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How Age Discrimination Affects the Economy

Updated on January 4, 2012

Age discrimination in employment has affected the improvement of the economies of various countries in different ways. The discrimination that mostly exists is that of senior and older workers. Most of these effects of discrimination directed to older workers hinder the growth of an economy.

Losing Experienced Workers

Young people are affected by the age discrimination but the bulk of people who suffer more are the older generation. In Mexico, age discrimination has led the economy to lose experienced workers and hired young workers around the age of 24. The economy suffers when an experienced, knowledgeable and productive worker is laid off to hire a young and inexperienced worker for a lower wage.

Loss of revenue

Most companies lay off older workers in a bid to retain revenue as the older workers tend to lead to more costs and expenses. Older workers need medical bills to be covered, insurance, and retirement benefits once they retire. They use up their life savings and sometimes borrow from banks, using their homes as security. Without employment, these people actually become a drain to any economy. Companies avoid hiring these people so as to save on costs. This has no positive effect on the economy, as the older workers still claim these benefits from the state through government agencies and corporations. In fact the companies end up paying more taxes, and they miss out on additional deductions that are given to companies that hire older workers. Governments normally offer companies relief, and other benefits as a way to entice them to employ older workers.

High turnover rates

Older employees waiting for retirement are more reliable and focused in terms of employment compared to the young ambitious workers. The young workers tend to shift from one company to another, as they search for greener pastures. The older people have lower absenteeism rates as compared to the younger generation. They are also more loyal to their employers and more reliable as they do not encounter problems, such as drug addiction and alcohol abuse. Companies then tend to lose revenue as they have to as they incur recruitment and training costs when replacing.

Shortage of Highly Trained Professionals

In countries such as Korea where age discrimination is practiced at the work place, most of the workers lose interest in investing time and advancing in post graduate degrees that could help them. The country’s economy ends up losing as professionals with these kinds of degrees such as Master’s and PhD’s help advance the economy further. Professionals who may decide to advance their careers by pursuing these courses, either immigrate to other countries or end up getting laid off and are driven to the vast and untaxed labor sector, that has odd jobs and street vending.

Discriminating is a bad practice as it takes useful and productive people, and ends up treating them as disposables. Age discrimination also known as ageism can affect the performance of an economy and the environment at the workplace. It should therefore be tackled from the grass root level. Effective strategies include appraising the culture of the organization and preventive training can help eliminate it. The employer can also revise the hiring and screening processes, to ensure that they do not encourage the practice. Carefully crafted policies that touch on the benefits and retirement can help eliminate any discrimination. Renewed commitment to provide a supportive work environment can be offered to the workers at all ages. Management should be able to come up with a well thought out plan and be committed to it. If all companies would practice these simple steps, age discrimination can be eliminated and the economy would improve.


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