Sea Change and the Workplace: How age is changing Australia
Ron Haggar Memorial Address 2004 by Pru Goward, Federal Sex Discrimination Commissioner
Australian Institute of Management, Employee Relations Management Group and the Industrial Relations Society of Victoria, Melbourne, 22 July 2004
- John Boyce, General Manager, Corporate Services, The Australian Institute of Management for Victoria and Tasmania.
- Geoff Fary and Lou Gheller, co-chairs of the Australian Institute of Management's Employee Relations Management Group.
- Julie Hansen, President, Industrial Relations Society of Victoria.
- Ladies and Gentlemen.
- Thank you for inviting me here today.
- It gives me great pleasure to address the Ron Haggar Memorial Luncheon.
- The late Ron Haggar made a significant contribution to industrial relations management in Victoria.
- In his honour, I would like to use this opportunity to discuss an issue of increasing significance to industrial relations management in Australia today. An issue increasingly on today's political and public agenda - how age is changing Australia.
- As Australia prepares for the baby boomers to go from being our largest group of tax payers to the group most likely to be dependent on tax payers, we are faced with a demographic shift that has everyone - from the prime minister to the baby boomers themselves - talking, planning and preparing.
- The level of concern surrounding this shift is understandable.
- There are implications for our economic future, public policy planning and of particular relevance to your work, for the workforce.
- Australia is one of a few OECD countries projecting continued labour force growth over the next 40 years.
- However before we get to excited, this growth is only at a rate of 14 per cent and those aged 55 to 64 are expected to be the fastest growing group of labour force age. [1]
- In fact, the age group expected to experience the smallest labour force growth between 2000 and 2016 are those aged 20-24.[2]
- Traditionally, labour force growth relies on the young - eager, fit and bursting with new ideas.
- Our expected labour force growth will be the result of a growth of an ageing workforce, which raises a number of challenges for us:
- First, how does the workforce best accommodate this surge in the number of older workers?
- Second, how do we maintaining maximum workforce productivity and economic growth while doing so?
- Workforce replacement of the baby boomer generation was always going to be challenging.
- Population wise, they make up the largest group in Australia - look at the impact of their aging on our population spread more generally:
- Over the next two decades the 55 to 64 age group is expected to increase by more than 50 per cent.[3]
- Over the next four decades the proportion of the population that is very old, that is over 85 years of age, is expected to triple.[4]
- The only way we could have ensured workforce replacement of this group 'worker for worker' was for the next generation to be the same size as the baby boomer generation and the nature of working and the workforce to be exactly the same - basically, we needed to clone the baby boomer generation.
- Unsurprisingly, we have failed to do this - baby boomers had less children than their parents. The nature of work, and the workforce has also changed.
- We require a more innovative response.
- It needs to be long term and globally competitive too as we are part of a developed world expecting an estimated shortage of 60 million workers by 2020.[5]
- So, where do we begin?
- One approach is to focus on keeping older people in the workforce.
- There is sense in this approach - first it keeps our big group of baby boomers working, generating personal income and contributing to economic growth.
- Second it that the knowledge, experience and expertise of this group is a highly valuable workforce resource.
- The government has already committed itself to continued employment for older workers as being part of the solution with the introduction of its new age discrimination legislation.
- Passed in June 2004, the legislation will, amongst other things, prevent discrimination in employment based on age in relation to offers of employment, terms and conditions of employment, access to promotion and training, dismissal and other detriment suffered.
- Obviously alone this legislation cannot ensure older people remain in the labour force.
- While its existence sets the standard of expected behaviour - practice and attitude must follow.
- The legislation must be coupled with public awareness on age discrimination and attitudinal and practical change towards older workers.
- If we want to keep older workers in the labour force, we also need to consider why older people stop working.
- Like other groups in society, older workers are not a homogenous group.
- They leave the workforce for a range of reasons. Physical and mental health constraints may form the reason, or part of it. However, there are a number of other barriers which prevent certain older workers from remaining in the workforce. Of greatest concern are those systemic barriers preventing older workers from remaining in the workforce.
- These need to be identified and addressed.
- Broadly speaking, there appear to be three groups of older workers.
- First, there are those who identify with work.
- Members of this group are likely to have autonomy and control in their jobs. They are likely to want to stay on longer and will probably flourish doing so.
- Second, there are those who hate work. This group cannot wait to get out of the workforce however their financial situation prevents them from doing so.
- Third, there is a large contingent of older workers - men mainly - who hate work but don't know how else to define themselves, except as breadwinners, so they want to stay on in the workforce longer.
- Policy makers often approach workforce retention issues with the first group in mind.
- They work on the assumption that everyone loves their jobs, everyone is energetic and engaged and wants to stay in the workforce longer. While this may reflect their life experience (and says a lot about the job of a policy maker!) or the experiences of those closely connected to them, it is far from an accurate description of the workforce!
- Call centre or factory workers, for example, are unlikely to be bounding to work with unbridled enthusiasm day after day, year after year.
- For those older workers who want to stay in the workforce because they love their work the barriers to workforce participation are most likely to be health constraints, employer perceptions/actions and legislative restrictions. For example, legislation stipulating that magistrates in New South Wales retire upon reaching the age of 65.[6]
- Age discrimination legislation, flexible work practices and workplaces that can physically accommodate the needs of older workers will go a long way in keeping this group of older workers in the labour force.
- Once we have all of this in place - no small task in itself, we only have the majority - groups two and three - to worry about!
- Because the majority of older workers, and most workers in general, are likely to fall into these categories - work is their ticket to retirement.
- To improve the workforce attachment of this group, we need to make work a more pleasurable experience for them. This may involve restructuring the workforce so that it better accommodates their needs and wants.
- Some of this change will occur organically for older workers - as the baby boomers age, the number of experienced workers who can work ridiculous hours for example, will dwindle.
- It will be impossible to base our workforce notions around those who can do a '60 hour week' when the majority of workers no longer can do this and we do not have enough younger workers to take their place.
- In keeping with their general 'power in numbers' affect on society - the working hour standards the baby boomers set will continue to be the norm.
- The workforce restructure to keep older workers working will also require research into what makes older workers like and dislike their work.
- We may find, for example, that older workers want greater autonomy in their workplaces and reducing control based hierarchical structures is important to them.
- This would be a major workforce restructure - but we are faced with a major workforce problem.
- If we are committed to workforce restructuring, and long term workforce sustainability is our ultimate goal, perhaps we need to be broader in our approach than just restructuring to suit the needs of older workers.
- There are a number of reasons why.
- Firstly, older workers are more likely to be worn out, weary and cynical about working than most other groups.
- 'Gone fishing' is closer than ever before and if financial constraints are all that are prolonging retirement day, a workforce restructure aimed at this group may be limited in both its effectiveness and long term impact.
- Second, even if a workforce restructure accommodated every need and want of older workers, the reality of aging means that while this approach saves us from an imminent labour force shortage, this group will still eventually reach an age where they can no longer work - sooner rather than later.
- Policies and laws which are directed specifically at the baby boomer generation are fine for now but there is nothing to suggest that the problem of a shrinking, aging workforce will not be around for the next generation.
- In fact, as our fertility rate continues to decline, there is nothing to suggest this problem will go away.
- Our economy is going to be increasingly reliant on people working for longer.
- So long term - how do we prevent premature and frustrated workforce exist? How do we reduce the chances of early burnout? The desire for early retirement?
- We better integrate work into our lives across our lifetimes.
- Current workforce and taxation arrangements present most families with 'all or nothing' as the most viable option.
- Today's family needs two incomes to survive, yet is discouraged from having both parents engaged in the workforce.
- So we have men who never see their children awake because they are working 7 days a week and by the time they get home at night they are fast asleep. Perhaps they feel the only option for them is to retire as quickly as possible so that they have all day to spend looking after their grandchildren, to make up for lost time.
- And women, who due to their detachment from the workforce during key earning years, find themselves in financially dependent or poor in old age.
- The desperate need for early retirement to 'have a life', the economic insecurity for women will be diminished if we can all better balance work and family - if we can all work and parent as part of our lives.
- That way, we can do both for longer and everyone wins.
- But it needs us to make two basic changes.
- One - to supporting men in a more active fathering role.
- Two - to supporting women in the workforce.
- How we achieve each of these is a topic in itself and one we will have to leave for another day.
- There is also no point being concerned with the how if we have not yet been convinced of the why.
- Why is greater engagement of men in families so important
- Why is female workforce attachment so essential?
- Let's consider this second question - it is relevant to today's discussion on the labour force implications of aging.
- We need to have women actively engaged in the workforce because today, more than ever before the linkage between the rights of women and economic growth is strong.
- Fact one:
- The aging of the workforce will lead to a rise in aged dependency rations. By the year 2040 there will be double the number of dependents per tax payer.
- This means the need to engage women in work is even stronger. With declining fertility rates, dependency ratios are only likely to increase for most of this century.
- Fact two:
- Today, with the increasing emphasis on self sufficiency in old age - the privatisation of old age we must reduce the ever widening up of a gender divide in the standard of living of our elderly.
- Fact three:
- Today with equality of access to education, especially higher education, it no longer makes sense to under use half that product - or in some cases, more than half the product.
- Education today just costs too much.
- Fact four:
- Today, with the globalisation of trade, it is increasingly urgent that Australia have not only a larger work force but a more meritorious one also so it can compete with the best in the world.
- Fact five:
- With the changing nature of work it is crucial that women be enabled to continue contributing to their family's living expenses.
- Allow me to look at each of these in turn:
- An ageing Australia.
- We have discussed this, but the final twist is the number of tax payers needed to support each aged person.
- And for longer- people are now expected to live about a third of their lives in retirement, and the last few years of that retirement are very expensive, especially for health spending.
- Not only do the large number of baby boomers mean that each tax payer will have more old people to support than the tax payer of today, as fertility rates continue to decline, so this dependency ratio will increase.
- Without the option of immigration, the only way of increasing the tax payer base will be to engage more women in work for more of their lives[7] .
- There is certainly room for this.
- Australia's female participation rate of 55 per cent is one of the lowest in the Western world- not as low as the Arab world perhaps, but lower than most European countries, lower than the UK and the US.
- This is low during the child bearing years, especially for mothers of under fives compared with women elsewhere.
- But it is also low for women aged 45 and above.
- Perhaps they drop out to keep their older husbands company or to care for elderly parents, but ultimately they lose income, savings and accumulated wealth to fund their own retirement.
- Unless we are prepared to contemplate enormous changes to welfare payments or to superannuation arrangements, women who have not provided for their own old age are to be pitied.
- The looming burden of aged care for baby boomers has encouraged governments to privatise old age- in particular to encourage superannuation so that people can provide for themselves and pay full price for their pharmaceuticals.
- Sadly, the working lives of women, at least at present, suggests that they will be the losers from this.
- Already women are two and a half times more likely to live in poverty in their old age than men, because they have contributed so much less to superannuation.[8]
- In general, Women forgo between $157,000 and $239,000 - depending on education level - in lifetime earnings from having one child.[9]
- By the year 2019, men, on average, will have accumulated double the superannuation that women, on average, will have done.
- And that is only the early days of full blown, 9 or 12 percent superannuation contributions.
- This disparity may not be so dire for a woman and man sharing a retirement income but today's high divorce rate, between one in two - three marriages end in divorce, means that this pooling is far from guaranteed.
- And don't forget that widows rarely continue to receive the full amount of superannuation enjoyed by their husbands.
- Women's superannuation saving have and will continue to take on increased significance for women's economic security.
- It would be very sad indeed if women, the centre-pieces of our families, ended up living in poverty in their retirement because they put their family caring responsibilities first. If for no other reason, women must be encouraged to continue working for as long as possible.
- The economic imperatives of international trade, including the trade in skilled labour, in addition to the high cost and necessity of further education again makes paid work for women a desirable economic and social goal.
- Women today constitute 55 per cent of all Graduates, their education and training cost billions of dollars.
- We are grateful for their skills, training, practice and education.
- They help make us competitive on the world stage.
- The investment we the tax payer makes in their education, to say nothing of their own and their parent's investment, must earn a return.
- It is no longer enough, when we are talking high tech degrees in science or engineering, or places in elite courses such as law and medicine, to wave our hands magnanimously, as my headmistress used to, and say "you educate a woman and you educate a whole family".
- You may, but you also spend considerable resources doing so that need to also meet national interest goals.
- At this point, people often think to suggest that immigration would be the answer.
- Well yes it would be, the only trouble is every other country has worked out the same thing- and skilled migrants have become valuable traded commodities for which countries bid enthusiastically.
- Shipping over tens of thousands of well educated Britons or Canadians or Indians is just not possible- we are all busy poaching from each other.
- Last year 40,000 migrants left Australia permanently- and you can be sure they were among our best and brightest, looking for challenges.
- We need to market ourselves as a people-friendly employer just to keep pace with the rest of the world.
- Finally, there is the changing nature of work.
- Today, we see increased casualisation, increased contract work, increased self-employment.
- Historically at the low skilled end of the spectrum, people move in and out of work frequently, and there are weeks of each year without any income coming in.
- Women in these circumstances work to ensure that the risk of no income at all is diminished, that there is always something coming in.
- Women in low socio-economic families always have done this- it is just that today, with casualisation and contract work, it is now a feature of higher income households.
- With Australia's divorce rate over a twenty year period sitting around 45%, perhaps it is also true that most women, even if at the very backs of their minds, know they might have to one day be their family's main provider.
- The continued engagement of women in the labour force is essential for women's security, for labour force maintenance and growth and for our economic development.
- BUT it will only work if we do it properly - if we acknowledge that women bear children and need to be accommodated for them in this capacity.
- Policies such as paid maternity leave encourage women to maintain their workforce attachment.
- Then there is our attitude and policies concerning child caring and parenting more generally, another key element to maintaining our labour force.
- Why? Because a workforce where all people are happier across their lifetime - where they feel valued, where they can find a sense of purpose AND where they are all understood as being more than just an employee is a workforce where people will want to be.
- What we are talking about is a work force that fosters a work-life balance across all ages and stages of life. Now that is a long term solution.
Thank you.
1. The Department of Treasury Intergenerational Report 2002 -03 at http://www.budget.gov.au/2002-03/bp5/html/index.html 22.
2. Labour force predictions from beehive/coffin presentation based on ABS Labour force survey (2000 statistic). The data for the 2016 projection is from ABS 6260 Labour Force Projections Australia 1999 -2016).
3. The Department of Treasury Intergenerational Report 2002 -03 at http://www.budget.gov.au/2002-03/bp5/html/index.html 22.
4. The Department of Treasury Intergenerational Report 2002 -03 at http://www.budget.gov.au/2002-03/bp5/html/index.html 19.
5. Based on research conducted by Boston Consulting Group commissioned by the All India Management Association.
6. s44 Judicial Offices Act 1986 (NSW)
7. Or for us to give up on the notion of retirement.
8. “… there are 106,000 poor single women over 65 as compared with 40,000 men in this group in 2000” Senate Community Affairs References Committee A Hand up not a hand out: Renewing the fight against poverty: Report on poverty and financial hardship, Commonwealth of Australia 2004, p211.
9. Bruce Chapman and Matthew Gray The Foregone Earnings from Child Rearing Revised Discussion paper No 47 Centre for Economic Policy Research Australia National University Canberra 1999.
