1. Who'll do the work?
Managing
Byline: BY STUART WASHINGTON AND JONATHAN MORRIS
MORE RETIREES AND FEWER RECRUITS PRESENT BUSINESS WITH A BIG
PROBLEM.
MORE RETIREES AND FEWER RECRUITS PRESENT BUSINESS WITH A BIG
PROBLEM.
Business will face one of its greatest challenges in the next five years: labor
shortages because of the ageing population. Some economists believe the problem
will be serious enough to threaten the potential of Australia's economy and
jeopardise company performance. Politicians say a workplace revolution will be
needed to solve it. The coming exodus of baby boomers from the workforce will be
compounded by other trends. The transformation of economies, especially those of
China and India, is altering worldwide demand for skilled workers. China's economic
growth, in particular, is a magnet for executives looking for career challenges. More
are leaving their jobs in Western countries and working overseas for longer periods.
Further down the corporate ranks, skilled workers are leaving the permanent
workforce earlier. Some are part of a trend to simplify lifestyles: they are relocating to
places where real estate is cheaper and the cost of living lower, working fewer hours,
and buying fewer products and services. This trend is expected to accelerate and is
one reason for the population boom along the coastline.
The challenge this presents for companies is enormous. As the pool of skilled
workers shrinks, companies will have to adopt new attitudes towards older workers.
Companies will need to encourage them to delay retirement, create new career
paths for them, and change offices to suit their needs. But this could mean slower
career advancement for younger workers as older workers re-enter the promotion
calculations of their employers.
Despite the size of the problem, few companies have done much about it until now.
The alarm was raised at a meeting of influential business lobby groups in
Melbourne's Treasury Place late last year. Some of the nation's top business
thinkers were told that strategies to deal with the problem should be introduced
immediately.
The federal Minister for Ageing, Kevin Andrews, called the meeting because he was
concerned about a lack of awareness of the issue in business. Delegates included
David Edwards, the chief executive of the Committee for Economic Development of
Australia, Melinda Cilento, the chief economist of the Business Council of Australia,
Fiona Field, a senior adviser on industrial relations at the Australian Industry Group,
and Tony Beck, the national secretary of the Finance Sector Union.

2. Andrews says: "It's a wake-up call that we will need a workplace revolution.
Obviously, if you are not going to have the number of younger workers - the 25-to-
40-year-olds - you have to look at the other end." Andrews called on the lobby
groups to spread the word to members before a national seminar on ageing is held
in April.
Some big organisations, for example Commonwealth Bank, are redesigning their
employee retention programs for 2003-04. Australia Post has adopted work practices
that encourage older workers to stay on. The Australian Industry Group has
commissioned a study on how its members will be affected. Some industries with
ageing workforces - notably education, nursing, manufacturing, mining and utilities -
are being doubly hurt by an exodus of retiring baby boomers and a lack of younger
workers.
Edwards says that, if nothing is done, "we will see Australia's GDP and productivity
fall away very substantially". He says: "We will see wage inflation because
companies will be competing for a much smaller pool of people. We will be paying
much higher taxes because older people will not be working and a smaller group of
people will be trying to support them. And there will be a whole range of businesses
that find it very difficult to compete because they don't have the employees they
require."
A study by Access Economics in 1999 offers a chilling statistic: it predicts that labor
market growth will slow from 1999 level of 170,000 a year to 125,000 for the entire
decade from 2020. The trend has begun. Between 1983 and 1992, the workforce
aged between 20 and 44 grew 24%, according to the Australian Bureau of Statistics
(ABS). Growth in that age group fell to 6% between 1993 and 2002, and growth
between now and 2012 is estimated to be less than 2%.
Labor shortages will not be across the board. A paper to be released before the end
of February by the not-for-profit research organisation Business, Work & Ageing
(BWA), which is associated with Swinburne University of Technology in Victoria,
pinpointed industries with the highest average age as being most at risk of labor
shortages. The ABS says industries with ageing workforce problems are education
(where the average age is 40.9 years); agriculture, forestry and fishing (40.8 years);
electricity, gas and water supply (40.3 years); government administration and
defence (40.1 years); and health and community services (39.9 years). These
industries are most exposed to a retirement bubble, which started to burst as the 4.1
million baby boomers born between 1946 and 1960 began reaching early-retirement
age of 55 in 2001. BWA also nominated industries with a falling number of
employees - including mining and manufacturing - as among those most likely to be
affected.
Commonwealth Bank is convinced the issue of the ageing demographic and labor
shortages is crucial for its business. Since 2000, the bank's organisation
effectiveness unit has been assessing changes in workforce demographics. The
head of the unit, Geoff McGill, says that, by 2003-04, he wants programs specifically
designed to retain older bank workers. "If we make assumptions that we grow
roughly the same as the rest of the economy, then our analysis says we potentially
could run into labor supply tensions or problems sooner rather than later."

3. McGill says that Commonwealth Bank's staff of 34,500 is broadly representative of
the working population. One conclusion from Commonwealth Bank's study of
demographic figures is that retaining workers for longer would be the main way to
deal with potential labor supply shortages. Organisations that move quickly to retain
older staff will enjoy a competitive advantage. Research has shown that projected
levels of immigration would not be sufficient to meet forecast demand.
"If you look at it in macro-economic terms, the purpose must be to increase the labor
force engagement of people who are over 55," McGill says. "We have got to improve
our capability to retain people over the age of 45 and particularly over the age of 55."
To help design effective retention programs, Commonwealth Bank has
commissioned researchers from Victoria University to survey a representative
sample of bank employees about the factors that make people choose between
retiring and staying on. McGill says most international studies about improving
retention rates of older workers indicate that providing more flexible working
arrangements is effective. To this end, Commonwealth Bank is testing flexible
working arrangements in the first half of 2003.
BWA's executive director, Louise Rolland, says flexible work practices and training
are important to retaining older workers, who often have responsibilities to their
children and even as carers for their parents. She says training programs need to be
made more accessible to older workers and to encourage their participation and
workforce involvement. Her research suggests older workers need to be engaged in
the workplace with training, new challenges and variety in their work. She also says
workplaces may need to be redesigned to reflect the health and safety concerns of
older workers.
Rolland says the trend of early retirement points to labor shortages. Her research
found that 89% of people retire before turning 65. They are motivated by a
superannuation system that allows people access to their retirement income at 55.
As a result, older people in Australia have low rates of workforce involvement
compared with other countries. Only 49% of those aged between 55 and 64 are in
the workforce, compared with the Scandinavian average of about 70%. Rolland says
workers should not be encouraged to retire early by superannuation schemes that
promote a culture of early retirement. "We have a long way to go in bringing
business up to speed," she says.
BWA's most recent research report says: "Government and Australian business is
yet to come to terms with the change from a generation of oversupply, when they
could select from a diverse pool of workers, to an environment that will be subject to
labor supply pressure."
Australia Post is another organisation acting on the potential labor supply shortage.
Its national manager for organisational development, Pat McCarthy, says: "The
ageing demographic is one of the biggest issues facing management this century."
This is no mere academic question for Australia Post's 35,762-strong workforce,
whose modal age has risen from 27 to 42 in the past 12 years.

4. McCarthy believes that retraining and retaining older workers will solve this problem.
A December 2001 study by Australia Post pinpointed information technology (IT) as
a division where the problem was acute. Older workers (over 40) were not keeping
their computing skills up to date and were becoming increasingly detached from their
work. McCarthy says: "Decreasing numbers of under-30 workers, changing
technology and an ageing workforce not being trained, have meant this had become
a big problem."
He says older workers need to be provided with training opportunities so their skills
remain relevant and they stay motivated. To achieve this goal, management has
introduced career planning for older workers. This means conducting formal
assessments of skills, then designing project work to match workers' talents and
aspirations. McCarthy says that if people are encouraged to keep their skills up
to date, they can be given more satisfying work and are more likely to stay on. He
also emphasises the personal responsibility of older workers. "If people are not
continuously learning through their career they are irrelevant. They are presented as
boring and they are boring."
Brett Holmes, the general secretary of the NSW Nurses Association, says the
looming labor supply shortage in the nursing profession threatens to affect the
quality of health services. A study by the Victorian Department of Human Services in
1999 predicted a shortage of 27,000 nurses in Victoria between 2003 and 2008,
taking into account the ageing of the population. Shortages are already being
experienced across much of the industry. National shortages in 20 of 21 nursing
specialties were reported in the Department of Employment and Workplace
Relations' February 2002 national and state lists of skills shortage.
The ageing demographic is squeezing the nursing profession at both ends. The 6000
nurses who graduate each year are not enough to fill the available positions, and
most nurses retire at 55. In addition, older nurses are reducing their working hours
as they approach retirement.
An August 2002 report, The Nursing Workforce 2010, commissioned for the National
Review of Nursing Education, estimated a shortfall of 40,000 nurses in 2010 if 1995-
96 levels of graduates and retirements were maintained.
The Victorian Government responded to the impending shortage by running a six-
month recruitment campaign early last year. The NSW Government is planning a
similar campaign this year. NSW Health also operates a program that recruits
overseas nurses, which attracted 160 nurses in 2002.
Holmes also says that to attract nurses back into the system means reassuring them
that conditions have improved to the extent that they have time to do a professional
job, changing society's negative attitudes to nursing, and paying nurses
appropriately.

5. The ageing workforce is also starting to affect the professions, such as accountancy,
particularly smaller practices in regional Australia. CPA Australia's national
recruitment manager, Langdon Blight, says Asian students have provided the only
growth in the number of young people studying accounting in the past decade. About
42% of CPA Australia's 75,000 members are over 45. Blight says that in 2003,
members will visit schools to promote accounting as a career choice. The Institute of
Chartered Accountants' general manager for standards and public affairs, Allen
Blewitt, says: "We are worried about the ageing of partners [in regional firms]. Where
is the next generation of partners going to come from?"
The institute says the profession must be better marketed, with better recruitment
practices that lure increasingly scarce young talent. Blewitt says that if nothing is
done, many public practices will fall into decline. Regional businesses will suffer
because they rely heavily on accounting services of tax, audit and business advice.
Some people dispute the effects an ageing workforce will have on business. Dr
Mariah Evans, of the Melbourne Institute of Applied Economics and Social
Research, says the voluntary exodus of older workers into early retirement has had
little effect on the economy. She questions how much loss of skills there has been.
She says retirees' skills have often been very company-specific. "I don't see a lot of
older people opening their own companies with their saleable skills," she says.
Evans says the issue of workforce ageing needs to be kept separate from the
question of fewer younger workers. Older workers cannot necessarily replace absent
young workers, as they are not good substitutes for each other in terms of patience,
judgment and speed. Fewer younger workers will not automatically translate into
a labor supply shortage. Technological change will reduce the need for young
workers to be employed in routine and unskilled jobs. She says: "There aren't any
wheelwrights any more."
Evans sees the world coping with an ageing workforce. "This is not the first time the
world has changed. Every change we have had so far we have come out of it more
productive. Look at what has happened post-Industrial Revolution and post-
computers."
Long stayers
How companies can retain older workers:
* Determine likely retirement numbers.
* Increase workplace flexibility.
* Pinpoint older workers who need skills retraining.
* Develop and revitalise career paths.
*Provide new challenges and variety.

6. * If necessary, reconfigure the workplace to meet the health and safety needs of
older workers.
Source: BRW
Retirement boom
* Australia's 4.1 million baby boomers, those born between 1946 and 1960, started
reaching the age of 55 in 2001.
* Only 49% of Australians aged between 55 and 64 are in the workforce. In
Scandinavia, the average is about 70%.
* Labor market growth will slow from today's level of 170,000 a year to 125,000 for
the entire decade from 2020.
* Between 1983 and 1992, the workforce aged between 20 and 44 grew 24%.
Between 1993 and 2002, it grew just 6%. Between 2003 and 2012, it is predicted to
grow less than 2%.
Source: BRW
The grey ghettos
* Education (the average age of workers is 40.9 years).
* Agriculture, forestry and fishing (40.8 years).
* Electricity, gas and water supply (40.3 years).
* Government administration and defence (40.1 years).
* Health and community services (39.9 years).
* Nursing, information technology and accounting have also been pinpointed as
sectors that will suffer from the retirement exodus.
Source: AUSTRALIAN BUREAU OF STATISTICS
Caption: ILLUS: PAUL DICKENSON
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Publication: Business Review Weekly
Publication date: 13-2-2003
Edition: Late
Page no: 70
Section: News and Features
Length: 2795
Comments: Long stayers; Retirement boom and The grey ghettos joined to story.