Companies in the rich world are confronted with a rapidly ageing workforce. Nearly one in three American workers will be over 50 by 2012, and America is a young country compared with Japan and Germany. China is also ageing rapidly, thanks to its one-child policy. This means that companies will have to learn how to manage older workers better.

Most companies are remarkably ill-prepared. There was a flicker of interest in the problem a few years ago but it was snuffed out by the recession. The management literature on older workers is a mere molehill compared with the mountain devoted to recruiting and retaining the young.

Companies are still stuck with an antiquated model for dealing with ageing, which assumes that people should get pay rises and promotions on the basis of age. They have dealt with the burdens of this model by periodically "downsizing" older workers or encouraging them to take early retirement. This has created a dual labour market for older workers, of cosseted insiders on the one hand and unemployed or retired outsiders on the other.

But this model cannot last. The number of young people, particularly those with valuable science and engineering skills, is shrinking. And governments are raising retirement ages and making it more difficult for companies to shed older workers, in a desperate attempt to cope with their underfunded pension systems.

Feb 4th 2010 | From The Economist print edition [adapted]