Older, but none the wiser the implications of an ageing workforce in the UK

A report from the Economist Intelligence Unit Older, but none the wiser? The implications of an ageing workforce in the UK Sponsored by Older, but none the wiser? Contents Executive summary Calm before the storm Employee demands are changing Healthy workers, healthy profits Tackling the pensions problem Case study: IHG 10 Conclusion 11 Appendix: Survey results 12 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? Executive summary An ageing workforce will create big talent management challenges for UK employers They should be changing their reward and resourcing practices now Historically low birth rates and increasing life expectancy mean that Europe’s working population is ageing fast In 2012 the continent reached an inevitable demographic tipping point The percentage of the population of working age fell for the first time in 40 years It is now forecast to fall every year until 2060 This inescapable trend will have profound implications for governments, citizens and companies across Europe The demographic make-up of the UK means that the country has more time to adjust—until the early 2020s—than the continent’s other large economies, according to European Commission forecasts But are UK companies using that time to their advantage? To explore some of the issues that senior executives will have to address as they seek to adapt their organisations to this new world, The Economist Intelligence Unit, on behalf of Towers Watson, surveyed 480 senior executives at companies across Europe, with 84 in the UK Just over three-quarters (76%) of those in the UK expect the number of their employees aged 60+ to increase by 2020, including 29% who expect it to increase significantly Key findings include: Companies have a chance to prepare now, but most are not taking it Workforce ageing will hurt the UK later the continent’s other main economies But this opportunity is being squandered When it comes to the kind of workplace changes that experts say are essential, UK companies are at the bottom of the European league table Less than one-fifth (18%) plan to let older workers cut their hours without feeling less valued Workforce ageing must move up the business agenda UK executives are currently the least concerned in Europe about the challenge of managing an ageing workforce Just one in 17 sees ageing as an issue By 2020 that figure will leap fourfold— the biggest increase in Europe The benefits on offer need to change As the workforce ages, employees will value a different mix of benefits UK companies are the most likely in Europe (48%) to feel that the benefit programmes they have in place today would not be fit-forpurpose in 2020 Some 60% plan to offer more choice—by far the highest proportion in Europe Insufficient savings are to blame for the UK pension crisis Demographic change and government deficits are seen as the biggest challenges to their country’s pension system But the UK (45%) executives overwhelmingly say the problem is that individuals are not saving enough That is more than three times higher than in the next country, the Netherlands © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? Calm before the storm The economic and business implications of Europe’s ageing workforce are huge But the UK should have more time to adjust than any of the EU’s other large economies Germany, one of the most exposed countries, could experience serious labour supply constraints within the next two or three years under the European Commission’s most pessimistic scenario The UK has a younger population; the Commission does not expect demographics to start hurting its economy until the early 2020s But when the pain does arrive, the Commission says the UK should have had much more time to adjust, because it will have had more scope to bring people into the workforce and to improve productivity Perhaps it is no surprise, then, that the survey found that UK executives are currently the least concerned in Europe about the challenge of managing an ageing workforce Just one in 17 UK executives sees ageing as an issue today; that level is over five times higher in France But this period of executive calm is not likely to last UK companies will shift their priorities over the next few years They currently have a laserlike focus on cost control—68% say it is one of their two most important business concerns, the highest percentage in Europe As economic prospects brighten, the focus on managing costs will diminish By 2020 only 20% think it Chart What would you say is the most important business priority for your organisation currently? (% of respondents) Europe Now UK now Europe in 2020 UK in 2020 68 57 55 49 42 32 27 26 23 25 20 44 42 29 24 45 24 25 14 14 Restructuring Cost control Expansion Source: The Economist Intelligence Unit 20 18 © The Economist Intelligence Unit Limited 2014 Innovation Talent management (HR) Risk control and management Older, but none the wiser? Chart What, if anything, does your business plan to by 2020 in order to adapt to the changing needs of your workforce? (% of respondents) Europe UK Germany Making physical changes to the workplace 24 28 45 50 Changing the employee benefits we offer 55 Offering more flexible working hours or working from home 46 Ensuring that the skills of older employees remain up to date 48 39 48 Giving employees more choice over their benefits Other, please specify 77 32 18 45 Looking at how to address intergenerational differences in our workforce 56 46 28 Adapting our structure to ensure that older workers who reduce work hours or responsibilities retain their status within the company and continue to feel valued 60 60 29 27 25 2 Source: The Economist Intelligence Unit will rank as highly In its place, UK executives say their main business priorities in 2020 will be innovation (55%) and talent management (45%) With the focus moving away from what people cost to what value they can bring, workforce ageing will become more of a concern The survey shows that it will climb up the executive agenda across Europe, but nowhere is the expected leap as high as in the UK, where four times as many executives think it will be a top-three issue in 2020—the biggest increase in Europe UK executives have time to prepare that their peers in other countries would envy, but most are making little use of it “The key to engaging and retaining older workers is to adjust work to their needs,” says Maria Karanika-Murray, a work psychologist in Nottingham Trent University’s School of Social Sciences “Some companies are © The Economist Intelligence Unit Limited 2014 already doing this, but many are unsure of their options.” In important areas, UK companies are lagging far behind Only 28% of survey respondents say they are planning to ensure that the skills of older employees remain up to date Just 18% expect to adapt their structures so that older workers who cut their working hours or responsibilities can retain their status in the business and feel valued On both points, the UK comes bottom in Europe—by a wide margin More needs to be done, believes Baroness Sally Greengross, chief executive of the International Longevity Centre, a UK think-tank on longevity and demographic change “There is significant denial around the implications and consequences of our rapidly ageing population,” she said in a recent debate “If we don’t change our employment practice, industry will face a skills gap: this is inevitable.” Older, but none the wiser? Employee demands are changing As employers adjust their human resources plans to fit a brightening economy, employee expectations will also change For now, job security is still seen by executives as the number one employee concern by a wide margin And UK employees are thought to worry more about this than those in any other European country, apart from Spain and Italy But UK executives expect this to roughly halve by 2020 believe it will become the main employee concern Instead, employees will look much more closely at the quality of their working lives Today, 55% of UK executives report that work-life balance is a top-three concern for their employees—that is by far the highest figure in Europe By 2020 executives in every country, apart from France, But how companies plan to deliver that flexibility varies by country For Europe as a whole, the most common response is to offer more flexible working hours or working from home (56%) UK companies see this as a way forward too But they are far more likely to see better benefit Reflecting the shift from money to lifestyle benefits, one-third of European executives expect their employees to want more job sharing, part-time working, portfolio careers and the opportunity for phased retirement The common denominator here is that employees want greater flexibility Chart What you believe to be the issues your employees see as most important today? (% of respondents) Europe Now 64 UK now Europe in 2020 UK in 2020 62 55 52 42 41 32 42 45 48 35 29 31 33 32 31 23 22 20 25 19 18 14 17 15 14 11 24 24 25 17 20 28 17 11 Financial security Job security Saving for retirement Stress and wellbeing Healthcare provision Work-life balance Source: The Economist Intelligence Unit © The Economist Intelligence Unit Limited 2014 Employment Skill New flexibility development technology (job sharing, /pace of portfolio careers, change part-time working, phased retirement) Caring for dependents (children and elderly) Older, but none the wiser? Chart How likely is it that the benefit programmes you have in place now will remain fit-for-purpose in 2020? (% of respondents) Very unlikely UK Very likely Don’t know 30 24 26 29 14 24 19 43 30 26 30 21 12 18 29 27 36 25 27 11 18 32 27 Netherlands 27 35 Italy Spain Likely 13 Germany Switzerland Neither/neutral Europe France Unlikely 10 16 36 Source: The Economist Intelligence Unit programmes as the answer to their talent management challenges And here they see significant need for change According to the survey, UK companies are the most likely in Europe (48%, compared with an overall European average of 39%) to feel that the benefit programmes they have in place today would not be fit-for-purpose in 2020 Some 60% plan to change the employee benefits they offer and to give employees more choice over their benefits—by far the highest proportion in Europe But UK executives are also the most likely to believe that the cost of benefits as a percentage of salary will increase (62%) Here they will face a conundrum: how can they offer employees the choice and flexibility of © The Economist Intelligence Unit Limited 2014 benefits and work practices they are looking for without allowing costs to spiral upwards? The survey suggests UK companies may be better placed to deal with this challenge than others Today, they are less likely to believe their company has built up its benefits offer without an overarching strategy (24%, compared with 37% for all Europeans) But like executives across Europe, only half of them (54%) believe they currently offer a comprehensive benefits package that helps them to attract and retain staff Older, but none the wiser? Healthy workers, healthy profits As executives rethink their benefits offer, healthcare will become increasingly significant Even if state health provision were not under pressure from demographic change, the health and welfare of employees would logically become a growing human resources concern, since workforce ageing will require companies to rely more on older workers anyway Over two-thirds (70%) of European executives feel this is the case—slightly more than the 64% in the UK, with its National Health Service (NHS) Yet as state health funding comes under pressure in the UK and companies look to offer a richer mix © The Economist Intelligence Unit Limited 2014 of benefits, it is no wonder that UK executives are the most likely in Europe (79%) to believe health benefits will become increasingly important to employees But does that rethink necessarily mean an increase in cost? “If older people maintain a healthy lifestyle, there is no reason why they can’t choose to continue to work well beyond the pensionable age and contribute in some way, at no extra burden to the employer,” says Ken Jones, chief executive of the UK-headquartered European business of Astellas, a Japanese pharmaceutical company Older, but none the wiser? Tackling the pensions problem Many companies see phased retirement as an important way of adapting to an ageing workforce UK executives considering this option are likely to be pushing at an open door The country’s citizens are almost twice as likely as the average European to want to keep working after their pension age—56% of them are keen on the idea, according to the European Commission On this measure, only the Danes rank more highly among the EU’s 28 member states And those in the UK are also much more interested in the option of taking a partial pension while working part-time—82% like the idea, compared with two-thirds of all Europeans Rethinking retirement in this way might also require a rethink of pensions And this is where the drive for greater flexibility could hit the buffers While executives surveyed in the UK are particularly keen to offer employees a more adaptable mix of benefits, 42% say pension arrangements are expensive to change, and 38% say they are excessively regulated Chart What challenges are employers facing in making changes to their retirement benefits? Select up to three (% of respondents) Europe UK 47 43 40 42 38 33 33 29 24 19 18 17 18 14 17 12 14 12 12 12 Source: The Economist Intelligence Unit © The Economist Intelligence Unit Limited 2014 Low levels of trust amongst employees for financial products Staff not have time or resources to manage retirement plans Lack of bottom line benefit makes change hard to justify Low levels of appreciation for retirement benefits among employees Low levels of financial literacy/understanding amongst employers Lack of tax incentives Lack of tools to measure ROI to justify the costs Managing the risk posed to the business (defined benefit plans) Excessive regulation Cost of implementing changes Growing costs (defined benefit plans) Staff haven’t requested any changes so employers not need to make any 19 Older, but none the wiser? Chart What is the biggest challenge facing the system for retirement savings in the country in which you are based? (% of respondents) Europe UK 45 26 20 18 14 Not relevant for my country, our retirement system is sustainable Regulatory and legislative changes Employers underestimating the future cost of promised benefits Unrealistic expectations of individuals Too many people not working to or past the state retirement age Unrealistic government entitlements (State pension, pension age) Insufficient savings being made by individuals Government deficits/debt (impact of austerity measures) Demographic changes (ageing population) 11 10 High costs for businesses providing pensions Source: The Economist Intelligence Unit Pension funding is also a thorny issue Like their counterparts in Europe, many UK executives (41%) believe employers should help their employees to have a comfortable standard of living in retirement, with 44%—a notch above the European average—saying employers should be primarily responsible for providing retirement provision But unlike their European peers, UK executives believe individual employees share the same burden of responsibility What is more, they are far less likely to believe that the employer should bear the risk of retirement provision Over © The Economist Intelligence Unit Limited 2014 half (53%) of UK executives disagree with that suggestion—more than double the proportion in Germany and Italy For UK executives, the greatest threat to pension provision in their country is the fact that—in their view—employees are not meeting their side of the deal Whereas executives across other countries say the biggest systemic pension challenges are demographic change and government deficits, those in the UK (45%) overwhelmingly point to insufficient savings by individuals That is more than three times higher than in the next country, the Netherlands Older, but none the wiser? Case study: IHG Compared with their European counterparts, UK companies have been slow to think about the potential impact of workforce ageing But the issue is on the agenda at InterContinental Hotels Group (IHG), the UK’s second-largest hotel operator Tony Voller, senior vice president of human resources Europe and global employer brand and resourcing, says the business will need to find new ways to engage its 9,000-strong UK workforce in the years ahead “We will have to think more flexibly about the way we employ people and the benefits we offer,” says Mr Voller “It’s great to assume people will want to work longer, although perhaps not at the same pace as they currently We will need to think about how we change contracts and so on, so people can get the work-life balance they want.” 10 © The Economist Intelligence Unit Limited 2014 Workforce ageing could also affect the way IHG deploys older staff, adds Mr Voller “We would typically have people moving up the career ladder; if they are staying in senior roles for longer, we’d want to make sure we are creating career opportunities for them What role should they have at the end of their working life? How we get them sharing their knowledge and experience?” But Mr Voller believes it is important to look at workforce ageing as just one part of a wider talent management issue IHG already tries to offer its employees a wide range of benefits, for example, and tries to take account of what might appeal to them at the different stages of their life—young or old “For me it’s about making sure we’ve got the right people in the right jobs at the right time We don’t put a huge focus on ageing per se; the key thing for us is to find talent.” Older, but none the wiser? Conclusion UK companies cannot escape the impact of demographic change, but they could a lot more to prepare The need to address workforce ageing is not yet as urgent as it is in other European countries, but surely that is an opportunity for executives to plan now and deal with the challenge effectively, rather than rush it and make a mess This is particularly true in the realm of benefits The survey shows that UK executives see a more 11 © The Economist Intelligence Unit Limited 2014 flexible and employee-focused benefits package as an important way of retaining and motivating workers, who will be in increasingly short supply Yet those same executives are the most likely in Europe to believe their benefits programme needs a major overhaul Now would be the time to start that process Older, but none the wiser? Appendix: UK survey results What would you say is the most important business priority for your organisation currently? Select up to two (% respondents) Cost control 68 Restructuring 26 Expansion 25 Talent management (HR) 25 Innovation 24 Risk control and management 18 What would you say will be the most important business priority for your organisation by 2020? Select up to two (% respondents) Innovation 55 Talent management (HR) 45 Expansion 44 Cost control 20 Risk control and management 20 Restructuring 12 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? By 2020, what will be the main drivers of change for your business? Select up to two (% respondents) Global competition 66 Technology 54 Talent/people management 39 Ageing Changing size and role of the state Offshoring/outsourcing Other (please specify) What are the main people (HR) issues you face as an employer currently? Select up to three (% respondents) Talent management and progression 49 Motivation and engagement 47 Cost control (compensation and benefits) 41 Recruitment 31 Retention 28 Downsizing / offshoring 19 Skills shortages 14 Diversity of workforce 12 Healthy workforce (health, stress and wellbeing) Regulation (state/EU) Ageing workforce Other (please specify) 13 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? What will be the main people (HR) issues you face as an employer by 2020? Select up to three (% respondents) Talent management and progression 54 Motivation and engagement 34 Retention 31 Cost control (compensation and benefits) 27 Recruitment 25 Skills shortages 24 Ageing workforce 22 Healthy workforce (health, stress and wellbeing) 12 Diversity of workforce 12 Regulation (state/EU) Downsizing/offshoring Other (please specify) What you believe to be the issues your employees see as most important today? Select up to three (% respondents) Job security 62 Work-life balance 55 Financial security 52 Skill development 24 Stress and wellbeing 22 Employment flexibility (job sharing, portfolio careers, part-time working, phased retirement) 17 Saving for retirement 14 New technology/pace of change 11 Healthcare provision Caring for dependents (children and elderly) Other (please specify) 14 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? What you believe to be the issues your employees see as most important by 2020? Select up to three (% respondents) Work-life balance 48 Financial security 42 Saving for retirement 35 Employment flexibility (job sharing, portfolio careers, part-time working, phased retirement) 32 Job security 31 Skill development 28 Stress and wellbeing 18 New technology/pace of change 17 Healthcare provision 11 Caring for dependents (children and elderly) Other (please specify) What, if anything, does your business plan to by 2020 in order to adapt to the changing needs of your workforce? Select all that apply (% respondents) Changing the employee benefits we offer 60 Giving employees more choice over their benefits 60 Offering more flexible working hours or working from home 46 Ensuring that the skills of older employees remain up to date 28 Looking at how to address inter-generational differences in our workforce 27 Making physical changes to the workplace 24 Adapting our structure to ensure that older workers who reduce work hours or responsibilities retain their status within the company and continue to feel valued 18 Other, please specify How likely is it that the benefit programmes you have in place now will remain fit-for-purpose in 2020? (% respondents) Very unlikely 13 Unlikely 35 Neither/neutral 26 Likely 18 Very likely Don’t know 15 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? By 2020, for the typical employee at your company, you believe that the costs of benefits as a percentage of salary will: (% respondents) Increase significantly 14 Increase 48 Stay the same 26 Decrease 10 Decrease significantly Which of the following statements describes your company’s attitude to benefits offered to employees? Select all that apply (% respondents) We think it’s right to look after our staff, and our benefits reflect that 57 We offer a fully comprehensive benefits package to attract and retain employees 54 We make sure we’re offering what’s normal for our industry, to keep up with competitors 54 It’s often better for employees to get certain benefits through work than buy them themselves 42 In the future, we are more likely to give employees a cash allowance and let them choose what benefits they like 26 We have a carefully selected set of benefits suitable for our employees’ lifestyles 25 We’ve built up benefits over time, without an overarching strategy for choosing them 24 It is difficult to reduce elements of our current benefits package so any change results in an increase in overall costs 20 Due to historic reasons/changes we have lost track of why we have the benefits we have 11 We only offer the minimum benefits that are legally required, and otherwise just pay cash 11 Other, please specify Who should be primarily responsible for providing and/or funding the following benefits? (% respondents) Individual Employer State Retirement provision 44 44 12 Savings scheme 77 16 Healthcare provision 11 46 43 Life insurance 37 58 Disability protection 27 48 25 Critical illness protection 49 29 22 End of life care 33 16 11 © The Economist Intelligence Unit Limited 2014 56 Older, but none the wiser? Do you agree or disagree with the following statements about health and wellbeing of your workforce in the future (to 2020)? Rate on a scale of to where is strongly agree and is strongly disagree (% respondents) Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree The health and wellbeing of our workforce will be an increasingly important issue for us as an employer 30 35 32 The state will play a reduced role in providing healthcare 46 20 19 Healthcare costs will increasingly fall on employers 44 24 24 Healthcare benefits will be increasingly important to employees 25 54 18 What is your company’s main objective in offering retirement benefits now? (% respondents) Wanting employees to have an adequate income in retirement 32 Attracting talent 24 Employee retention 24 Compliance 13 Workforce planning (managing when employees retire) Other (please specify) What will be your company’s main objective in offering retirement benefits by 2020? (% respondents) Wanting employees to have an adequate income in retirement 31 Attracting talent 24 Employee retention 20 Workforce planning (managing when employees retire) 13 Compliance 10 Other (please specify) 17 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? What challenges are employers facing in making changes to their retirement benefits? Select up to three (% respondents) Growing costs (defined benefit plans) 47 Cost of implementing changes 42 Excessive regulation 38 Managing the risk posed to the business (defined benefit plans) 33 Low levels of appreciation for retirement benefits among employees 29 Low levels of financial literacy/understanding amongst employers 17 Lack of tax incentives 14 Lack of bottom line benefit makes change hard to justify 12 Staff not have time or resources to manage retirement plans 12 Low levels of trust amongst employees for financial products 12 Lack of tools to measure ROI to justify the costs Other, please specify Staff haven’t requested any changes so employers not need to make any What is the biggest challenge facing the system for retirement savings in the country in which you are based? (% respondents) Insufficient savings being made by individuals 45 Demographic changes (ageing population) 20 Unrealistic expectations of individuals 11 Unrealistic government entitlements (State pension, pension age) High costs for businesses providing pensions Government deficits/debt (impact of austerity measures) Employers underestimating the future cost of promised benefits Too many people not working to or past the state retirement age Regulatory and legislative changes Not relevant for my country, our retirement system is sustainable Other, please specify 18 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? Do you agree or disagree regarding the following statements about retirement provision in the future? Rate on a scale of to where is strongly agree and is strongly disagree (% respondents) Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree It is not an employer’s role to help their employees to have a comfortable standard of living in retirement 13 20 26 27 13 Employers should bear the risk of providing for their retirement 19 25 30 23 As an employer, we are concerned about the reputational risk of workers reaching old age and not being able to retire 11 50 24 12 How you expect the number of employees aged 60+ to change by 2020? (% respondents) Increase significantly 29 Increase 47 Remain the same 18 Decrease Decrease significantly Do you agree or disagree with the following statements about older workers? Rate on a scale of to where is strongly agree and is strongly disagree (% respondents) Strongly agree Somewhat agree Neither agree nor disagree Somewhat disagree Strongly disagree Older workers are less productive than younger workers are 11 35 38 14 Older workers have greater skills than younger workers 38 35 18 Older workers are less motivated than younger workers are 13 30 39 16 Older workers are easier to manage than younger workers are 21 41 29 24 Older workers take more time off for health reasons than younger workers 20 46 Which of the following you think is most likely to happen as a result of an ageing workforce? Select up to two (% respondents) Higher costs of benefits 47 Greater employee demand for benefits (healthcare, retirement and other benefits) 39 Increased flexible working (to provide care for older dependents, phased retirement, etc) 39 Progression of younger workers becomes more difficult 38 Greater risk of age discrimination claims 22 19 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? Which of the following best describes your title? (% respondents) Board member CEO/President/Managing director CFO/Treasurer/Comptroller CIO/Technology director Other C-level executive SVP/VP/Director 22 Head of business unit Head of department 20 Manager 31 Other, please specify What is your primary job function? (% respondents) Human resources 44 Finance 15 General management 14 Operations and production Marketing and sales Risk Strategy and business development IT Information and research Procurement R&D Customer service Legal Supply-chain management Other How many employees does your company have globally? (% respondents) Less than 250 250-499 500-1,999 2,000+ 97 20 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? What is your industry? (% respondents) Aerospace and Defence Automotive and Transportation Equipment Charities and Non-Profit Chemicals Communications Consumer goods Education Entertainment and media Financial Services: Banking 14 Financial Services: Insurance Financial Services: Other financial services Food and Beverage Government/Public sector Health Care Hospitality (Restaurant, Hotel/Lodging, Tourism and Leisure) IT and High Tech Manufacturing 12 Natural Resources Oil & gas Pharmaceuticals Professional and Business Services 13 Property and Construction Publishing and printing Retail Telecommunications Transportation Utilities Wholesale Other, please specify 21 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? Please state which of the following best describes your company? (% respondents) Publicly listed 71 Other privately owned (partnership, limited liability, etc) 18 Private Equity portfolio company Family owned Government/State owned enterprise What are your organisation's global annual revenues? (% respondents) Less than €500m €500m to €1bn 14 €1bn to €5bn 22 €5bn to €10bn 17 More than €10bn 47 22 © The Economist Intelligence Unit Limited 2014 While every effort has been taken to verify the accuracy of this information, The Economist Intelligence Unit Ltd cannot accept any responsibility or liability for reliance by any person on this report or any of the information, opinions or conclusions set out in this report LONDON 20 Cabot Square London E14 4QW United Kingdom Tel: (44.20) 7576 8000 Fax: (44.20) 7576 8500 E-mail: london@eiu.com NEW YORK 750 Third Avenue 5th Floor New York, NY 10017 United States Tel: (1.212) 554 0600 Fax: (1.212) 586 1181/2 E-mail: newyork@eiu.com HONG KONG 6001, Central Plaza 18 Harbour Road Wanchai Hong Kong Tel: (852) 2585 3888 Fax: (852) 2802 7638 E-mail: hongkong@eiu.com GENEVA Rue de l’Athénée 32 1206 Geneva Switzerland Tel: (41) 22 566 2470 Fax: (41) 22 346 93 47 E-mail: geneva@eiu.com [...].. .Older, but none the wiser? Case study: IHG Compared with their European counterparts, UK companies have been slow to think about the potential impact of workforce ageing But the issue is on the agenda at InterContinental Hotels Group (IHG), the UK s second-largest hotel operator Tony Voller, senior vice president of human resources Europe and global employer brand and resourcing, says the business... se; the key thing for us is to find talent.” Older, but none the wiser? Conclusion UK companies cannot escape the impact of demographic change, but they could do a lot more to prepare The need to address workforce ageing is not yet as urgent as it is in other European countries, but surely that is an opportunity for executives to plan now and deal with the challenge effectively, rather than rush it and... 20 Workforce planning (managing when employees retire) 13 Compliance 10 Other (please specify) 2 17 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? What challenges are employers facing in making changes to their retirement benefits? Select up to three (% respondents) Growing costs (defined benefit plans) 47 Cost of implementing changes 42 Excessive regulation 38 Managing the. .. respondents) Innovation 55 Talent management (HR) 45 Expansion 44 Cost control 20 Risk control and management 20 Restructuring 4 12 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? By 2020, what will be the main drivers of change for your business? Select up to two (% respondents) Global competition 66 Technology 54 Talent/people management 39 Ageing 9 Changing size and role of the. .. Entertainment and media 1 Financial Services: Banking 14 Financial Services: Insurance 5 Financial Services: Other financial services 1 Food and Beverage 2 Government/Public sector 0 Health Care 1 Hospitality (Restaurant, Hotel/Lodging, Tourism and Leisure) 6 IT and High Tech 8 Manufacturing 12 Natural Resources 0 Oil & gas 7 Pharmaceuticals 4 Professional and Business Services 13 Property and Construction... adapt to the changing needs of your workforce? Select all that apply (% respondents) Changing the employee benefits we offer 60 Giving employees more choice over their benefits 60 Offering more flexible working hours or working from home 46 Ensuring that the skills of older employees remain up to date 28 Looking at how to address inter-generational differences in our workforce 27 Making physical changes... (% respondents) Wanting employees to have an adequate income in retirement 32 Attracting talent 24 Employee retention 24 Compliance 13 Workforce planning (managing when employees retire) 6 Other (please specify) 1 What will be your company’s main objective in offering retirement benefits by 2020? (% respondents) Wanting employees to have an adequate income in retirement 31 Attracting talent 24 Employee... Strongly disagree The health and wellbeing of our workforce will be an increasingly important issue for us as an employer 30 35 32 2 1 The state will play a reduced role in providing healthcare 8 46 20 19 6 Healthcare costs will increasingly fall on employers 5 44 24 24 4 Healthcare benefits will be increasingly important to employees 25 54 18 2 1 What is your company’s main objective in offering retirement... know 2 15 © The Economist Intelligence Unit Limited 2014 Older, but none the wiser? By 2020, for the typical employee at your company, do you believe that the costs of benefits as a percentage of salary will: (% respondents) Increase significantly 14 Increase 48 Stay the same 26 Decrease 10 Decrease significantly 2 Which of the following statements describes your company’s attitude to benefits offered... 9,000-strong UK workforce in the years ahead “We will have to think more flexibly about the way we employ people and the benefits we offer,” says Mr Voller “It’s great to assume people will want to work longer, although perhaps not at the same pace as they do currently We will need to think about how we change contracts and so on, so people can get the work-life balance they want.” 10 © The Economist Intelligence ... Older, but none the wiser? Calm before the storm The economic and business implications of Europe’s ageing workforce are huge But the UK should have more time to adjust than any of the EU’s other... feeling less valued Workforce ageing must move up the business agenda UK executives are currently the least concerned in Europe about the challenge of managing an ageing workforce Just one in. .. already doing this, but many are unsure of their options.” In important areas, UK companies are lagging far behind Only 28% of survey respondents say they are planning to ensure that the skills of older