Talking Talent

David Knox, Worldwide Partner at Mercer, has published a paper exploring Australia’s position on the age pension.

As our population ages and a larger percentage of people sit in that over 65 age bracket, he asks whether a pension at 65 is still appropriate.

Knox outlines a number of adjustments to pensions around the world, including:

• The US is gradually increasing its normal retirement age for Social Security from 65 to 66 between 2002 and 2009 and then increasing it again from 66 to 67 between 2020 and 2027; 
• The UK announced in a 2006 White Paper discussing their new pensions system that they will gradually increase their State Pension age from 65 in 2024 to 68 in 2046; 
• Germany is gradually increasing its pension age from 65 in 2012 to 66 in 2024 and then to 67 in 2029; 
• Denmark is increasing the age threshold for the public old-age pension from 65 in 2024 to 67 in 2027. Furthermore from 2025, the eligibility age will be directly linked to changes in life expectancy at age 60; 
• Japan is increasing its age for access to the earnings-related component of its pension from 60 to 65 by 2025 for males and by 2030 for females; 
• Increases in pension age that affect both men and women are being implemented in the Czech Republic, Greece, Hungary, Italy and Korea (OECD, 2007).

What’s my point?  I’m certainly not suggesting that people don’t deserve the aged pension.  What I’m suggesting is that we need to look at the fact that, as our population ages, we are going to lose a pool of high skilled, knowledgeable and experienced workers who will retire when they still have many good years in them.  Is 65 really still the right age to retire?

Following on from yesterday, Australia’s population is projected to age progressively from the median age of 36.4 years in 2004 increasing to about 41 in 2021 and about 45 years in 2051.  By 2051 around 26 percent of Australia’s population is projected to be aged 65 years or older, compared with 13 per cent currently.

Extensive research has concluded that immigration beyond current levels would have a diminishing impact on retarding the ageing of the population. This reflects ageing being a gradual process and that most migrants who enter Australia would themselves be part of the aged population in 30 to 40 years time.

This means harnessing ‘grey power’ is vital if we are to continue to compete on a global stage.

With the economy facing capacity constraints and the population ageing, it doesn’t make sense to have skilled people driving taxis.

Fifty-year-olds are still perceived as being past their used-by-date in the workforce.  At the same time, the latest census data reveals that 11 per cent of Australia’s population is between 55 and 64.  It is these people that the ICT industry needs to do more to attract, retain and retrain.

Research analyst firm, Mercer, says that workers aged 55 and older, particularly women, appear to be the answer to the ongoing skills and labour shortage – not generation Y – and Australian employers must consequently shift their focus from young to old to maintain productivity.

Research findings reveal that by the year 2012 the amount of workers in the labour force aged 55+ will increase by 14 per cent whilst the amount of workers aged 25-54 will increase by only 5 per cent.

Furthermore, the amount of women aged 45+ will increase by 12 per cent whilst the number of men in the same age group will increase by only 6 per cent

Mercer’s Tim Jenkins says that there’s a sense of urgency for employers.  By 2012 demand for skills is expected to increase 18 per cent in the construction industry; 13 per cent in the accommodation, café and restaurant industry; and 12 per cent in the wholesale industry, but with no guarantee that demand will be met with supply.

“In four short years there will be close to a quarter of a million more workers aged 55+ in the Australian labour force and assumptions about what an employer should expect from an employee, and vice versa, have to change.

“Australian employers have to re-define what the average daily and weekly job looks like and how it is remunerated in order to hold onto older workers, maintain productivity and keep downward pressure on wages that, according to our research, are forecast to rise at an average annual rate of 4.2% between now and 2012.

This seismic demographic shift threatens the sustainability of many Australian businesses.

So why does a recent survey by career management firm, Linkme.com.au, tell us that almost three-quarters of Australians believe that finding new employment – across all industries - after 50 is almost impossible.

People are telling me that they feel ‘on the scrapheap’ once they hit 45, and yet these are the very people who have a lifetime of skills and experience to harness.

One woman I spoke to said she was advised to change her resume to say ‘more than 10 years’ experience’ instead of ‘more than 20′ and to remove the dates from her degrees – all to reduce the perception that ‘older’ means ‘out-of-date’.

In industries where work is increasingly based on knowledge-creation, the focus needs to be on the workplace as a key arena for encouraging ‘lifelong learning’ as part of work.

Retaining and retraining older workers will save recruiting costs, maintain institutional memory and technical knowledge and give a higher return on investment in training.

However, it’s not just the responsibility of employers.

Employees need to recognise that they work in a fast-paced industry where training is paramount.  Continuing employment or re-entering the workforce may require a commitment to retrain and some attitudinal shifts too.

The most important factor in a mature person’s employment prospects is: are they adaptable?  Those most at risk of redundancy and underemployment have had fewest opportunities to acquire new skills and develop a positive attitude to learning.

Australia’s economic growth – and our industry’s prosperity - is partly dependent on mature-age workers remaining in the workforce for as long as possible, so it’s time to discard negative perceptions of baby boomers and support them in their working lives as much as Gen-X and Yers.