Europe’s Shrinking Labor Force Amidst Ageing Population: Challenges for HRM.

 


In the recent past years, labor market of the Central & Eastern Europe has drastically changed, main root cause for these changes is the labor shortage.

1. Emigration of the existing labor force from Europe to other western countries,

2. Increase of ageing population in the Europe region, are mainly impacted in weakening the labor force in the Europe Union region leaving many challenges to the businesses, societies, governments and ultimately led to a sluggish economy growth.

This blog directs towards the ageing population concern as it has immensely affected to the economy. 



Possible poverty among the elderly, issues of generational equity because of rising wealth transfers from the working age to the retired population, inefficiencies in labor markets, and the rising costs of pension and public transfer systems as the dependency ratio (the ratio of the nonworking to the working population) rises (Chand & Tung, 2014)1 .

Given the rapid workforce ageing in the EU, organizations need to better understand how to manage their older workers toward a mutually beneficial relationship that maximizes the value for both sides (Kooij, Jansen, Dikkers & De Lange, 2014; Ng & Feldman, 2008; Truxillo & Fraccaroli, 2013) 2 .

Despite the growing need for older workers and their talents, the reality is that older workers are often negatively stereotyped in a way that affects their access to employment, training opportunities, and job performance (Ciutiene & Railite, 2014) 3 .

However, older workers are often more reliable, loyal, and willing to stay longer in the job but with slightly lower levels of creativity and innovation compared to younger workers (McGregor & Gray, 2002)4.

(1,2,3,4 cited in Chand, M. and Markova, G. 2019)

 



Accordingly, several HR practices have been identified to arrest this ageing work force concern in previous researches and studies which Chand, M. and Markova, G. (2019) have described as follows;

1. Conduct of HR Programs.

This will include initiatives that allow older employees to continue their participation in the workforce, offer opportunities for self-actualization, and encourage late career advancement. . If employers expect to address labor shortages by encouraging retirees to stay in the workforce or return back to work, there should be greater attention to HR practices relevant to this group. (Chand, M. and Markova, G., 2019).

Because of the differences in ability, career aspirations, and family demands among older workers, organizations should engage in a variety of practices to address the array of needs. While some older employees will benefit from accommodative HR practices such as reducing the workload, granting additional leave or semiretirement, others would still seek developmental HR practices with regular training opportunities, continuous improvement on the job, and opportunities for promotions (Zacher et al., 2018, cited in Chand, M. and Markova, G., 2019 ).

2. Work Design Practices.

Work design practices refer to the way work is organized and related to materials, processes, and people toward a final output (products or services), (Chand, M. and Markova, G., 2019).

In the EU, the most popular maintenance measures adopted by employers (according to employees) included introducing flexible working hours (adopted by 30% of employers, particularly in Germany and Sweden) as well as ergonomic measures, such as adapting the workplace and work tools to the needs of aging employees (most often implemented in Poland and Sweden). Around one fifth of employers reduced working time before retirement or offered part-time retirement (most popular in Denmark, the Netherlands, and the United Kingdom) and promoted internal job mobility (most popular in France and Sweden) (European Commission, 2014, cited Chand, M. and Markova, G., 2019 ).

3. Managerial Training.

A major challenge for older employees is the lack of understanding and support for late career employees. Training and development programs for managers with the aim of promoting understanding and support for late career employees could be a remedy for some of these issues. These programs can facilitate the placement of older workers in the right jobs, provide them with career support, link them with potential mentors, and help with the reduction of the Pygmalion effect. (Chand, M. and Markova, G., 2019).

4. Employee Training.

Employees themselves also need to think about and possibly expand their end of career expectations, rather than simply have managers make most of these decisions. While long-held attitudes are often hard to change, it is important to continuously educate employees about the abilities and competencies of employees in their 60s or even 70s. Implementing training and development practices tailored to the specific needs of older workers may foster perceptions of organizational support and career satisfaction (Armstrong-Stassen & Ursel, 2009, cited in Chand, M. and Markova, G., 2019).

5. Retention initiative.

Employee retention is usually the outcome of practices and initiatives taken by organizations to reduce voluntary exit from the organization. At different stages of one's career, different incentives and their combinations could have this effect. Purposeful monitoring of older employees’ engagement and disconnect from the organization is necessary to inform other HR practices. The availability of training is recognized as critical for retaining older workers (Armstrong-Stassen & Templer, 2005, cited in Chand, M. and Markova, G., 2019). Thus, there is necessity for intentional, well-designed HR programs devoted to retaining and energizing older employees. In the EU, retirement as a gradual transition was most common in Denmark, the Netherlands, and Sweden, and significantly less frequent in France, Italy, and Poland. The least popular measures include reduction of tasks and salary or demotion.

Part-time employment among older workers can also be a tool to increase the labor force participation of older workers who want to transition to less strenuous work (European Commission, 2014, cited in Chand, M. and Markova, G., 2019).

TABLE 1: Issues affecting older employees and HR practices that help manage these issues (Chand, M. and Markova, G., 2019).



The aging population, coupled with a graying and shrinking workforce, raises important concerns about the region's future economic growth and business's ability to acquire the talent that they need. This calls for policies that promote sustainable economic growth and emphasize active aging programs, both at the national and the organizational levels  (Chand and Markova, 2019).


Yet, challenges are remaining in the labor market, which HR managers should arrest the situation amidst the AI driven innovations as technology has majorly impacted to the all type of labor force at present as humanoid robots are being made to tackle labor shortages.








References


Chand, M. and Markova, G., 2019. The European Union's aging population: Challenges for human resource management. Thunderbird International Business Review, 61(3), pp.519-529.Avaailable at https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=europe+labor+shortage+and+HRM&btnG=  (Accessed: 09 August 2023).

Clip 1; European Commission (2015) “European Economy Explained - Going further together - The ageing population – European Commission. Available at https://www.youtube.com/watch?v=zlSQEpG1AcQ (Accessed: 09 August 2023).

Clip 2 ; BBC News (2014), “How an ageing population will change the world” - BBC NEWS. Available at https://www.youtube.com/watch?v=x4r0S5qoIXc (Accessed: 09 August 2023).

Clip 3; Euronews next (2023) “World’s first mass-produced’ humanoid robot to tackle labor shortages amid ageing population – Euronews next. Available at https://www.youtube.com/watch?v=-OMQDbUEads (Accessed: 09 August 2023).

Fig 1; 

https://www.google.com/search?q=ageing%20population%20in%20europe&tbm=isch&tbs=rimg:CQWgYr1GAyCCYWyQqHhvWoyLsgIRCgIIABAAOgQIABAAVSgmjj7AAgDYAgDgAgA&hl=en&sa=X&ved=0CBwQuIIBahcKEwiA8ITZndCAAxUAAAAAHQAAAAAQBg&biw=889&bih=358#vhid=sIXnSS3XtEDPWM&vssid=3981:ZdjqzWhDZsyAmM (Accessed: 09 August 2023).

Fig 2; Department of Economic and Social Affairs (2017) “World Population Prospects – 2017 Revision : Ageing Population (2017). Available at https://www.un.org/ar/desa/world-population-prospects-2017-revision-ageing-population (Accessed: 09 August 2023).

Poór, J., Slavić, A., Nikolić, M. and Berber, N., 2021. The managerial implications of the labor market and workplace shortage in Central Eastern Europe. Strategic Management, 26(2), pp.31-41. Available at https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=europe+labor+shortage&oq= (Accessed: 08 August 2023).

Table 1 : Chand, M. and Markova, G., 2019. The European Union's aging population: Challenges for human resource management. Thunderbird International Business Review, 61(3), pp.519-529.Avaailable at https://scholar.google.com/scholar?hl=en&as_sdt=0%2C5&q=europe+labor+shortage+and+HRM&btnG= (Accessed: 09 August 2023).







Comments

  1. SugandiAugust 12, 2023 at 12:41 PM

    Aging employee interactions can be both good and bad. Its based on the organization.

    ReplyDelete
  2. RANGIKA RANASINGHEAugust 17, 2023 at 8:52 AM

    you pointing out some steps that organizations can take to better integrate older workers and help make their aging workforce more productive.

    ReplyDelete
  3. Shanitha Dinush ChandimaAugust 17, 2023 at 4:01 PM

    Europe's shrinking labor force due to an aging population poses significant challenges for HRM. The need to attract, retain, and upskill older workers while engaging younger talents becomes paramount. Striking a balance between generational dynamics, adapting work structures, and promoting knowledge transfer is crucial for sustaining productivity and innovation in the face of demographic shifts

    ReplyDelete
  4. B. Abeywardana (MBA/HND Supply chain)August 17, 2023 at 4:07 PM

    Gen X and millennials must raise a voice on behalf of themselves towards strong retainment. we will come-across this due course. thanks for reminding

    ReplyDelete
  5. Rajitha MadhusankaAugust 17, 2023 at 6:39 PM

    We cannot forget the contributions of older workers which played a crucial role in bringing companies to where they are today. Their dedication, expertise, and hard work have contributed significantly to the growth and success of organizations. Recognizing and honoring the valuable roles of older workers is a must.

    ReplyDelete
  6. LilanAugust 19, 2023 at 1:09 AM


    Europe's shrinking labor force due to an aging population poses significant challenges for Human Resource Management (HRM), as organizations must adapt strategies to attract, retain, and motivate a smaller pool of workers while addressing intergenerational dynamics and skill shortages.

    ReplyDelete
  7. Harsha AthapattuAugust 19, 2023 at 8:36 AM

    Older workers are frequently more dependable, loyal, and eager to stay on the job for extended periods of time, but they have slightly lower levels of originality and invention.

    ReplyDelete
  8. Ayodhya GalappaththiAugust 22, 2023 at 8:21 AM

    Employee retention is a result of organizational practices aimed at reducing voluntary exit. Monitoring older employees' engagement and disconnect is crucial for HR practices. Training availability is critical for retaining older workers. Well-designed HR programs are necessary to retain and energize older employees. As you discussed retirement as a gradual transition is most common in Denmark, Netherlands, and Sweden.

    ReplyDelete

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