Older but no wiser

The Rudd government is trying to encourage the private sector to keep older employees in the workforce, but what about the older workers in the public sector?

The Rudd government is taking an interesting line in tackling the looming problems of an ageing population. Instead of tackling workforce participation and productivity in its own backyard, it’s decided to focus on the private sector – an approach based on, well, not much evidence.
In 1970 there were seven working-age people per retiree. That number has dropped to five at present and by 2050 it’ll be 2.7. We’re going to have to work longer to avoid higher taxes as health costs swell considerably; to care for the really old, you have to manage the less old.

While the Henry tax review favours incentives for older people to keep them working, the government has started by encouraging the private sector to hold on to older workers without any evidence that the public sector is any better at it.

A $43 million package announced last month encourages private businesses to keep older workers in mentoring or consultative roles. But in reality, public sector workers are just as difficult to hold on to.

The best data available on the disparity between the retirement ages in both sectors is dated and inconclusive. The Melbourne Institute’s 2003 HILDA survey deals with retirement intentions and actually shows a slight skew towards public sector workers retiring earlier, although the difference is statistically insignificant.

Associate Professor John Spoehr from the University of Adelaide says the government should be more concerned about how it’s going to hold on to its own workers as the skilled-labour shortage re-emerges.

"There’s a need for government itself to take a look at how it’s going to retain its own mature age employees, because it’s going to be competing with the same pool of people to ensure that it can maintain its own service levels and commitments,” he says.

Spoehr said in five to 10 years time the government will be hard pressed to hold on to its older workers because certain parts of the private sector will be "very aggressively” bidding for public servants.

There’s evidence that it’s already happening. Co-founder of Olderworkers.com.au, Matt Higgins, says the private sector is "without a doubt” more willing to hire mature workers than the public sector. He said Coles and Woolworths are prime examples and even some of the miners are beginning to sniff around.

The existence of ageism is undeniable but Higgins said the private sector is more able to see past it when an older candidate with the right skills is put forward.

The skills shortage dominated the political landscape before the global financial crisis. But the Howard government chose to focus its efforts on training up young people and older workers were largely ignored.

While this is no longer the case, the government clearly needs to get its own house in order. The need is heightened by signs that the government is losing workers right now and has little leverage to keep them.

A large proportion of public servants in their mid to late 50s are on lucrative state government pension schemes that were abolished by the early 1990s. The schemes calculate the retirement payments as a proportion of your final wage and basically encourage workers to retire at 60 to maximise the payout. It’s a similar system to the one in Germany which has become increasingly burdensome on its economy and the legacy in Australia is a block of public sector workers who will be very unwilling to stay in work.

But the government should be commended for not only recognising that tackling ageism is important in social terms, but realising that older workers represent a significant untapped labour resource. A study conducted by researchers from the Eidos Institute and the University of Southern Queensland on behalf of National Seniors Australia concluded that neglecting older Australians as potential workers costs the economy $10.8 billion annually.

The government acknowledged the potential windfall that older workers present for the economy when it announced the program.

"If we can improve projected participation rates for Australians aged between 50 and 69 by 5 percentage points (from a projected 62 per cent to 67 per cent by 2049-50) then real GDP per person would be 2.4 per cent higher, equivalent to about $2,500 in today’s terms,” the government said in a statement.

Participation rates are relatively constant, so a lift of 5 percentage points is substantial, but not out of the question. However, the participation rate simply measures the amount of people in the workforce, rather than the total hours they work, which is a more accurate representation of their level of participation and contribution to GDP.

Whatever the merits of the government’s yardstick, a $43 million program won’t get them anywhere near it.

National Seniors Australia chief executive Michael O’Neill described the program for what it is, "a pilot”.

"We all need to be patient sometimes, it’s been a long time coming,” O’Neill said.

"I think one of the things that the government is also acknowledging is there hasn’t been a lot of policy or research energy spent in this space in recent times.”

The program includes "training packages” for 2,000 employers, funding grants for 50 "Golden Guru” organisations and face-to-face job support for 2,000 workers battling injury or illness.

Unlike the public-private retirement figures, the numbers on the sheer number of older people out of work are unequivocal, there’s a big resource of older people who want to work.

"I think there’s a really significant potential for disguised unemployment and particularly underemployment being an issue,” O’Neill says.

Put simply, the most recent ABS data had 3.5 million people aged 55 and over listed as "not in the labour force” which means they’ve retired or never really entered the workforce, and 617,712 people of the same age listed as part-timers. What the numbers don’t illustrate is how many of those people listed as "out of the workforce" have simply given up trying to find a job and settled for retirement, and how many of those part-time workers have lost a full-time position.

The importance of Australia’s ageing population as a matter of economic policy is clear – one reason it's so alarming that figures of our older workforce remain elusive.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles