A social bias against older workers is weighing on the country’s GDP, according to PwC, which said Australian businesses are stuck in a “cradle to grave” model of career progression with a stigma towards changing careers and taking a step back.
“Employing more mature workers doesn’t block the path for younger workers, it actually makes our nation stronger, as more workers generates more demand and therefore more jobs in the economy,” said PwC global people business leader Jon Williams.
“Businesses who make better use of the skills and experience of older workers gain a real competitive advantage at a time when their customer bases are also ageing.”
Australia recently jumped five places to 15th in OECD rankings for employment of mature age workers, buoyed by the Federal Government’s efforts to increase participation and supporting our ageing workforce, according to Williams.
“While Australia is in the middle of the pack moving from 20th to 15th place among the 34 nations, New Zealand continues to excel, maintaining its second place behind Iceland,” he said.
“If Australia could match New Zealand’s mature age employment rate, Australia could generate an annual average increase of $24 billion in nominal GDP.”
PwC modelling based on Federal Treasury’s Intergenerational Report which projects the economy out to 2050, shows that increasing participation among mature age workers to New Zealand levels will at that time:
- increase GDP by 4.7 per cent or $198 billion at today’s value
- improve the Commonwealth and state/territory budget by 1.7 per cent of GDP
- reduce net debt by 11 per cent GDP in 2050
Improving mature age recruitment
A new report from the CIPD in the UK also highlighted the importance of valuing older workers, and it urged organisations across all sectors to take steps now to reap the benefits of a more age diverse workforce, rather than fall victim to a mass exodus of skills as their workforce ages.
It found that the health and social work, education and public administration sectors are most at risk of skills shortages due to the ageing workforce.
This is because they are not only highly reliant on older workers (around a third or more of their workforces are over 50), but also struggle more than other sectors to remain attractive places to work for older workers.
“The reality is that organisations need to get to grips with the ageing workforce challenge today or face skills shortages that will affect their ability to grow or deliver key services in the very near future,” said Ben Willmott, head of public policy at the CIPD.
“Too many employers are sleepwalking towards a significant skills problem that risks derailing their business strategy if not addressed.
“Not enough organisations are thinking strategically about workforce planning or even know enough about the make-up of their workforce.”
He said employers need to recognise the value that older workers can bring to their organisation when recruiting new staff, continue to invest in people’s training and development at different stages of their careers and think about how they can transfer the knowledge of an aged workforce to other parts of the business when they do retire.
“In addition it is increasingly in employers’ interests to think about how they can support the health and wellbeing of their staff and provide more flexible working opportunities to allow older workers to downshift and benefit from more gradual transitions into retirement if that is what they want,” said Willmott.
5 steps to addressing the ageing workforce
The report outlines five essential components that should form an organisation’s strategy to address the ageing workforce challenges:
1. Inclusive recruitment: employers must ensure that they do not, intentionally or otherwise, exclude relevant talent from their recruitment processes. This means, for example, that they do not screen out candidates by requiring unnecessary qualifications that could discriminate against older or younger candidates, for example requiring that people are university graduates when a degree-level qualification is not actually needed to do the job.
2. Improve the capability of line managers: ultimately someone’s decision to leave the workforce can be the result of a failure on the part of managers to appropriately understand the needs of those they are responsible for. Line managers should be appropriately trained to ensure that they are able to meet the needs of a diverse workforce.
3. Invest in training, development and performance management: all employees, regardless of age, need training to keep their skills up to date and enable them to progress and develop their career. Older workers are less likely than their younger colleagues to take part in training, either because they are not offered opportunities to train, they are not encouraged to take part or because they fail to put themselves forward for training opportunities.
Providing older employees with opportunities to retrain and develop their skills is a vital part of ensuring that they continue to feel motivated and challenged in their role. Employers need to ensure that older workers are not overlooked for training and they receive development opportunities and opportunities to progress their careers.
4. Support employee health and wellbeing: poor health is one of the biggest reasons for economic inactivity amongst those in their fifties. While good line management is clearly important in ensuring that any health problems are flagged up early on, employers should also offer access to many other forms of support, including occupational health advisers and counselling services to address mental health where appropriate.
5. Move towards more flexible working: providing flexibility for workers who are more likely to have ill health, caring responsibilities and other commitments on their time must form a key component of any strategy to improve staff retention. While employees currently have a right to request flexible working, employers do not have to grant it, but, in our view, they must be duty-bound to accept the request unless they can show that it could cause irrefutable damage to the business.
And at the very least, employers should think about how, in the longer term, they could facilitate flexible working. In that regard, business and HR leaders need to consider the business case in their organisation for providing flexible working practices that match employee demand and at the same time meet the requirements of the business.
Source: Avoiding the demographic crunch: Labour supply and the ageing workforce. Image source: iStock