Rise of grey-collar economy: An overlooked economic trend

CHENNAI: While much attention is given to AI automation, remote work and the gig economy, a less-discussed but equally transformative trend is emerging—the rise of ‘grey-collar’ jobs and the economic implications of an aging workforce. As global demographics shift, economies will need to adapt to a world where more people are working into their late 60s and 70s, and where industries catering to older populations become economic powerhouses.

Factors converging to make the grey-collar economy a defining feature of the coming decades are:

1.Aging Populations – Countries like Japan, Germany and South Korea already face labour shortages due to rapidly aging populations. Even China and India, long considered young labour-rich economies, are on the same trajectory. By 2050, over 2 billion people globally will be over 60, creating shifts in consumer demand and workforce dynamics.

2. Shortages in Skilled Labour – While many younger workers gravitate toward tech and digital careers, there is a growing shortage of essential workers in healthcare, skilled trades (electricians, plumbers, mechanics) and eldercare services. These grey-collar jobs blend blue- and white-collar skills, requiring language, technical expertise and problem-solving capabilities.

3. Longevity Economy – As people live longer, they require new financial planning models, healthcare innovations and lifestyle adaptations. Industries like elderly housing, specialised elderly care and medical care, fintech solutions for retirees and assistive technologies are set to expand massively.

4. Role of Migration and Skilled Caregivers – Recognising the need for a robust caregiving workforce, countries like India are already training caregivers proficient in languages like German, Japanese, Korean and English to meet global demand. As aging populations in Europe and East Asia struggle with labour shortages, these trained professionals will play a crucial role in providing essential eldercare services.

Governments and policymakers must act now to ensure economies harness the potential of this shift rather than struggle under its weight. Here’s what needs to be done:

1. Retirement Age and Workforce Participation Reforms – Policies encouraging flexible retirement, phased exits from the workforce and incentives for older workers to reskill will be crucial. Countries like Japan are already extending retirement ages and providing tax breaks for companies that retain older employees.

2. Reskilling and Upskilling Programs – Governments should create mid-career and late-career retraining initiatives. Subsidised education programs for workers in their 50s and 60s can prepare them for second careers in growing industries like healthcare, education and sustainability.

3. Encouraging Age-Friendly Workplaces – Laws that prevent age discrimination in hiring, promote flexible work arrangements and improve workplace ergonomics will make it easier for older employees to remain productive.

4. Boosting Investments in Elderly-Centric Industries – Governments should incentivise businesses that focus on senior care, home healthcare and elder-focused financial services. Tax benefits, grants and research funding can accelerate innovation in this space.

5. Facilitating a New Visa Regime for Skilled Migrants – Countries facing severe workforce shortages in eldercare and other essential industries should develop targeted visa programs to attract young skilled professionals. A streamlined migration policy focusing on caregivers, healthcare workers and skilled trades people would help balance demographic challenges while ensuring sustainable economic growth.

The grey-collar economy goes beyond keeping older workers employed by recognising a demographic shift that will reshape labour markets, consumption patterns and economic priorities. Governments that proactively adapt will see a competitive advantage, while those that ignore this trend risk facing labour shortages, pension crises and economic stagnation. The world must prepare for this transition now.

(The writer is a management consultant, who held senior executive positions in leading MNCs)