How to manage the challenges of an ageing workforce

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The impacts of Australia’s ageing workforce will be so pronounced the government has budgeted for retraining. What can HR do?

In between the tax cuts and promises to return to surplus, you may have noticed that one of the centrepieces of the 2018 budget released this week was increased funding to assist Australia’s ‘greying’ population.

The measures include $17.4 million over four years to establish the Skills Checkpoint for Older Workers program, and $189.7 million over five years to support mature age workers adapting to the transitioning economy.

We thought this would be an opportune time to explore the implications of an ageing workforce for employers.

Australia’s ageing population

According to the 2016 census, nearly one in every six people in Australia (16%) were aged 65 and over. Australia’s ageing population has significantly increased over the past century and is expected to continue, with estimates showing that by the end of the next decade, one in three Australians will be aged over 55.

The retirement age in Australia is also changing. Although the traditional and informal retirement age in Australia has been 65 years of age, the proportion of people in the labour force aged 65 years and over has been steadily increasing. From 2006 to 2016, the proportion of people in the labour force aged 55 and over increased by 13%.

These trends, together with today’s high cost of living and inevitable increases in the eligible age for receipt of Australia’s age pension, indicate that the number of older Australians participating in the labour force will continue to rise. At the same time, as Australia’s demographics continue to change, it will also become necessary for businesses to engage and retain mature-age workers to reduce the impact of a large non-working population on the economy and welfare system.

What does the ageing population mean for employers?

Multi-generational workforce

Firstly, for the first time in history, there may now be four or even five generations of people working together. The differing work values and expectations between each generation can create all kinds of management and intergenerational conflicts for organisations. Are the “youth” optimistic, or naïve? Or are the “experienced” wise, or just set in their ways?

A range of differing workplace needs

Secondly, an ageing workforce means that employers now need to deal with the very real issue of how to manage and cater to the needs of older employees. While Australians are living and working longer and are healthier than ever, even the healthiest workers will be impacted as they experience age-related declines in speed, physical strength and cognitive ability. Additionally, mature-aged workers are likely to have a greater desire for flexible working arrangements in order, for example, to be able to care for ageing parents (a reality for many in their 50’s and 60’s) or to transition to retirement.

Acknowledging the needs of mature-aged workers and implementing suitable initiatives to accommodate these needs will benefit not only the employees but also their employers. Take BMW for example. When the luxury German automobile company realised that many of its workers who were the company’s most experienced at developing new production lines were becoming too old to physically cope with the demands of their jobs, it introduced simple modifications such as brighter lighting and seats so workers did not have to stand all day. This significantly improved productivity.

Increase in age based discrimination and unconscious bias

Finally, the increased proportion of mature-aged workers also increases the risk of age-based discrimination and unconscious bias towards older workers (particularly in recruitment practices and policies).

(Sally Evans has some ideas about how to tackle ageism, read her thoughts here.)

According to the Australian Human Rights Commission, more than one quarter of Australians aged over 50 have experienced some kind of age discrimination in the last couple of years, and four in ten organisations admitted that they would not employ persons aged over 65. While discrimination based on gender or race is often at the forefront of workplace strategies dealing with inclusion and diversity, age discrimination has until very recently received little attention. This is very likely to change given the participation levels of older workers in the workplace.

Strategies for managing the ageing workforce

To manage the inevitable changes to Australia’s demographics, employers need to start preparing for an ageing workforce and develop strategies to manage and retain older workers. There are a number of strategies that can assist employers in addressing these issues, as follows.

Undertaking an age audit and succession planning — by monitoring things such as the age of staff in particular areas and the age of people leaving, employers can best plan for future resourcing needs and the transfer of skills and knowledge.

Conducting training for managers and recruitment panels on unconscious age-related bias and stereotypes of older workers to tackle unlawful discriminatory practices and unconscious bias towards older people in the organisation.

Developing mentoring/coaching programs to promote skill transfer between younger and older workers, as well as training on managing and working within intergenerational teams to address the issues of working in multi-generational teams.

Developing flexible employment opportunities and conditions for older workers to accommodate their needs. This may include redesigning jobs to accommodate physical restraints, offering job-share arrangements and implementing phased retirement options.

Assisting workers transition to retirement by running ‘preparing for retirement’ awareness sessions and sessions on financial counselling.

Re-skilling older workers and investing in education programs that assist older workers to be more efficient and to harness new ways of working (such as utilising technology and social media).

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

Key contacts

Jenni Mandel

Senior Associate