Ageism could cost OECD economies $500 billion in productivity by 2040: WEF report

Age-related workplace barriers are projected to cost Organisation for Economic Co-operation and Development (OECD) economies almost $500 billion in cumulative productivity losses by 2040. This economic impact is driven by an aging global population and a slower-growing working-age workforce, according to a new report by the World Economic Forum and Marsh.

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OECD countries, it is estimated, will suffer nearly $500 billion in productivity losses by 2040, due to under- and unemployment of adults aged 55+ relative to younger workers.

The report highlights that OECD countries, comprising 38 highly developed nations, face significant productivity losses due to the under- and unemployment of adults aged 55 and older compared to younger workers. These losses are attributed to extended periods of joblessness and structural impediments that lead many older adults to leave the labor force entirely.

Demographic shifts are intensifying this challenge. By 2040, the global population aged 65 and over is expected to increase by over 50 percent, from 856 million to 1.3 billion. In contrast, the working-age population (25-64) will grow by only 13 percent. This imbalance is already manifesting in country-specific economic impacts, with the US projected to lose $113 billion and France $106 billion in cumulative GDP losses between 2025 and 2040 due to extended unemployment among older workers.

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By 2040, the global population aged 65 and over will grow by more than 50 per cent, increasing from 856 million to 1.3 billion. Meanwhile, the working age population, aged 25 to 64, will grow by just 13 per cent.

Beyond economic figures, the report links ageism to adverse health outcomes. Research indicates that ageism contributes to millions of disease incidences in the United States alone, adding billions in healthcare costs and correlating with increased rates of depression, physical illness, and reduced access to medical care. The WEF emphasizes that these figures likely underestimate the problem, as many individuals facing age-related disadvantages opt out of the workforce without appearing in official unemployment statistics.

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These figures are just the tip of the iceberg. Many people who feel disadvantaged due to ageism simply choose to exit the workforce and do not appear in the unemployment figures.

However, the report also points to promising alternatives and policy successes. It notes that multigenerational teams enhance creativity and innovation, while experienced employees can mentor younger colleagues and acquire digital skills in return. Examples like South Korea's high employment rate for older adults, Japan's consistent increase in employment for those over 65, and Sweden's flexible pension system demonstrate that integrating older workers into the economy is feasible and beneficial. The report concludes that addressing ageism offers a dual opportunity: boosting productivity and providing health and financial benefits to individuals, while enabling employers to tap into a valuable, underutilized talent pool.

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Tackling ageism can boost productivity, provide health and wealth benefits to individuals and reduce financial reliance on governments. It also provides an opportunity for employers to access under-used skills and experiences of a valuable - and growing - cohort of society.