Why should people care about mature age employment? Malcolm King outlines the key direct effects of demographic contraction on the broader Australian economy.
Here is why. According to the 2010 Intergenerational Report, the worst-case scenario is that by 2050, government spending will outstrip revenue by 2.75 per cent of GDP, with half of all government-spending going towards health care and the aged pension.
We currently spend $121 billion on healthcare. That will blow out to about $200 billion, which will be paid for by our kids and grand kids. Where’s the generational equity in that? I don’t believe the fiscal gap will be that much but who wants to take a chance?
On current retirement projections (always unreliable), demand for employees in the service industry will outstrip supply around 2020. People say to me, ‘so what? We have lots of people, lots of migrants and more are arriving everyday’. That’s true but one third of them leave over a five-year period. Not all of them want to work in the service industry and many simply don’t have the language skills or training.
As the Boomer ‘Pig in the Python’ demographic passes through the workforce, it leaves organisations bereft of workers. The principle economic way to attract workers is to increase wages. So younger people will attract a premium wage (about time I hear some say), as long as they want to work in that industry. Many don’t but that’s another story.
I’ve included three direct effects of demographic contraction.
For the last 20 years, Australia has been very successful in keeping wages from breaking out. Yet this time around it will be employers not workers behind the push to increase salaries to hunt for talent. Wage inflation by sector will rise and it will push up the CPI. How much? We don’t know but an increase of two percentage points would not be far off. Inflation is a cancer that kills savings and value.
Pirating is fun (avast!) until someone poaches your head of IT or someone who is the ‘go to’ person of the organisation. If recruiters and employers can’t get the people they need, they pirate. Over the next 20 years as the post war generation of nurses and aged care professionals retire, poaching will become an epidemic with not a small sense of desperation about it. Adelaide will have to staff its new hospital in 2016 with more than 500 new administration and healthcare professions – it will need to hire from offshore.
Put your managing directors hat on, pull out the SWOT plan and look in to the future. He or she can see labour shortages. Not so in Thailand, Singapore, India or China. Because the Government has failed to correctly design and implement it’s Experience+ suite of programs, most employers are still at the 1970s default position – older workers are a risk, not an asset.
The services and manufacturing sectors can see the writing on the wall. Not only can they access cheap labour but in a SWOT analysis, they can see a shortage of workers and increased costs for the workers they can attract. Some banks on the one hand say they are Corporate Champions of older workers, while on the other hand, they are sacking their older workers and going offshore.
So lets look at how things are going for the Australian Government’s mature age policy push. Even though the $10 million Jobs Bonus for older job seekers was launched last April, it has only attracted 84 candidates. It has taken the Government and DEEWR almost 12 months to get less than 100 mature age people a job. Both organisations could do less on a matter of national importance, but I don’t see how.
Over the last 12 months, the Government has scrapped three important mature age initiatives: On the Job Support, Experience Plus Training, and Job Transition Support. The monies saved from these programs were rolled into the Corporate Champions to help them prepare for the Boomer retirements and the $25.8 million Experience+ Work Ready program. The latter program hopes to provide job-hunting skills and basic IT literacy training for people 50+. After nine months of planning, Work Ready is not ready.
The Department of Innovation, Industry, Science and Research’s $20 million Investing in Experience (Skills Recognition & Training) program replaced DEEWR’s More Help for Mature Age Workers in July last year. It aimed to help up to 5,000 mature age workers to gain nationally recognised qualifications, although rumours suggest the enrolment figure is less than 500 people.
Corporate Champions fiasco
Unfortunately the $15.6 million Champions project, aimed at helping employers prepare for the demographic change as the Boomers retire, will flounder as the Government launched it too late in the electoral cycle. The Prime Minister’s call for a September 14 poll, and the Government’s primary vote standing at about 29 per cent, has squibbed employer interest. Why sign up to a program that will be scrapped if and when the Coalition form government? The project is also extraordinarily complicated.
I had a small hand in getting businesses on board the Champions project in South Australia. I got seven businesses signed up but then between Walter Mitty (a non de plume I was subcontracted to) and Australian Industry Group, which manages the project, they decided to only select two as Corporate Champions. So to Calvary, Western Hospital, Elders, Torrens Transit and Transfield, please direct all enquiries to Minister Kate Ellis. This was a Federal Government policy initiative of national importance.
Few employers, large or small, have heard of the Corporate Champions program and only 250 companies will be selected over the next four years. The scale of the endevour requires at least 2500 Champions. DEEWR Media had done almost nothing to promote the Government’s mature age initiatives.
Each Corporate Champions provider (consultancies) uses a different methodology born from different ‘workplace philosophies’. Many come from the diversity paradigm and believe employers have a moral obligation to employ more older workers because ‘it is the right thing to do’ – much like gender equity.
Whether or not an employee holds their position depends on a raft of factors but some of the most important are merit, performance and the ability to change with the strategic direction of the business. The older worker push is not a diversity or equity issue, nor is it a HR problem. It relates directly to business planning – to capability and profit.
The timidity of the Experience+ and Corporate Champions push matches the will of the Government and DEEWR to place this issue high on the national agenda. It is hoped the Opposition, if it forms government, won’t make the same mistake.
About the author
Malcolm King works in generational change. He was an associate director in DEEWR Labour Market Strategy and has worked in higher education