Retire + Health

How the Face of Retirement is Changing on a Global Scale

June 12, 2018
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“A large part of the workforce is getting older and they’re not retiring. Employers in growth markets must prepare for a multi-generational workforce."

It used to be that workers retired around age 65, and then lived off of pensions, savings and family support. But now that people are healthier and living longer, retiring in their mid-60s is no longer as attractive. Many people plan to work well into their 60s and 70s, not simply because they want to, but more likely due to financial need.

Mercer’s recent study, Healthy, Wealthy and Work-Wise: The New Imperatives for Financial Security, looked at the forces that impact financial security and beliefs about retirement. The 12-country study surveyed 7,000 adults across six age groups, as well as 600 senior executives in business and government. More than two-thirds (68%) of the respondents in the study said that they expect to keep working past a traditional retirement age.

Today, the way that people work and ‘retire’ has fundamentally changed. Employers and workers need to adapt. This is especially true in growth markets like Asia and Latin America, which are rapidly expanding and the growing middle class are optimistic about the future. However, they need the tools to make sure they can maintain their newfound, higher quality of life in later years.

Urbanization
 

As these aging populations face urbanized economies, this will also have an impact on the multi-generations of workers and family structures. For instance, in China, where younger generations traditionally support older generations, and with 60% of the Chinese population expected to be in an urban city by 2030, urbanization will shape the physical and cultural fabrics of this thriving country. Chinese families now face dramatically higher housing, transportation, and food prices, not to mention increasingly limited workforce mobility.

Latin America is also one of the world’s most urbanized regions (in comparison, the European Union is 74% urbanized; the East Asia and Pacific region is 50%). By 2050, UN-Habitat predicts Latin America’s cities will include 90% of the region’s population. Latin America, like China, has traditionally had a very family-based culture, so urbanization could also strain family structures and workforce mobility[1].

Time To Retire Retirement
 

Today, on average globally, people expect to spend 15-20 years in retirement. Without better planning, many will either outlive their savings or have to reduce their expected quality of life. These realities will become more acute in many growth economies, where employer sponsored retirement benefits are often immature and government pension systems are threatened by sustainability. The number of working people to retirees will drop dramatically over the next 20 years, globally falling from 1:8 today to 1:4 by 2050[2].

Countries like Chile, China and Brazil will actually halve to 1:2. This puts extraordinary strain on social systems. The strain increases with the high proportion of informal workers in most growth countries. Informal workers can comprise up to 50% of the workforce in some countries. These workers may be unlikely to contribute to or benefit from social security and aged pension systems. In addition to the individual implications, this can also have profound macro-economic implications.[3]

The proportion of pension spend relative to GDP is also rising in growth markets. Combined with an aging population, the sustainability of government pension systems is even lower. For instance, Italy, Greece and the Ukraine have among the highest percentages of pension spend at around 16% of GDP, and these were around 10% in 2000, which highlights how rapidly pension spend is growing. Many other European countries have considerably high percentages (>11% of GDP), including Portugal, France, Austria, Slovenia, Spain, and Finland. For context, the U.S. public pension spend is currently 7% of GDP, while Japan and Hungary are 10% of GDP.[4]

With societies rapidly aging, organizations will need to be far more flexible in providing programs that meet the needs of a wide range of employees – from millennials who typically switch jobs frequently, to informal workers seeking financial stability, to older workers looking to stay healthy so they can work longer and ensure income in their later years. In 2010, the East Asia and Pacific growth regions accounted for 36% of the global population aged over 65 years. Between 2015 and 2034, the older population in East Asia alone is expected to grow by about 22% every five years.[5]

As we navigate aging and urbanized growth markets, employers need to be prepared for a multi-generational workforce. A large part of the workforce is getting older, and they’re not retiring. Further, as more older workers are increasingly likely to live in urban areas, they have less workforce mobility and industry options, not to mention a higher cost of living that will only rise as urban real estate is claimed by the middle and upper classes. This puts a strain on individuals’ abilities to live well for longer.

Different expectations around work and retirement on the part of employers and employees could help both groups. Older workers have significant experience that could be extremely valuable —employers that figure out how to keep these employees contributing longer may have a competitive advantage.

Opportunities for people to work for an additional decade or two (or three), in different capacities or with adjusted schedules, would mean that people would have many more years where they could contribute to savings and investments. Ideally, a steady savings plan over a longer timeframe could be maintained regardless of how people structure their working lives. It may also provide better retirement outcomes for those who take time out of the workforce, structure their work flexibly or work in the informal economy.

On a policy level, it is time to consider raising or even eliminating set retirement ages. Similarly, many countries need to consider providing incentives for people to work past the traditional retirement age. While some growth economies, Singapore for example, have done this successfully, the number of social pension systems that incentivize people to work longer is still small.

What individuals can do
 

Around the world, respondents in the survey felt that planning for retirement was their own responsibility, and for the most part, were optimistic about being able to save. China, for instance, ranked highest in their optimism for the future. Seventy-percent expect to maintain their quality of life after fully retiring. This may be due to the quickly growing middle class and traditional savings culture. While this savings may not necessarily be earmarked for retirement, saving for the future is a part of the day-to-day lives of many in the country.

On the other hand, Japan, which is the second oldest society in the world,[6] has very low financial security, with 72% of survey respondents saying they do not feel financially secure. Only 21% expect to maintain a desired quality of life after fully retiring and only 8% are confident they have saved enough to provide income for retirement. It is not surprising that 78% of respondents are at least somewhat stressed about their financial situation, with the top factors contributing to this stress being personal health, lack of reliance on a state pension, and not saving enough for retirement.

As we face aging societies around the world, not just in Japan, these alarming statistics serve as a warning of the impact a long-term savings gap can have if no action is taken. Although we accept it is our personal responsibility to better prepare for retirement, we are not taking the necessary actions to improve our financial security.

Eighty-five percent of survey respondents were willing to change their current lifestyle, realizing trade-offs - such as saving more or downsizing - were necessary to afford to live longer. 40% were willing to save a greater percentage of disposable income, followed by 32% who were willing to spend less and downsize. 27% were willing to take on part-time work. Respondents were looking for greater guidance regarding the trade-offs they should make.

What employers can do
 

As later-life financial needs vary, flexibility is vital. People want to choose how long they work. A big role employers play is in rethinking their retirement benefits, especially since workers may want to keep working past the traditional age of retirement. This means, in many cases, employers benefit from the experience and skill sets of older workers — especially in the face of a shrinking talent pool.

Employers have much to gain from helping their employees become more financially fit. Research shows that employees who are not financially healthy have higher levels of stress and distraction, leading to lower productivity, poorer customer service and impaired health.

As a matter of fact, the Mercer study found that 40% of respondents globally reported their financial security caused them stress.

The study also found that 79% of adults trust employers to give sound advice about financial planning. Eighty-six percent of employees said that if their employer improved benefits or added access to an investment plan, it would result in higher job satisfaction and greater commitment to the organization. In short, workers are looking to their employers to help them help themselves.

Worrying about money matters at work places a significant drag on productivity — and could be eliminated if employers helped their employees find appropriate financial tools and information to make smarter financial decisions, including long-term savings options. Beyond the practical gains, employers committed to helping their employees attain financial security is simply the right thing to do.

These tools would be especially effective for Millennials. They are the least financially secure generation in the workforce today. Ninety-three percent are willing to use online tools to help track and manage their financial, health and personal data as long as the tools are easy-to-use and their data is secure. Eighty-tw percent of millennials surveyed said they would save more if they understood the impact of those savings on later years.

Some resources, however, do not hold the same level of interest: 52% of all adults are not comfortable with robo-advisors giving automated advice and feel similarly about call centers with financial advisors. This implies people are looking to be treated individually when it comes to guidance and advice.

Employers need to transform savings into an engaging experience and make it achievable through simplified language, tools, and the ability to track savings and progress in real time. This could create the same explosion in the savings industry as we have seen over the past several decades in the fitness industry – aided by the fitness revolution of the 1970s and 1980s, and current digital tools to track, motivate, and improve performance.

Act now to live well later
 

Acting now applies to business and government, and is not solely the responsibility of the individual. The need to adapt long-term savings programs and products to new demographic and economic realities is urgent. The current trajectory could put large numbers of people at risk of poverty, not to mention diminished productivity at work. Applying creative and strategic thinking would transform the future reality for many.

The dynamics of retirement savings need to change to reflect our diverse and modern social systems and work experiences. Financial security should not be the domain of only those with access to employer programs, of one gender over another, or of older generations to the detriment of those that follow. Public and private enterprises must join forces to ensure that financial security is available to everyone, now.

 

1 UN Habitat, 2012
2 United Nations Population Data, 2017
3 World Bank, 2017
4 OECD, 2015
5 World Bank, 2015
6 Central Intelligence Agency, 2017

More in Retire

Anil Lobo | 27 Jun 2019

Supplementary retirement savings plans can provide security and stability for older people who no longer have a steady paycheck — and India's National Pension System (NPS) aims to do just that. NPS is a supplementary Defined Contribution pension plan, and subscription to the scheme is purely voluntary in nature. Like most of the world, India's population is aging, and lifespans are increasing. As a result of improved health and sanitation conditions, the global life expectancy is forecast to increase from an average of 65 years in 1990 to 77 years by 2050.1 For most people, living longer means more non-working years to enjoy. But for growing numbers of people around the world, maintaining enough income to live comfortably during those non-working years is expected to be a challenge. Not only are most older people no longer earning income, but as the years advance, the cost of living and inflation continue to increase. As government leaders around the world consider ways to help citizens prepare for retirement, they can look to India's NPS as a model for boosting retirement savings and helping aging workers avoid poverty during old age. The Basics of India's National Pension System   In 2004, the Indian government launched its National Pension System with the goal of providing retirement income to its citizens.2 The system aims to institute pension reform and foster the habit of saving for retirement. Initially, the program was made available for government employees only, but in 2009, NPS became available on a supplementary basis for all Indian citizens between the ages of 18 and 60. A Tier I NPS account (a mandatory account offering tax benefits) is designed in such a way that it discourages early withdrawal until the account owner reaches retirement age. If the account owner intends to withdraw before retirement age, they are allowed to withdraw only 20%, and the balance has to be used to purchase annuity. The NPS offers a decent tax benefit for its participants — contributions are made before taxes — but a portion of withdrawals are subject to taxes. On reaching the retirement age, one can withdraw 60% of accumulations, which are tax free, and the balance of 40% has to be utilized to purchase annuity from approved annuity providers. One can defer the withdrawal and stay invested until the age of 70 or continue to make fresh contributions, if desired. Tier II NPS accounts provide voluntary savings options without stiff exit penalties or lock-ins. There is a proposal to provide some tax benefits under Tier II NPS, which would require a lock-in period of three years; however, this proposal is yet to be confirmed. Since the launch of the system, the Indian government has created additional social security programs to encourage retirement saving, especially among the working poor. In 2010, the government's Swavalamban Scheme committed to depositing 1,000 rupees into the accounts of each saver who contributed 1,000 to 12,000 rupees into their own account annually and was not covered by a government or employer pension. But in 2015, that plan was scrapped in favor of the Atal Pension Yojana (APY), which guarantees defined pension distributions during retirement for savers who meet certain qualifications based on their contributions. APY also offered a government contribution of 50% of the saver's total contribution or 1,000 rupees per year, whichever is lower, for a period of five years (from 2015 to 2020). India's NPS has gone through a few iterations and continues to evolve, but the plan is helping to boost retirement savings among Indian citizens. It's also shifting citizens' expectations: Instead of relying on younger family members to support them in their old age, many are now adjusting their savings and preparing to support themselves in their retirement years. On top of that, NPS is one of the cheapest investment products. Overall costs of the NPS are far lower than those of other products, and it is perhaps the cheapest pension product available. 3 Lessons You Can Learn From India's Model   For organizational leaders around the world, India's experiment in providing a national pension program for all its citizens offers a number of valuable lessons. 1. Unsustainable National Debt Requires New Solutions   Long before the NPS was launched, India's federal and state government employees were covered by a tax-funded defined benefit pension program that provided a 50% replacement wage at retirement with an inflation-linked adjustment. In the mid-1980s, this program cost the country less than $0.5 billion annually, but by 2006, with people living longer, the price tag jumped to more than $600 billion per year.3 Maintaining the program was unsustainable, and leaders realized they needed to develop a replacement program to ensure successful retirements for future workers and protect the nation's finances. Since the launch of NPS, all new government employees have been enrolled in it, fostering a responsibility among workers to prepare for their own retirement and protecting the government from continuing to run up unsustainable pension debt. 2. Tax Advantages Are Key for Supplementary Retirement Savings Plans   Most participants choose to invest in the NPS due to the tax benefits. However, some Indian citizens report that they did not opt for participating in the NPS as they perceived that some mutual fund instruments and private retirement savings vehicles have greater potential to beat the market and also provide better tax benefits. In order to encourage citizens and promote NPS, the government developed three categories of tax-saving options. The third of these options is exclusively for salaried employees whose contributions are made through the corporate model of NPS. All three categories can be availed together and exclusive of each other. Moreover, there was a recent relaxation in the tax-free withdrawal limit of corpus allowed at the time of retirement (from an earlier limit of 40% of corpus to 60% of corpus). Originally, though 60% was allowed to be withdrawn, the balance of 20% was taxed at normal rates, and making it entirely tax free has made it even more attractive. While a few senior executives may have access to other retirement savings plans, including employer-sponsored Defined Contribution superannuation plans, most of the population (particularly among the working class) do not have access to other retirement savings plans, and hence, the tax advantages inherent in NPS are crucial encouragement for them to save for retirement. 3. Citizens Need Education About the Model's Benefits   While the NPS offers a number of benefits to savers, participation rates remain relatively low.4 Some respondents to a recent survey revealed that not understanding the importance of saving and the advantages of compounding interest could have influenced their choice to stay out. NPS leaders have used a variety of methods for communicating and educating the population about the system. For instance, pilot programs staged in two different geographic areas hosted workshops, meetings and camps targeting unorganized sector workers and key stakeholders. Information was also distributed through cable television networks, radio, mobile publicity vans, seminars and road shows. India continues to measure the success of its pension program and may make more changes in the future. Many countries are struggling to solve the potential challenge of poverty in old age, but the NPS in India is an encouraging step toward protecting the future for many of its citizens, and it's worth taking a look at the model for inspiration. Sources: 1. United Nations: Department of Economic and Social Affairs,"World Population Prospects — 2017 Revision: Global life expectancy," United Nations: Department of Public Information, June 21, 2017, https://www.un.org/development/desa/publications/graphic/wpp2017-global-life-expectancy./ 2. "National Pension System — Retirement Plan for All," National Portal of India, October 22, 2018, https://www.india.gov.in/spotlight/national-pension-system-retirement-plan-all. 3. Kim, Cheolsu; MacKellar, Landis; Galer, Russel G.; Bhardwaj, Guatam, "Implementing an Inclusive and Equitable Pension Reform," Asian Development Bank and Routledge, 2012, https://www.adb.org/sites/default/files/publication/29796/implementing-pension-reform-india.pdf. 4.Zaidi, Babar, "5 Reasons Why Investors Stay Away From NPS. But Should You?" The Economic Times, December 27, 2018, https://economictimes.indiatimes.com/wealth/invest/5-reasons-why-investors-stay-away-from-nps-but-should-you/articleshow/61890679.cms.

David Anderson | 03 Apr 2019

Asian pension systems are facing major challenges. The region is experiencing seismic demographic changes, with rapidly aging populations and declining birthrates. But investment returns are relatively low due to geopolitical uncertainty and minimal interest rates. With the region having relatively few robust retirement systems, many Asian countries will struggle to provide adequate pensions. Governments need to take positive action now to reduce financial pressures and avoid intergenerational conflicts between the young and old. Life expectancy at birth in the region has increased by seven to 14 years in most countries during the last 40 years, according to the 2018 Melbourne Mercer Global Pension Index (MMGPI), which ranks pension systems round the world on adequacy, sustainability and integrity. This is an average of one additional year every four years. The increased life expectancy of a 65-year-old over the last 40 years has ranged from 1.7 years in Indonesia to 8.1 years in Singapore. Much of the rest of the world is facing similar challenges relating to aging populations, and nations are pursuing similar policy reforms. These include raising pension ages, encouraging people to work longer, increasing the funding levels set aside for retirement and reducing the amount of money people can take out of their pension accounts before they reach retirement age. The 2018 MMGPI findings pose the fundamental question: What reforms can Asian governments implement to improve the long-term outcomes of their retirement income systems? The natural starting place to create a world-class pension system is ensuring the right balance between adequacy and sustainability. A system providing generous benefits in the short-term is unlikely to be sustainable, while a system that's sustainable over many years usually provides modest benefits. Without changes to retirement ages and eligibility ages to access social security and private pensions, the pressure on retirement systems will increase, which could threaten the financial security provided to the elderly. Increased workforce participation by women and older workers can improve adequacy and sustainability. Japan, China and South Korea rank near the bottom of the Mercer index. Their pension systems do not represent a sustainable model to support the retirement of current and future generations. If left unchanged, these countries will suffer social conflicts, since pension benefits will not be distributed equally between generations. Japan, for instance, is taking baby steps to reform its pension system by gradually raising the mandatory retirement age of some 3.4 million civil servants to 65 from the current 60 years of age. Japanese retirees can now choose to start receiving their pensions at any point between the ages of 60 and 70, with greater monthly payments offered to those who start at age 65 or older. Having the world's highest life expectancy and lowest birthrate, Japan's population is expected to shrink. This challenging situation is already contributing to skill shortages, which will further impact Japan's shrinking tax revenue base. The Japanese government could improve its pension system by encouraging higher levels of household savings and continuing to increase the level of state pension coverage, since 49 percent of the working age population is not covered by private pension plans. Introducing a requirement that part of the retirement benefit must be taken as an income stream and not a lump sum will improve the overall sustainability of the social security system — as would reducing government debt as a percentage of gross domestic product, as this improves the likelihood that the current level of pension payments can be maintained. China faces different issues. China's unique pension system comprises various plans for urban and rural populations, as well as for rural migrants and public sector workers. The urban and rural systems have a pay-as-you-go basic pension consisting of a pooled account (from employer contributions or government expenditure) and funded individual accounts (from employee contributions). Supplementary plans are also provided by some employers, particularly in urban areas. The Chinese pension system could be improved by increasing the use of workers' contributions to pensions to enhance the overall retirement protection of workers and increasing minimum support for the poorest retirees. A requirement that part of the supplementary retirement benefit must be taken as an income stream should be introduced, as well. More investment options should be offered to pension holders to permit a greater exposure to growth assets, while pension plans should improve their communications with members. Hong Kong should consider introducing tax incentives to encourage voluntary member contributions, thus increasing retirement savings. Hong Kong should also require that part of the retirement benefit be taken as an income stream. Older workers should be retained in the labor market as life expectancies rise. South Korea suffers from one of the weakest pension systems for the poor when expressed as a percentage of the average wage at just six percent. Its system would benefit by improving the level of support provided to the poorest pensioners, introducing a requirement that part of the retirement benefit from private pension arrangements be taken as an income stream and increasing the overall level of contributions. Singapore's well-structured pension system is ranked top in the region and has seen improvements in sustainability. Its retirement system, the Central Provident Fund, provides flexibility to its members, who include all employed Singaporean residents and permanent residents. But more can be done. Barriers to establishing tax-approved group corporate retirement plans should be reduced, and the CPF should also be opened to temporary nonresident workers who comprise more than a third of the labor force. The age that CPF members can access their savings should be raised, as well. Since pension systems are an intergenerational issue, they require a long-term perspective. Pension systems, which are one of the largest institutional investors in any market, should increasingly recognize the importance of acting as good stewards of the capital entrusted to them, including managing risks, such as climate change. With Asia's aging populations staying productive well into their 70s and even 80s, it is critical to improve the provision of adequate and sustainable retirement income. Raising the retirement age, expanding the coverage of private pensions for workers and encouraging financial planning and early savings should be the focus of employers and policy makers. Article originally published in Nikkei Asian Review.

Janet Li | 20 Dec 2018

Quality of life is a powerful force. When a generation of citizens experiences unprecedented economic opportunities and long-term financial well-being, there is a strong desire to maintain—or advance—those standards. In China, a surging middle class is determined to enjoy their comfortable lifestyles well into the future. In addition, a younger generation of tech-savvy and financially sophisticated Chinese employees is redefining the meaning of retirement for a population of 1.4 billion people.  Trust plays a key role. The Chinese strongly believe in the ability of external financial support sources—such as the government, pensions funds, employers, families, life insurance benefits, and financial advisors—to provide for them in retirement. Younger workers just entering the workforce are placing even greater faith in online tools and financial apps to manage their long-term finances. This trust, however, will be tested as China pivots to accommodate larger global economic forces and powerful cultural developments—such as societal aging—as detailed in the Melbourne Mercer Global Pension Index (MMGPI). The Challenges of Adjusting to Change   The MMGPI measures the retirement income systems for nations based on three key sub-indexes: Adequacy, Sustainability and Integrity. A comprehensive analysis of these data sets determines a nation’s overall index rating. For 2018, China received an overall score of 46.2. For perspective, the Netherlands and Denmark received the highest ratings—with scores of 80.3 and 80.2, respectively—and Argentina earned the lowest rating at 39.2. Japan (48.2), Korea (47.3) and India (44.6) all received similar scores to China. Unsurprisingly, these growth economies face domestic and policy challenges that are familiar to China—especially with regard to providing financial support to millions of aging people in an era of declining birthrates.   In 1970, the average life expectancy in China was 59 years; today it is 76.5 years. Aging Chinese workers are living longer and causing seismic changes throughout population demographics in China. Increasing life expectancies will test the nation’s pension resources and the financial power of China’s middle class to support the parents and grandparents who worked so hard before them. Currently, China’s retirement income system entails a rural system and an urban system that leverages a pay-as-you-go basic pension. Those pensions consist of pooled accounts (from employer contributions or fiscal expenditures) and funded individual accounts from employee contributions. In some urban areas, employers also provide supplementary benefit plans. These combined resources, however, are not keeping pace with the needs of China’s aging population.  Communicating a Diversity of Resources The MMGPI’s analysis of China’s retirement income system reveals that the most impactful path forward entails bolstering existing services, implementing proactive policies and educating employees about the various options and programs that best suit their individual needs. Specifically, the index findings recommend that Chinese policymakers: 1. Continue to increase the coverage of workers already in pension systems. Enhancing coverage allows for a more robust safety net for millions of retired workers, raising the Adequacy quotient. 2. Increase the minimum level of support for the poorest aging individuals. This demographic represents the most vulnerable and highest at-risk group in the aging population, and the one that benefits the most from additional support. 3. Require that part of the supplementary retirement benefit must be taken as an income stream. Installment payments or income annuity payments offer a fixed, effective means of paying the bills—especially when used as part of a diversified retirement income strategy. 4. Increase the age to qualify for a state pension over time. People are living longer, which naturally translates into working longer and retiring later in life. This is key to boosting Sustainability. 5. Allow more investment options to members, thereby offering greater exposure to growth assets. Diversification is the foundation of smart investing. Providing more investment opportunities leads to increased financial stability—especially for China’s middle class, which desires new ways to empower their assets. 6. Improve communications and better educate members regarding the details of pension plans. The accelerated emergence of new investing mechanisms, policies and digital technologies means individuals are often uninformed about the latest opportunities.     A Collaborative Quality of Life   Successful cultures strive to provide a dignified quality of life to every member of society. This requires the fair and disciplined acquisition and distribution of assets. In modern China, those assets are largely being created by younger workers, particularly in the growing middle class which has experienced a tremendous rise in wages and opportunities. As China’s middle class increases its appetite for new consumers goods, high-quality luxury products and improved standards of living, it must also come to terms with budgeting for the long term—both for themselves and their aging family members.   Nearly 43% of Chinese workers expect to be able to enjoy their desired quality of life after retiring by increasing their retirement fund contributions and working side jobs to supplement their savings. This demonstrates that significant segments of the Chinese population acknowledge the pension challenges ahead and are taking informed personal actions to mitigate potential future struggles. This engaged approach to personal financial well-being, supplemented by smart retirement income systems from employers and government organizations can empower Chinese workers—from GenY and Millennials to their aging parents and grandparents—with a synergy of resources that will make quality of life a standard part of getting old. To learn more about retirement income systems in China and the rest of the world, download the full Melbourne Mercer Global Pension Index  and visit Mercer China.

More from Voice on Growth

Abdulaziz Alajlan | 17 Oct 2019

For many decades, Saudi Arabia — as a nation, culture and economic force — has been inextricably tied to oil exports and the energy industry. However, a bold new vision, named Saudi Vision 2030, aims to wean the country off its dependencies on fossil fuels through the creation of sweeping new reforms and policies. This vision looks to modernize Saudi Arabia, both as a domestic society and a global financial powerhouse. The Power of Embracing Change   In 2016, Crown Prince Mohammad bin Salman bin Abdulaziz Al-Saud led the unveiling of the Saudi Vision 2030 initiative, which detailed the nation's unprecedented and extraordinary commitment to emerge as a leader in a rapidly evolving world. As oil prices continue to react to new economic realities and regional political forces shape the roles and objectives of nations throughout the Middle East, Saudi Arabia's decision to proactively embrace change could have extraordinary foreign and domestic ramifications. With a population of more than 33.4 million people and a median age of 25, Saudi Arabia faces a future filled with significant challenges and opportunities.1 Saudi Vision 2030 is a road map for how the nation will empower its millions of young citizens to work and thrive in a globalized world that increasingly views petroleum as an outdated and harmful source of energy. A shift in long-established revenue resources and economic paradigms requires a fundamental shift in local workforce skill sets and proficiencies with modern technologies. As other nations are slow to adjust to climate change and other geo-economic shifts, Saudi Arabia is poised to exemplify to the rest of the world how governments can leverage policy reform to enhance the lives of people both inside and outside the country's borders.2 Accommodating a Complex Global Economy   Saudi Vision 2030 will have a profound impact on rapidly growing economies, such as India, that seek to leverage digital transformation while implementing innovative domestic and workforce policies. In fact, the fate of Saudi Arabia and India are becoming increasingly intertwined, as India — unlike many western economies — requires more oil to empower its robust economic rise. Industrialized markets, in areas such as Europe and the United States, are seeking greener alternatives and more electric vehicles for transportation demands, but India remains heavily dependent on fossil fuels. By 2040, India will need to process up to 10 million barrels of crude oil every day to support its expanding economy and progressively urbanized populations.3 Saudi Arabia, a nation that already has a few notable government policies elevating the standard of living for its citizens (such as offering free college education to all citizens), is further internationalizing its economy by prioritizing privatization. The 2030 plan encourages financial institutions to promote private sector growth, marking a significant development in how the country is aligning its domestic workforces to compete in a globalized economy. The focus on increasing privatization and other non-oil industries — such as construction, finance, healthcare, retail and religious tourism — will create new opportunities for Saudi businesses and entrepreneurs.4 Creating a Future Through Indigenous Resources   Saudi Vision 2030 addresses many of the local, cultural challenges facing the nation, such as the role of women in the workforce and society, the impact of digital transformation and automation, and the need to modernize the sensibilities of Saudi businesses. Allowing women to drive and granting them greater access to economic prosperity — with the goal of increasing women's participation in the workforce from 22% to 30% — has generated positive responses with global investors. The 2030 plan also prioritizes domestic issues and the overall health of its citizens, with the stated objective of raising the average life expectancy from 74 to 80 years and aggressively promoting daily exercise and healthier lifestyles for all Saudi citizens.5 The Saudi government also seeks to bring its society into the digital age by implementing more e-government services that will connect citizens to resources through smartphones, data-centric operations and other technologies. This push will also drive human capital out of government jobs and into the private sector. According to the Mercer Global Talent Trends 2019 report, companies in countries such as India, Brazil, and Japan will experience a 70% increase in automation, boosting their need — like Saudi Arabia — to find new roles and professional development opportunities for workers. The 2030 plan offers an ambitious vision for the nation's indigenous resources. Empowering women and integrating modern technologies throughout its economy and government are just part of this comprehensive strategy. By inviting the global economy to invest in its progressive financial mechanisms and bolster tourism through campaigns highlighting the nation's history, Saudi Arabia is poised to lead its people, and the world, into a future forever defined by a new, modern view of the future. Will it work? The world will know in 2030. Sources: 1. Kingdom of Saudi Arabia. "Saudi Census: The Total Population." General Authority for Statistics, Accessed 11 July 2019,https://www.stats.gov.sa/en/node. 2. Mohammed bin Salman bin Abdulaziz Al-Saud. "Vision 2030." Vision 2030, 9 May. 2019, https://vision2030.gov.sa/en. 3. Critchlow, Andrew. "India is too important for oil titan Saudi to ignore." S&P Global Platts, 6 Mar. 2019, https://blogs.platts.com/2019/03/06/india-important-oil-saudi/. 4. Nuruzzaman, Mohammed. "Saudi Arabia's 'Vision 2030': Will It Save Or Sink the Middle East?" E-International Relations, 10 Jul. 2018, https://www.e-ir.info/2018/07/10/saudi-arabias-vision-2030-will-it-save-or-sink-the-middle-east/. 5. "Saudi Arabia Vision — Goals and Objectives." GO-Gulf, 14 Jul. 2016,https://www.go-gulf.com/blog/saudi-arabia-vision-2030/.

Patrick Hyland, PhD | 17 Oct 2019

Feeling stressed by your management responsibilities? If so, you're not alone. In our latest norms, we found that just 67% of leaders and managers think the level of stress they experience at work is manageable; the other third was unsure or overwhelmed. A similar percentage said they struggle to maintain work-life balance. Just half of leaders and managers feel they have enough time to do a quality job, and only 48% feel they can detach from work. These results suggest that anywhere from a third to a half of leaders and managers are struggling to cope with the challenges of their job. When confronted with statistics like these, some just shrug and sigh: "Stress is part of the job, isn't it?" Based on a growing body of research, that's a dangerously defeatist perspective. Aside from the health risks associated with stress, there are a number of dysfunctional workplace dynamics that can emerge when leaders feel rundown, exhausted or emotionally drained. Barbara Fredrickson, Ph.D., for example, has found that negative emotions can trap people in a flight, fight or freeze mindset that limits their ability to think creatively and develop innovative solutions. Janne Skakon and colleagues1 have found that the way leaders cope with their stress trickles down, impacting their employees' own work experience and stress levels. And at Mercer|Sirota, we've found that overwhelmed managers are significantly less likely to recognize and praise their direct reports. If you're chronically stressed at work, it's time to stop buying into the myth that leaders and managers must be selfless martyrs. You're putting your own health and well-being, along with your team's effectiveness and engagement, at risk. Instead of working yourself to exhaustion, start developing a self-care strategy to manage the demands of your job. Here are four steps to consider: 1. Recognize the Warning Signs   Burnout — a state of physical, mental and emotional exhaustion often accompanied by self-doubt and cynicism — is a serious issue. Researchers have found prolonged periods of burnout can lead to a number of physical and mental health problems, including depression, anxiety, heart disease, high cholesterol, stroke and type 2 diabetes. Burnout can manifest itself in a number of ways, including increased irritability, decreased motivation, changes in eating or sleeping habits, or unexplainable aches and pains. 2. Rest and Recover   If you find you are experiencing burnout, you need to take immediate steps to get help. Start by telling someone what you are experiencing. Tell your boss, an HR business partner or a colleague. If you don't feel comfortable telling someone at work, then (a) realize you may be working in a toxic organization2 that is not healthy for you and (b) be sure to tell your family, friends or your doctor. If you remain silent, your exhaustion could lead to isolation and compound your problems. After you have shared your concerns, start finding ways to detach from work. Stop checking email the moment you wake up. Skip unnecessary meetings. Lighten your load. Take a mental health day. If you can reduce your hours or take a vacation, do so. Find ways to rest and reset so you can recover. 3. Reflect and Reorient   After you've gained some distance from your experience, it's time to start identifying the factors that led to your burnout. Start by reflecting on the timeline of events. When did your stress levels first start to rise? What was going on at work? Outside of work? Have you had this experience before, or is this the first time you've experienced burnout? Next, reflect on the nature of your stress. As you've probably heard, stress is not always bad. Researchers have found that challenge stress — the stress associated with achieving an important goal — is positively related to job satisfaction. Hindrance stress — the stress associated with barriers that prevent us from getting work done — is negatively related with job satisfaction. If you've had a burnout experience, you've probably been dealing with a lot of hindrance stress. With that in mind, think about the way work gets done in your organization. Some experts argue that burnout is the result of working in a dysfunctional organization. Finally, consider your own personality, values and attitudes toward work, your organization and your job. Researchers have found that people with certain personality traits are more prone to burnout.3 Through these reflections, your goal is to learn from your experience and gain insights that will prevent future episodes of burnout. 4. Rebuild a More Resilient You   If you have gone through burnout, the good news is this: you can use this experience to become a stronger, wiser and more resilient person. But that will require intentional effort on your part and a commitment to practicing self-care. As you design your own self-care plan, realize that multiple pathways exist. Start by rethinking your approach to your job; you will probably need to change some of your workday habits. Your physical health is critical: researchers have found that leaders and managers are more effective when they are eating right, sleeping well and getting exercise. Your mental perspective is also important: Stanford psychologist Alia Crum has argued that stress can be good for leaders if they know how to manage it. Be sure to consider your emotional response to the vicissitudes of work and life: research suggests that psychological flexibility and emotional agility can make you a more effective leader.4 And as you build your self-care plan, be sure to take a holistic approach, considering all aspects of who you are and what's important to you: research shows that your spiritual life — those aspects of your life that provide a sense of meaning, purpose and coherence — can help increase your resilience. As you consider these four steps, remember this: if you're not taking care of yourself, you're not going to be able to take care of your team — at least not for the long haul. At some point, your patience, your health, your energy, or your effectiveness is going to give. Without some type of self-care strategy, you're doing yourself — and the people who depend on you — a disservice. Sources: 1. Skakon, Janne; Nielsen, Karina; Borg, Vilhelm; Guzman, Jaime. "Are Leaders' Well-being, Behaviours and Style Associated with the Affective Well-being of Their Employees? A Systematic Review of Three Decades of Research." An International Journal of Work, Health & Organisations, Volume 24, Issue 2, 2010,https://www.tandfonline.com/doi/abs/10.1080/02678373.2010.495262. 2. Appelbaum, Steven and Roy-Girard, David. "Toxins in the Workplace: Affect on Organizations and Employees." Corporate Governance International Journal of Business in Society, 2007,https://www.researchgate.net/publication/242349375_Toxins_in_the_workplace_Affect_on_organizations_and_employees. 3. Scott, Elizabeth. "Traits and Attitudes That Increase Burnout Risk." Very Well Mind, May 20, 2019,https://www.verywellmind.com/mental-burnout-personality-traits-3144514. 4. Kashdana, Todd B. and Rottenberg, Jonathan. "Psychological Flexibility as a Fundamental Aspect of Health." Elsevier, Volume 30, Issue 7, November 2010,https://www.sciencedirect.com/science/article/pii/S0272735810000413?via%3Dihub.

Dr. Avneet Kaur | 03 Oct 2019

The use of on-site clinics has been growing in recent years, with businesses realizing the potential for giving access to quality and timely care to contribute to an increase in productivity, reduce absenteeism and improve employee health. But, are you reaping the full benefits of your on-site clinics? Or, are you just focused on meeting legislative requirements? There are three key things you can do to unlock the full potential of your on-site clinics. In a recent Worksite Medical Clinics Survey, employers with on-site clinics saw a return on investment (ROI) of 1.5 or higher. If you're not seeing similar returns, it may be because your on-site clinic isn't moving beyond basic requirements. Create a Patient-centered Clinic   Ensure the services offered by the clinic are suited to your employees. This will eliminate unnecessary spend on under-utilized services and steer you toward investments that will bring a greater sense of satisfaction, positive health outcomes for your employees and, consequently, a positive impact on your bottom line. Understand what your employee population looks like — in terms of age, gender and nature of work — as this will play a large role in understanding what type of health and social care services, as well as specialists, are needed. In addition to demographic information, it's critical to understand the health needs of your employees — for instance, which common illnesses are prevalent and need to be better managed and which key lifestyle risks need to be averted through education or preventative services. Communicate the Value   The adage of "if you build it, they will come" might not be the best way to yield the desired ROI in this case. It's important to shape communications around services offered on-site by highlighting the value they bring to employees: convenience and easy access to care, coordination and orientation toward quality providers, early detection of illnesses, etc. Effective communication will bring increased utilization and early detection, maximizing your investment as an employer while also contributing to the well-being of your employees. On-site Clinic: The Wellness Hub   When on-site clinics are designed and managed correctly, there's a high return for both employer and employee. Well-designed clinics can play a real gatekeeping role, coordinating employee pathways toward high quality providers and wellness vendors. They can also directly provide prevention and employee education services, which are key to avoid acute and costly care events. At Mercer, we help clients implement the 4-C model of effective on-site clinic management. This extends the value of your clinic from meeting legislative requirements to allowing employers to deliver quality health services that focus on value to the employee. To maximize your on-site clinic, reach out to us today.

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