Workers getting older all the time

Most HR specialists are acutely aware that Australia's population is ageing.

In the HR profession, there are major questions about the impact on the available pool of labour and skills that will be available to businesses over the next decade. HR people need to devote time now to identifying strategies or succession plans to address the aging issue.

But aging is not exclusively an HR problem, for it will be one of the major challenges for all Australian businesses, large or small over the next decade.

It is a fact that the supply of skilled labour in individual industry sectors may well be insufficient to address labour needs over the next twenty years. To give an example of the extent of the problem, by 2021 the number of people aged 65 and over is likely to total 4 million, and the number of people retiring will exceed those entering the labour force.

While an ageing workforce means declining labour force participation, our declining fertility rates also mean Australia faces markedly slower population growth. Over the entire decade of 2010 to 2020, the working population in Australia is projected to increase by just 125,000 compared with an annual increase of 170,000 at present.

These numbers indicate that Australia faces a potential workforce crisis. As population ages, a relatively low number of mature workers are choosing to remain in the workforce. By 2016, the number of individuals aged 60-64 is expected to almost double.

Meanwhile, the country currently has one of the lowest workforce participation rates for older people in the developed world, with just 49 percent of Australians between 55-64 years of age working today compared to 59 percent in the U.S., 60 percent in New Zealand and up to 65 percent in Scandinavia.

Today, there are approximately six working individuals in Australia for every person over 65 years; during the next twenty years, it is estimated that ratio will be reduced to dramatically.

As a small, open economy, the optimisation of Australia's human resource capacity will be essential to manage the challenges ahead in maintaining and increasing our international competitiveness. Our competitiveness will be linked inextricably to our capacity to be leaders in the knowledge economy. We cannot afford to lose our existing talent to other countries or to waste it through discriminatory employment practices and lack of attention to lifelong learning.

Over the past few years, the national group the Council on the Aging has been appalled at the waste of skills and experience of mature age workers. A number have reported that they can readily find work consistent with their skills and experience in Asia but not in Australia. Others are relegated to jobs below their skill level and many are forced into early retirement.

The Federal Treasurer, Peter Costello has repeatedly outlined plans to encourage older Australians to stay in the workforce longer and allow retirees to take their superannuation accounts as annuities rather than as lump sums.

Mr Costello’s idea is that the aging population is putting heavy demands on the budget, and that the best way to address the problem is to grow the economy by expanding the workforce and encouraging older Australians to continue to work, at least part-time as they pass their retirement age.

According to the Australian Chamber of Commerce and Industry, a culture has developed in Australia that disadvantages many mature-age workers and it is important for employers to take steps to counteract this culture.

The Chamber believes that industry needs to address the changing demographics of the workforce, including the decline of youth entering the labour market over time, and the impact that this may have on the future supply of skills. For example, employers need to develop dual strategies to attract suitable young employees and to retain older workers with enhanced skills.

The Chamber of Commerce also claims that restrictions on part-time work in some awards hinder the employment of older Australians.

Early retirement has become more common in recent years. And while government policy now encourages workers to stay in the workforce longer, the Chamber says that further reforms are necessary in the areas of superannuation, tax-funded pensions, and subsidised aged care.