The retirement crisis and the role of automation
Demographics are changing. Populations are ageing. And as a result, various changes need to happen.
The ageing population has led to a phenomenon known as the retirement crisis. As more and more people retire, without other people entering the workforce to replace them, it’s getting harder to sustain business operations.
Automation has a key role to play when it comes to this retirement crisis. But what exactly can it do?
What is the retirement crisis?
The retirement crisis is a phenomenon impacting countries worldwide. It sees the balance between retirees and the remaining workforce skew into problematic territory.
So, businesses are finding that they don’t have the workforce they need to continue growing. Meanwhile, governments face the need to support more people with lower tax revenues.
This crisis is also playing a part in the rise of the older worker. Those that would have traditionally retired cannot afford to (or, less frequently, choose not to for personal reasons).
The retirement crisis is also known as the pensions crisis, the pensions timebomb, and the demographic time bomb.
What caused it?
There are a few causes for the retirement crisis — and they almost all revolve around demographics.
For a start, there has been a declining birth rate across many countries for some time. Consequently, affected nations have fewer new people entering the workforce to replace those that retire.
Then, there’s the fact that general life expectancy has increased. This means that retirees are living longer — and need to be financially supported for longer.
All this means that there is a higher average age for populations worldwide. And it’s this shift in demographics that mean there’s a lower ratio of workers to retirees.
As for the rise in older workers, financial reasons are most common. Because people live longer, because of inflation, because of unstable support, many older workers cannot afford to retire when they ‘normally’ would.
But, it is worth mentioning that financial insecurity isn’t the only reason for elderly workers. Some older people stay in the workforce to stay active, and others do so because they enjoy their work and gain satisfaction from completing it.
The role of automation
So, how does automation relate to the retirement crisis? It hasn’t caused the problem. Rather, automation is going to have a key role in mitigating the crisis.
So, addressing the shortage is the way to avert it. And that’s where automation comes in — it can boost the workers we do have to reduce the need for the workers we’re missing.
Automation is a powerful tool for increasing productivity and efficiency. It does this by reducing time-consuming everyday tasks. In turn, humans don’t have to waste their work hours on them. This translates to fewer workers being able to create the same value — thus supporting more retirees.
These gains do, however, require more than just superficial automation deployment. The technology will need to be widely adopted and well used deep within each organisation’s processes.
Debunking the fears
Naturally, this idea of deep, widespread automation causes anxiety around the technology to rear its head. The worry is that while automation might save economies, it won’t just fill the gaps left by retirees. Instead, it will replace the entire workforce, leaving everyone without a job. (Or so the narrative runs.)
While this kind of automation anxiety is common, it is not well-founded. Over the course of history, technological advancement has been the ‘bogeyman’ taking jobs. But each time, more jobs were created, and the safety and quality of the work humans held were improved.
If, though, automation goes on to create jobs, should we still use it to address the retirement crisis? (And the shortage of labour it represents?)
The jobs created by automation are higher-skilled than those it absorbs. It creates strategic and technical roles, while supplanting more routine administrative roles. Filling those kinds of jobs further boosts productivity and valuable output; it doesn’t hobble organisational output. So, deep automation deployment won’t contribute to the retirement crisis.
This does mean that older workers choosing to re-enter or remain in the workforce for non-financial reasons will face an urgent need to reskill. This need will also apply across workers of all generations.
The retirement crisis vs automation
The retirement crisis is a problem that’s better addressed sooner rather than later. We need to proactively find ways to bolster the workforce and support retirees before the problem gets any bigger.
The issues in the workforce aren’t just an opportunity to automate — they’re fuelling a necessity for automation to integrate into our systems. It’s time to put aside the automation anxiety and start incorporating the technology into more and more of our daily processes.