Older workforce easier said than done

The Productivity Commission wants us working into our 70s. Has anyone asked businesses what they want? Tony Featherstone reports.

The Productivity Commission's call to lift the retirement age to 70 sparked a narrow debate this month. Opinions flew thick and fast on whether people want to work that long, are physically capable of working into their 70s, and whether there will be enough jobs for them.

How do companies feel about this? Do they want to employ increasingly older workers, and are they set up to meet the needs of workers aged 70 or beyond? Have their Gen-Y managers been sufficiently trained to get the best out of workers old enough to be their grandparents? How do young workers feel about this issue?

Do the benefits of employing older workers far outweigh the risks of having someone who can no longer do the job, is resistant to change, blocks the career path of twentysomething managers, is overpaid because of corporate longevity, and is costly to axe?

Moreover, has business thought enough about the costs of an older workforce: higher occupational health and safety risks; potentially higher average wage costs; and what it means for their workforce composition if the balance tips more towards older workers? And where are all these jobs for people in their late 60s or 70s coming from?

What's your view? Is your company serious about employing older workers? Does it make concessions for older workers that younger ones do not receive? Do you have to manage older workers, and has it been a good experience?

Difficult questions, I know. But if we're hell-bent on having a debate about the need to lift the retirement age to pay for the costs of an ageing population, somebody needs to get the view of large and small business.

The Productivity Commission report, An Ageing Australia: Preparing for the Future, did a terrific job of highlighting this issue, even though the federal government quickly quashed its recommendation. The commission's macro-economic analysis of labour-force participation, population growth, income growth, and possible regulatory reforms, was incredibly useful.

Now we need a similar report that takes a micro-view and gets the employer perspective. Perhaps a few business associations and industry bodies could do deeper research on this topic, with special emphasis on how small and mid-cap companies will cope with an ageing workforce.

It would be timely. As new business models evolve, companies are being forced to do more with less. Yet we assume business can handle an older workforce at a time of immense technological change and industry disruption. It would be the last thing some businesses want.

My sense is corporate Australia has only dipped its toe in the water for this coming demographic tsunami. Between now and 2050, the number of people aged 65 to 84 is expected to more than double, and those aged 85 or over will quadruple to 1.8 million, the Treasury's 2010 Intergenerational Report says.

Companies, of course, publicly say nice things about hiring older workers. Many had gushed about the benefits of hiring older full- and part-time workers, particularly before the 2008 financial crisis when there were skill shortages.

Yet I see more companies replacing older workers with ever-younger managers at every opportunity to slash costs. The corporate spin does not match reality.

Moreover, it is hard to write stories about the downside of hiring older people. You are immediately criticised for being ageist, uncaring or brutal. Or worse, generalising about older people and unfairly defining them by their age. But this debate is too important to be blindsided by political correctness.

My business uses two contractors in their late 60s who are highly skilled, productive and adaptable - and great to work with. Over the years, I've also seen older workers who are hard to manage, change-resistant, lazy, overpaid and who constantly criticise their employer and younger colleagues - as they milk a few more years of a fat salary before retirement. They expect special treatment because they are nearing retirement, even though their performance does not warrant it.

We need hard statistical evidence, not anecdotes or generalisation, from thousands of businesses about the real issues in managing an older workforce - real research that can inform public policy if the retirement age is lifted to 70, as seems likely in coming years or decades because of budgetary pressures.

We need to know about companies that have had great experiences with older workers, so that others can learn from these. Did they do anything different to accommodate an older workforce? How did they bring together several generations to create outcomes?

Equally, we need to know about companies that had poor experiences with older workers. What could they have done differently? And is there a bigger role for government to help Australian business manage the transition to an ageing workforce?

Most of all, we must put the emotion of age to one side and focus on the facts: do the productivity benefits for companies of having workers retire later outweigh the costs? We also need to hear about this from those hiring older workers and managing them. Not just government.