Introduction

The Australian Government released its second Intergenerational Report in 2007, which was based on data from the 2006 National Census.  This Report, like the 2002 Intergenerational Report, highlights the key facts surrounding the ageing of Australia’s population and the implications for Australia of the ‘Baby Boomer’ generation moving into retirement.
The key features of Australia’s ageing population are:

• As at August 2007, the median age of the Australian population was 37 years; an increase of 7.6 years in the past 25 years
• 13.3% of Australia’s population is aged 65+
• 24.3% of the population is aged 55+, an increase of 2.3% in just 5 years
• The Australian Bureau of Statistics projects that by 2051, 25% of Australians will be aged 65 or older
• The average intended age of retirement is around 62 years, up from 58.6 in 1996
• Life expectancy at the average effective retirement age is now 23 years for men and 26 years for women, about five or six years longer than it was 30 years ago

The implication for employers is that the makeup of the Australian workforce is already undergoing dramatic change, with the rapid ageing of the population that was forecast in the last Intergenerational Report already occurring.

The most dramatic change that is already noticeable is the rate of inflows of younger people has already started to fall.  For example, while the working-age population grew, on average by around 175,000 every year from 2000 to 2005, it is expected that this will fall to 138,000 in 2010 and an average of about 57,000 a year in the period 2020 to 2030; partly due to relatively low fertility rates. 

Second, existing employees are getting older, and there has been a tendency for many of them to retire as young as 55 years of age and for employers to target recruitment strategies at younger and traditional prime-age segments of the labour market. (Workforce Tomorrow: Changing Labour Markets, DEWR, 2005). The result is employers are competing for a shrinking segment of the workforce.

It is projected that labour market growth in the period 2002–2015 will be 15% for workers aged under 45 and 85% for workers aged over 45.  Projections also indicate that by 2011 the proportion of workers aged 14–24 years will fall by 18% and workers aged 45–64 years will rise by 34%.  As at 2001, nearly one third of all workers in all occupations were aged 45+ with some industries or occupations already reflecting the ageing workforce, with the average age of employees 50+.   Australia could also face a shortfall of 200,000 workers over the period 2006-2011 if action is not taken to address the issues. (Workforce Tomorrow: Changing Labour Markets, DEWR, 2005)

The Intergenerational Report recommends that, in order to address these issues, policy settings and labour force initiatives need to focus on lifting productivity, increasing our population and lifting workforce participation.

Government policy has responded through reform of the national training system and initiatives which address entry level training through the Australian Apprenticeship system, with a particular focus on lifting the skills of existing workers.

Social policy has seen the introduction of the ‘baby bonus payment’ to mothers to assist in meeting the cost of pregnancy and raising children.  Migration policy has also responded through the increase in permanent migration levels and the introduction of flexible arrangements for temporary visas to meet immediate industry skilled labour requirements to combat skill shortages.

VECCI is working with the Australian and Victorian Governments to promote better use of the training system to build a skilled workforce and promote to employers of the value to recruit, retain and retrain older workers through the “Grey Matters” employer awareness campaign.

The Australian Government has now implemented its ‘Welfare to Work’ package of reforms to assist welfare recipients in to the workforce.

These Welfare reforms will support people with a disability, carer parents, mature job seekers and long term unemployed to obtain work.  The creation of job opportunities for these clients will be crucial in lifting workforce participation to meet the skill needs of business.

It is in this context that employers will need to consider more flexible human resource practices as set out below.

Changing workforce demographics and implication

Over the next 30 years, as the workforce ages and many workers retire, and with fewer young workers to replace them, there will be a shortage of workers available to Australian businesses.
Without sufficient skilled workers, many businesses will have difficulty maintaining current levels of productivity and expanding their businesses to meet the increasing demands of both Australian and export markets.
Employers that set their sights on recruiting, retraining and retaining older workers will make significant progress toward ensuring the future viability of their business.  Three key questions need to be asked:  Who is currently in our organisation (retention)?  Who do we want to attract to our organisation (recruitment)?  What motivates them (attraction and retention)?
As labour shortages increase, employers will need to be innovative to attract and retain the shrinking supply of available talent.  The workforce of the future will be more diverse, consisting of more parents, more people with disabilities, more people wanting to work part-time and older workers. 

New strategies are required, such as:

• Creating and maintaining a more diverse workforce
• Retaining workers, especially mature-age workers
• Mentoring and coaching new employees
• Increasing training for existing employees
• Improving ‘life balance’ for different types of employees (i.e. those with children, carers, mature-age)
• Flexible work practices

Positive aspects of the ageing workforce

State-wide labour shortages mirror national trends and the decline in labour supply has already commenced and will accelerate sharply over the next 10 years (DEWR 2006).  A number of factors are forcing businesses to analyse their business and their workforce, and plan for the following changes:

Table 5.1

 All businesses face an increasing proportion of older people in their workforce.  Consequently, business owners and managers who try to understand the needs of experienced workers will benefit from forward planning to recruit, train, integrate and retain mature-age workers, and thereby, be better able to cope with the significant changes to the labour supply.  There is an opportunity to extend the working life of workers aged 45 years and over.

Benefits to be gained by employing and retaining 45+ workers

• Retaining older workers for longer adds to workplace stability
• Access to a wider pool of talent
• Increased return on investment in training staff
• Assists organisations to maintain experience and knowledge
• Staff profile reflects ageing customer base

Functional advantages to be gained by employing and retaining 45+ workers

• Already skilled and experienced
• Helps create a more diverse and productive workplace
• Assists business to become more flexible and responsive to change
• Increased capacity to coaching, mentoring, sharing knowledge and experience

Diversity of generations, gender and ethnicity

The workforce of the future will be more diverse and, with the effects of population ageing and as labour shortages increase, employers need to adjust their recruitment and retention practices. 
Clear communication and managing the culture of an organisation can present challenges when employing and maintaining a workforce with diversity in age groups, gender and ethnicity.

Strategies to support diversity in the workplace:

Recruitment – Attract strong candidates who are prepared to meet company goals and priorities and to work in the company’s environment through using a variety of job search locations, accepting recommendations of potential candidates from employees and closely following EEO guidelines.
Hiring – Review internal human resources policies, processes and operations in order to streamline hiring and identification of good candidates and to promptly make job offers.
Supportive work environment – Provide employees with the direction and tools needed to perform the company’s activities to the best of their ability, including leadership and diversity training for line managers, quality work-life considerations, offering a safe and productive environment, and fostering a sense of belonging and community spirit.
Learning and development – Training and development opportunities contribute to employees choosing to stay with the company.
Rewards and recognition – All employees like their efforts to be acknowledged.  Employers can ensure that merit and results are used to differentiate rewards and recognition between employees.