How automation helps employers fill the retirement crisis’s labor gap
Around the world 10,000 people turn 65-years old every day — the retirement age in many countries. While many baby boomers are staying in the workforce longer than their predecessors, 5,900 members of their generation, on average, leave the workforce per day, according to the Pew Research Center.
While the baby boomer generation is no longer the largest demographic in the United States, their rapid rate of retirement will cause organizations to rethink their workforces. Enterprises and governments must take a holistic view of the future of work — one that leverages automation and reskilling of employees to scale new programs quickly.
Industrial and post-industrial nations — especially the United States, Spain and China — should take note of what is happening to Japanese population trends. Lower-than-average birth rates and higher-than-average death rates have caused the country’s population to shrink since 2010.
Approximately 22% of Japanese employees work more than 50 hours a week to fill the chasm between retirees and new entrants, causing an ailment referred to as karōshi, or death by overwork. In short, Japan has a human labor shortage, and it’s overextending the country’s resources and workers.
We can already see the beginnings of a similar problem in the United States. As baby boomers require more medical care and age out of the working population, younger workers must pivot from service, knowledge, and production jobs to care for them.
Like Japan, the United States has more jobs than there are people to fill them and no way to increase the supply of human labor. That’s where the opportunity for automation lies.
By augmenting humans with software robots, companies can fill gaps in the labor force caused by aging populations and can enable younger workers to take over higher-value work.
New technology skepticism
Historically, new technological developments have been met with skepticism, and automation has not been the exception to the rule. However, this new generation of technology, like many before it, improves humans instead of making them obsolete.
Deloitte research reports that automation technology created 3.5 million higher-skilled, better-paying jobs in the United Kingdom between 2001 and 2015. This reveals that the real challenge to human workers isn’t competing with automation but adapting to it.
The World Economic Forum estimates that more than 1 billion people will need reskilling by 2030 to succeed in the future of work. This reskilling must take a two-pronged approach:
- Help older workers develop the skills to adapt.
- Teach new workers the skills they need to keep up.
Workers already understand this. Forrester research tells us that 41% of employees worry their digital skills won’t meet demand, and 53% find the increasing complexity of work threatening.
While at first glance this may seem grim, it’s an opportunity. Accenture research shows that businesses could claim a slice of $11.5 trillion of economic growth if they harness intelligent tech, but they have to reskill to keep up.
Shifts in the workforce may seem subtle at first, but change will accelerate quickly and steeply as the retirement crisis approaches. Automation is the key to navigating this rising labor landscape.
Robotic Process Automation (RPA) — the central platform for enterprise automation tools — acts as a leading indicator for this widespread automation adoption. Fifty-three percent of surveyed organizations have already adopted RPA, and 19% plan to do so in the next two years. If that rate continues, nearly every company in the world will adopt RPA within the next half-decade.
However, companies looking to get in on the ground floor of automation face a central hurdle: scaling. Deloitte reports only 3% of organizations have scaled to more than 50 software robots.
This means that underneath the surface of early automation adoption lies a potent power for fundamentally transforming work. The retirement crisis could — and should — act as a catalyst to pull widespread automation integration above the waves of the silver tsunami.
Current research is promising. Sixty-four percent of enterprise users report that RPA is an enterprise-wide, strategic initiative compared to only 15% who said the same a year ago.
RPA’s flywheel effect means early deployments that demonstrate potential build momentum for future development, driving some companies to increase RPA spend by 66% of companies in the coming year.
Furthermore, Deloitte reports RPA can save labor hours equivalent to 20% of human capacity initially, at 52% at scale. Beyond productivity gains, 85% of companies said RPA exceeded benchmarks for accuracy, timelines, flexibility, and compliance, too.
Automation technology promises to relieve the stress workers experience from bigger workloads as a result of the human labor shortage and drive enterprise-wide benefits in the process. Not only will this new era curb karōshi worries, but it will also better position companies who embrace it to address the labor shortage and thrive.