Do older workers really reduce firm productivity?

Abstract

In this article, we examine the effect of workforce ageing on company productivity, using an analysis based on Korean firms. We found that an increase in the ratio of workers aged over 50 years to total workers had a negative effect on value added per worker, which was consistent with the findings of most previous studies based on European data. However, the results of the analysis, including various classifications such as size, industry and several financial conditions, revealed that an increase in the ratio of older workers had positive effects on value added per worker in large manufacturing firms under risky or growing conditions. As the productivity of older workers may vary, future research may determine under what conditions - size, industry, region and financial conditions - older workers contribute positively to productivity. Firms with financial troubles or those planning to downsize should be cautious about laying off older workers as an approach to improving organisational performance because these workers contribute positively to productivity under certain conditions.