31.01.11

I Didn't Go to Davos

Having never personally received the coveted invitation to the annual jamboree in Davos, known as the World Economic Forum, I rely on the plentiful reports issuing from this remote corner of the Swiss Alps to fuel my curiosity. (Cinderella and I have this much in common!)

I take comfort in the thought that even if Davos is the trendiest place to be for those concerned with economics and global issues, there are other gatherings of thinking people discussing these issues. I attended one or two last week - without having to invest in ski gear or suffer an oom pah pah band cacophony for the privilege!

There is no doubt, however, that some of the items on the agenda of the WEF are of relevance for this blog, including a report on Global Risks 2011, which warns of the huge unfunded liabilities created by ageing populations.

It claims the problem is so great that some of the world’s major economies, including the UK, would be deemed insolvent if they accounted properly for the pensions and health promises they have made to their ageing populations.

Demographic imbalances could contribute to a systemic risk to the entire financial system, it argues. Indeed, according to the WEF, the situation is particularly worrying in Europe, where countries have some of the oldest populations in the world. The soaring number of pensioners versus workers is already “a burden” for many economies.  

This of course is the background to which we see pension ages being pushed up in countries across Europe. This latter development is meeting with opposition or begrudging tolerance in varied measure among unions and working people themselves, while politicians mouth the platitude that “something must be done,” whilst actually doing little or nothing to prepare the world of work for the ageing workforces they (correctly) discern to be inevitable.

Seemingly, this economic challenge of ageing populations, familiar to TAEN followers, was one of the key issues under discussion in Davos, with WEF managing director Robert Greenhill calling on countries to rein in their pension commitments.

The familiar voice of George Magnus, senior economic adviser at UBS, was heard opining that trimming pension liabilities will not be enough. Cuts might save money, but, Magnus maintains, they will not address the structural problem of an ageing society and shrinking workforce. He is right.

Magnus has pointed out that with the EU’s working-age population projected to drop 15 per cent between now and 2060, the real problem is maintaining economic growth.

“Every percentage point reduction in the workforce leads to a percentage point off growth,” he says. Getting more women and older people working is his answer, with the message to employers that they will have to change their attitudes to older workers, no longer seeing them as difficult and expensive.

Who could argue with his message? Well plenty of employers don’t necessarily argue with him but doing something about it is different. Maintaining the work capacity of the individual whilst recognising that policies and practices regarding their work arrangements and working conditions can make a huge difference to staying in work decisions, is a paradigm rarely understood.

While the great and the good were expanding their lungs into the alpine air, some of us were following suit in less rarified atmospheres, like Birmingham in dark January. Last week we journeyed hence with visitors from the US-based AARP. Their Director of Workforce Deborah Russell developed the theme for good age management practices here in the UK, drawing on experiences of US employers, working without mandatory retirement. Our employer audiences expressed interest. 

One thing seems clear; the myopic obsession of some employers with maintaining a right to fire people at 65, is utterly out of kilter with the economic realities facing the world, and on the evidence of American experience, totally unnecessary. The default retirement age was absolutely the silliest thing to have introduced in the first place and it is a matter for celebration that it will go this year.

At the end of last week, I went to the Netherlands for the wind up conference following a fantastic fortnight of activity organised by Blik Op Werk, a social firm which has been using the Finnish work ability model and the work ability index with Dutch employers. (For those unfamiliar with these concepts, see this TAEN briefing on work ability.

In the space of two weeks, my Dutch friends had discussed employer responses to workforce ageing with a thousand or more attendees at various workshops which introduced them to the analytical methods the work ability model entails. Juhani Ilmarinen, the Finnish inspiration of the model, has been barnstorming around the Netherlands doing presentation after presentation.

How all this came about is of interest. In the Netherlands, health insurance and unemployment insurance companies have been taking growing interest in prevention of early retirement and economic inactivity. One of them has been funding research.

Following some seed corn start up support from the Dutch Government, Blik Op Werk now operates out of a tiny space in Utrecht with a staff no larger than TAEN here in the UK, doing great work. Similar projects in Germany and Austria have grown up, honing a model that introduces workplace leadership (as well as work ability) as a key element in effecting change.

What irony in these contrasting scenes. The canapés scoffing high rollers agree that workforce ageing and shrinkage are among the greatest economic threats the world faces, but as for doing something about it – relatively modest not for profit organisations are left to rattle the can.

T’was ever thus for Cinderella of course!