Companies in the industrialized world will need all the greying heads they can find in a few years, say business consultants and economists. The reason for this change in corporate thinking? Global ageing.

"It's like a sleeping giant because the ultimate effect of this workforce ageing will not be felt for five or six years," said Michael Keane, management consultant at Watson Wyatt Worldwide in Morristown, New Jersey.

Baby boomers - the post-war offspring born between 1946 and 1964 - are hitting retirement and, due to falling birth rates, there are not enough younger workers to replace them.

"In 2006, there will be a very incredible increase in the number of people reaching 60," said economist Bernard Godement of investment house Daiwa in London. "It has a direct consequence on unemployment: the growth of the active (working) population is simply going to collapse over a few years. Certainly, the unemployment story will be taken care of."

Facing up to reality

Still, many companies "haven't faced up to this demographic reality. It hasn't penetrated their minds," said Richard Judy, director for workforce development at the Hudson Institute, a think-tank in Indianapolis.

"Companies still have the mindset of ‘downsize, get people out,"' he said. "They need to think of their workforce as either present assets or future assets."

Without action, ageing could have big consequences for productivity and prosperity in the industrialized world.

David Naude of investment house JP Morgan in Paris said the drop in the labour force and rise in the dependent population could cut per capita living standards by 15 per cent in Europe and 8 per cent in the United States over the next 30 years relative to what they would have been without demographic change.

Even if all the unemployed found jobs, this would not solve the problem. In Europe, for example, assuming all of the jobless returned to work, there would still be a 5 per cent drop in relative per capita living standards, he said.

"Only a significant rise in participation rates - the number of people working - can fully prevent a deterioration in relative living standards," he said.

Companies could end up begging older workers to stay, offering flexible hours, semi-retirement, anything to keep them on the payroll. "If the baby boom retires in the same way the past generation did, this country (the United States) risks not having enough people to do productive work," said Keane.

"The baby boomer population is so large. Generation X (those born between 1965 and 1985) just doesn't have enough people in it to replace the baby boomers."

In Europe, the working age population in Germany, France and Italy will decline by a cumulative 12 per cent during the coming 30 years after having grown by an average of 1 per cent annually during the past 30 years, said Naude.

In the United States, as the estimated 76 million baby boomers age, the group of workers aged 45 to 64 will grow faster than any other age group, according to the US Bureau of Labor Statistics. Under a worst case scenario, if fertility rates stay low and the death rate falls substantially, there could be as many as 76 retirees for every 100 workers by 2030.

In Australia and other countries the same problem looms. Economic forecaster BIS Shrapnel predicts that in Australia, childless couples will outnumber those with children in 16 years. "After 2010, employers will desperately need their older employees because there won't be enough young ones," it said.

"You will have countries and companies having difficulty being as productive and profitable," said Keane. "If they don't have the workforce to do the work, profits will suffer and when profits suffer there is an economic consequence.

Management consultants say that to avoid this scenario, companies must overcome their stereotypes of older workers as uncreative, unproductive, out of touch and expensive.

"There's no law of nature saying young people are more innovative than old people," said Keane. "No one has said you can't learn past a certain age."(Agencies via Xinhua)