India’s young, growing workforce and China’s ageing population put Asia’s two great economies at either end of the age dividend. In this article we explore how businesses will need to respond.
Harish HV, a partner at Grant Thornton India, says giving young workers the freedom to be creative can drive innovation and growth
The figures tell the story: India’s population today is around 1.3 billion, and it’s projected to reach 1.4 billion before long. More than half of that population is under 25 and with over 200 million of that segment between the ages of 18 and 25, India has a strikingly young workforce.
The rapid pace of liberalisation, globalisation and technological development experienced by India has created a generation of young people who are entering the workplace having experienced more choice, affluence and independence than any of their elders. Not only that, they are acutely aware of career opportunities that exist beyond India.
Whereas their parents and grandparents might have stayed with the same company for life, slowly working their way up the ladder, today’s young workers feel less loyal towards their employers and are much happier to job-hop to achieve their aspirations. Traditional notions of respect for ones elders are being replaced by respect for competency and knowledge, in the workplace at least. That means young workers are more likely to respond to colleagues they admire professionally compared with command-and-control leaders.
What young workers want
Nowhere are these characteristics more evident than in India’s IT sector, where more than 60 per cent of employees are younger than 30. Managing in a multigenerational workplace, a study by HR consultant Puja Kohli, conducted in collaboration with Indian IT industry body Nasscom, suggests young employees look for three things in a good employer: building skills and competencies; freedom and empowerment; and recognition and appreciation. Kohli identified multiple aspects of working life that fell under the freedom and empowerment category, from vocabulary and dress code to work-life balance and use of social media.
Many IT companies are already responding, in small ways, to the new expectations that young workers have of them. IBM India allows employees to connect their own devices to the organisation’s IT system, with the required security measures. An internal social networking platform allows workers to raise queries, post views and interact with colleagues without having to go through their superiors.
Other sectors are adapting to younger workers’ preferences too. The retailer Future Group in Mumbai, for instance, allows its employees to start work any time between 8.30am and 10.30am, and leave once they have finished eight hours. This allows them to beat the traffic, and also helps to develop a sense of responsibility and self-motivation – two factors that keep them happy and fulfilled and encourage them to stay with the company.
Cultural shifts are needed
Specific initiatives like this are a good start but to really get the best out of young workers, companies need to make bigger cultural shifts such as breaking down old hierarchies and involving all employees in decision-making. They also need to get better at setting a clear organisational vision and direction and equipping employees with the knowledge and skills to help achieve that vision. When they have varied, interesting work and opportunities to progress, young workers respond with energy and enthusiasm.
Employers that fail to understand this younger mindset are likely to experience lower rates of employee engagement and productivity and higher rates of attrition. Most damaging will be losing out on attracting the best talent and the ideas that they bring to the table, which will have a knock-on impact on competitiveness.
That’s the lesson for any mid-market business in India. You can benefit from demographic advantages with a young, dynamic workforce that can drive innovation and find new business opportunities – if only you can provide the flexibility that will set them free to do so.
China’s companies need to adapt their working practices to help experienced older employees stay in the workplace for longer, says Grant Thornton China partner Shannon Tan
China has become accustomed to rapid growth, not just in the economy but also in the working population. Now this growth is slowing and China has to find some answers to the challenges this poses.
For the government, the falling birth rate is providing a stress test for the social welfare system. One response is to plan raising the retirement age, which was set back in the 1950s at 50 years old for women and 60 for men. Another has been to ease the strict one-child policy, which was brought in during the 1970s to limit population growth.
For industry and for individual companies, the same phenomenon means that the workforce is getting older. As more experienced workers reach the end of their careers, there is a growing shortage of young people to take their place.
Companies that can’t respond to the new conditions – particularly in the manufacturing sector – are facing serious shortages of young staff and loss of expertise.
Better operations and technology
Partly it’s a problem of accepting that the decades when limitless cheap labour fuelled China as the manufacturing engine of the world are gone. Companies with an eye to the future, such as Shenzen CHC Electronics Co in Guandong, are moving up the value chain – outsourcing manufacturing to neighbouring countries and concentrating on research, development and design.
Technology can help – the efficiency and productivity that come from robotics, automation and computerisation can transform a business. In Zhejiang Province, Ningbo Heran Import and Export Co traditionally employed scores of workers hand-knitting socks – now it produces 500,000 socks a week from a single Swiss hi-tech production line.
A shortage of younger workers can actually help to enforce better working practices and encourage investment in such technology. Those companies that respond in the right way are building leaner, more efficient, more profitable businesses, and they are thriving.
But operational and technological improvements can only take you so far. To remain competitive, China’s companies will need to harness the talents of their ageing workforces.
Harnessing the skills of older workers
There are many ways to do this. Flexible working arrangements allow older employees to remain in the workplace without taking on the pressures of a full-time role. Flexible retirement policies – under which workers can choose their retirement age, the time it takes to retire and the nature and intensity of work in the run-up to retirement – can also help. Re-employing retired workers on a flexible basis is another option. China’s state owned enterprises often re-hire their most highly experienced retirees as consultants or mentors to younger workers.
For employers, the benefits of retaining older workers are multiple. Not only do they tend to be consistent in their performance levels, they display greater loyalty compared to their younger colleagues, and have greater specialist and technical expertise. They contribute to the creation of multigenerational workforces, whose different perspectives can often spark creativity and innovation.
Boosting workforce productivity
Alongside more age-friendly policies, China’s companies will need to change the way they think about workforce development. Here, China has a lot to learn from other economies, such as the US, where they provide lifelong learning for their employees as a matter of course. Imaginative training, career breaks, secondments to other jobs and other departments, sabbaticals – these are all ways to change the environment for workers that will broaden their experience and make them much more productive and, at the same time, improve their quality of life.
The fact is that, in the future, China is going to have fewer people making things and doing all the jobs that it has got used to. But this is not China’s challenge alone. Mid-market companies in all countries must work to understand the demographic trends within their domestic and overseas markets – be they related to age, gender, skills or any other indicator - and consider how they need to adapt their own working practices to turn those trends into competitive advantages. Automation and flexible working practices are just two examples of adaptation; there are many more ways to make the most of the talents of the available workforce.
Whatever route they choose, employers are increasingly going to have to look at, rethink and change the way they operate. And that’s a good thing.
Adapting to changing demographics can be a significant challenge for any mid-market business. To speak to Harish, Shannon or any of our Grant Thornton specialists in Asia and around the world about how to turn these challenges into opportunities, please visit our Grant Thornton India and Grant Thornton China websites.