India stands on the cusp of a significant demographic transition, facing a critical opportunity to leverage its aging workforce as an economic asset. As the population ages, the country faces the dual challenges of supporting its elderly citizens and managing the socio-economic impact of an aging workforce.
If managed effectively, the aging population could become a powerful economic asset through what is termed ‘silver dividend’ – the economic potential of elderly individuals in the workforce. While many discussions surrounding India’s demographic dividend have focused on its young population, the silver dividend can unlock the potential of the other half of the workforce.
The silver people
India’s demographic transition has resulted in an increasing proportion of its population entering the silver age, typically defined as individuals aged 60 or 65 years and older.
According to the last Census projections, the elderly population is expected to reach 13.1% of the country’s total population by 2031, with an annual growth rate of 3.28%, up from 8.6% in 2011. As the elderly population rapidly grows, addressing the employment and well-being of older adults has become increasingly urgent.
Several states are already experiencing a higher proportion of elderly residents compared to the national average. For instance, Kerala (12.6%), Tamil Nadu (10.4%), Andhra Pradesh (10.1%), Himachal Pradesh (10.2%), Punjab (10.3%), and Goa (11.2%) have all reported high elderly populations according to the 2011 Census.
Untapped labour
Despite a high elderly population, the concept of silver labour (continued workforce participation by older adults) remains underdeveloped in India.
According to the latest Periodic Labour Force Survey (PLFS), only 26.8% of people aged 65 and above were part of the labour force in 2023-24. It also must be noted that this rate has increased by 5.4% points when compared to the 2017-18 rate.
While life expectancy continues to rise, it is crucial to also enhance the labour force participation of the elderly.
The employment conditions for elderly workers across both rural and urban India remain challenging. However, the dynamics of labour force participation differ between rural and urban areas. The labour force participation rate (LFPR) among elderly workers in urban areas has stagnated from 2017-18 at 16% till 2023-24. In rural areas, it has gone up to 31.2% – an increase of 7.4% points when compared to 2017-18 rates.
Source: Periodic Labour Force Survey (2017-18, 2023-24), based on authors’ calculation.
A significant driver of this increase is the rising participation of elderly women in the labour market. In rural areas, the LFPR of elderly women increased substantially by 10.5% points. However, among the males, the increase happened only by 5.2% points only.
In contrast, the trends in urban areas show a decline in elderly male participation, while female participation saw a slight increase during this period.
These patterns underscore the complex and evolving nature of silver labour in India, especially as rural elderly women increasingly join the workforce.
Two elderly women at Thalsar village in Gujarat. Photo: Adam Cohn/Flickr (CC BY-NC-ND 2.0).
Choice
The increasing participation of older individuals in the labour force has a significant impact on the economy, indicating a positive trend towards realizing the silver dividend. However, it is essential to recognize that many older adults, especially those in rural and informal sectors, are compelled to continue working out of necessity rather than choice.
According to the Periodic Labour Force Survey (PLFS) 2023-24, 81% of rural elderly workers are engaged in agriculture and allied activities, compared to only 23% of urban elderly workers.
This disparity highlights that rural elderly individuals often take on precarious and low-paying jobs in agriculture, construction, or informal service sectors, driven by the need to supplement inadequate pensions or social security benefits.
For many, the absence of comprehensive financial support and rising healthcare costs make continued work an economic imperative.
Furthermore, the participation of rural elderly workers in the manufacturing and industrial sectors – which offer better growth – has remained unchanged, their involvement in the services sector has declined in 2023-24.
Breaking down their day-to-day activities further for the elderly individuals who are unemployed, the Survey reveals that they spend the maximum time on producing goods for personal use, followed by their domestic work, care, and other remaining tasks – in a day.
Notably, they spend no time on learning activities, highlighting a concerning gap in opportunities for skill development.
For those who are employed, the scenario shifts dramatically; they spend the maximum time on work-related activities. And, thus, their work appears to be more productive than their counterparts who are unemployed.
These facts underscore the urgent need to engage the elderly in both learning and employment activities, ensuring they have opportunities to develop new skills and contribute meaningfully to the economy.
An economic opportunity
India’s aging population represents both a challenge and an opportunity. By adopting comprehensive, forward-looking policies, India can transform its growing elderly population from a perceived economic burden into an asset.
Unlike the traditional demographic dividend, which focuses on the benefits of a youthful, working-age population, the silver dividend recognizes the value of older individuals’ skills, experience, and knowledge.
The retirees from the formal sector, with their experience and expertise, present a significant untapped resource. For instance, retired army officers can be engaged in roles related to security and strategic planning. To harness this potential, there is a pressing need for policymakers to develop strategies that identify and integrate retirees into appropriate sectors, ensuring their skills and knowledge are effectively utilised.
Globally, countries like Japan and those in the western world, which have substantial aging populations, are already leveraging their silver workforce. Japan has implemented Senior Human Resource Centres (SHRCs) to offer part-time and flexible work opportunities for retirees, particularly in community services, clerical work, and maintenance, alongside reemployment policies for older individuals. The United States has developed Encore Career Programs, focusing on mentorship and advisory roles for retirees. In Sweden and Germany, flexible retirement ages allow for extended working lives.
For India to reap similar benefits, it must adopt a holistic and proactive policy approach to ensure that older adults can contribute meaningfully to the economy.
Expanding social protection programs and schemes (such as Atal Pension Yojana (APY) and National Pension System (NPS), Pradhan Mantri Shram Yogi Maan-Dhan (PM-SYM), MGNREGA, Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), Garib Kalyan Rojgar Abhiyaan (GKRA), promoting age-friendly workplaces, reskilling older workers, improving healthcare, and encouraging entrepreneurship are essential steps toward turning India’s aging workforce into a driver of economic growth.
Balhasan Ali is Researcher at Institute of Economic Growth, New Delhi.. Rachna Singh is a PhD Scholar from Banaras Hindu University, Varanasi. Gudakesh is an assistant professor at Institute of Economic Growth, New Delhi. The views and opinions expressed in this article are those of the authors.
