COTA's response to National Strategy for an Ageing Australia paper Employment for mature age workers

COTA's response to National Strategy issues paper Employment for Mature Age Workers

COUNCIL ON THE AGEING (AUSTRALIA)

Response to Employment for Mature Age Workers

issues paper for the

National Strategy for an Ageing Australia

Council on the Ageing (Australia)
Level 2, 3 Bowen Crescent
Melbourne Victoria 3004

Phone: 03 9820 2655
Facsimile: 03 9820 9886
Email: cota@cota.org.au

JUNE 2000

CONTENTS

Introduction

Strategy one: Employment growth and labour force management

Strategy two: Tackling age discrimination

Strategy three: Promoting education, training and lifelong learning

Strategy four: Greater flexibility in work and social security

Strategy five: Adequate safety net provisions

Employment for Mature Age Workers

INTRODUCTION

Over the past 12 months, employment has been a focus for Council on the Ageing policy work for the following reasons:

the high rate of attrition from paid employment of people between the ages of 50 and 64: 33 per cent in this age group are receiving an income support payment and 46 per cent do not have a paid job

the immediate social, psychological and financial consequences of unemployment on mature age people

continuing reports of age discrimination in the hiring and firing practices of employers

the long term effects of unemployment on retirement and income available for retirement.

These issues have been of great concern to the Council on the Ageing which has resulted in a range of activities including:

a national congress Older Australians: A Working Future, in Adelaide, November 1999

two major submissions to House of Representatives Standing Committee on Employment, Education and Workplace Relations, Inquiry into Older Workers

submission to Welfare Reform Inquiry.

The submissions to the House of Representatives Standing Committee on Employment, Education and Workplace Relations, Inquiry into Older Workers, are contained in our report Older Australians: A Working Future. We have also included a copy of the submission to the Welfare Reform Inquiry. Our views on specific issues are contained in these accompanying submissions.

The purpose of this submission to the National Strategy for an Ageing Australia is to provide a broad, conceptual framework in relation to employment for mature age people. In this regard, we have a conceptualised a five point strategic plan.

Strategy one

Maintaining strong and sustainable economic growth which will generate sufficient jobs for all who want them combined with effective labour force management.

Strategy two

Tackling age discrimination so that mature age people are neither targeted for retrenchment nor prevented from gaining jobs for which they are qualified and that there is fair distribution of jobs between groups in the labour market.

Strategy three

Promoting opportunities for education, training and life long learning so that all members of the workforce are able to maximise their capacity for maintaining and increasing their skills and mature age people in particular are able to maintain and attain skills.

Strategy four

Greater flexibility in the workplace and in social security provisions to enable people to change the pattern and intensity of their workforce participation as they age.

Strategy five

Ensuring that there are adequate safety net provisions for people who are unable to participate in the labour market.

Strategy one: Employment growth and labour force management

Maintaining strong and sustainable economic growth which will generate sufficient jobs for all who want them combined with effective management of the labour market.

The National Strategy for an Ageing Australia must include economic planning and policy-making. As COTA said in the healthy ageing submission, the condition of the economy will be fundamentally important to the achievement of positive outcomes for an ageing population.

Mature age employment issues will most effectively be addressed over the long term by consistent employment growth, inextricably linked to economic conditions. A greater consonance between labour market supply and demand will create the conditions in which employers will be forced to review their present preferences for younger workers.

However, a full employment scenario is still a long way off in Australia although unemployment is currently diminishing. There will be ongoing tasks for Government in managing a consistent mismatch between demand and supply. These tasks include ensuring that:

unemployment is not concentrated excessively on particular groups in the population and that the duration of unemployment is limited for all groups;

unemployment is not masked by large numbers of people leaving the labour force under the guise of early retirement, disability or other factor, because of the perception of poor labour market prospects or the likelihood of discrimination (a common saying amongst mature age people is "no one will employ me at my age");

the skills base of the workforce for all ages matches the needs of Australian industry.

These are all essential elements in managing the Australian labour market and maintaining a healthy balance between the working and non-working populations.

Dependency ratios

There has been an ongoing debate in recent years in Australia, as elsewhere, about the possible effects on the economy and the capacity of governments to pay for the services that a large and dependent aged population is likely to need in the future. This debate took a high profile following the National Commission of Audit asssessment of Commonwealth finances in 1996 which identified the ageing population as a major risk factor and made a number of recommendations about ways in which the potential costs to government of the ageing population could be offset. The proposed options included increasing incentives for retirement-related savings, long term care insurance, and the use of older people's assets to pay for health and care costs.

The Commission of Audit made much of its assessment based on projections about workforce dependency ratios. It showed that in view of current trends, the aged to working population dependency ratio would increase from 0.28 in 1993 to 0.54 in 2059. The ratio of non-working to working population is projected to increase from 0.77 in 1993 to 0.91 in 2059.

Curiously, the Commission of Audit did not examine the potential for increased labour force participation and later retirement ages for the older population as a tool in managing the costs to government of an ageing population. The sort of benefits of increased labour force participation include:

greater capacity for individuals to make savings for retirement;

lower dependency on publicly funded income support payments and services for longer periods;

better health for longer periods (provided that the job itself does not pose a health risk);

higher returns to revenue through taxation;

higher standard of living in the pre-retirement and retirement years than would be available from early retirement.

COTA believes that the dependency ratios predicted by the Commission of Audit could be substantially ameliorated by increasing employment amongst mature age people. There is significant work to be done in the short to medium term in improving the employment to population ratios of people under the conventional retirement age of 65. A longer term project will be to encourage people over the age of 65, health permitting, to remain in employment as well as removing barriers to their participation.

Geographical issues

There are difficult issues to be faced by Government in the context of the geographical concentration of mature age unemployment in regional and rural areas. Mature age people may be less able to relocate than younger people and at the same time there may be an insufficient local economy to absorb their labour. The Reference Group on Welfare Reform has made a number of recommendations in the area of local and regional development which COTA believes are worth considering in the context of the National Strategy for an Ageing Australia including (see pages 47 to 51 of the Interim Report on Welfare Reform):

in areas of high unemployment where community economic development is required to help generate local employment, community work programs could be used to support local initiatives reinforcing the capacity of the community to mobilise resources and create sustainable economic activity;

"community loan funds", a form of low cost credit, to regenerate local communities;

fostering community and business partnerships to work in building up local economic infrastructure;

taking further Government support in the forms of direct funding for local community building programs; funding for intermediaries that promote community-based regeneration; funding local programs through loans or grants; other supports such as research, advice, legal frameworks and fiscal incentives.

Principles for employment policy for mature age people

For mature age people, in particular, the Government needs to develop a plan for maintaining their labour force attachment based on the following principles:

Opportunity and choice: employment policy needs to provide encouragement and diverse opportunities for mature age people who wish to participate in the labour force.

Flexibility: it is important that there be opportunities for people to change the nature and extent of their labour force participation as they age. Options include moving from full-time to part-time work or moving to a different type of occupation.

Appropriateness: the nature of assistance provided to mature age people should be appropriate to their experience and maturity. Hence programs that people in younger age groups are encouraged to participate in, may not be appropriate for people in this age group. Any policy or program should ensure that older people retain their dignity.

Strategy two: Age discrimination

Tackling age discrimination so that mature age people are neither targeted for retrenchment nor prevented from gaining jobs for which they are qualified.

The second major stream of action on mature age employment needed for the National Strategy is in the area of age discrimination.

Age discrimination issues have been well-documented in the Human Rights and Equal Opportunity Commission report Age Matters (1999).

The main dimensions of age discrimination involve the targetting of mature age people in downsizing and retrenchment and the systematic discrimination against older people seeking jobs.

In addition, age discrimination in employment can exist by denying access to training to older people and limiting opportunities for promotions.

Age discrimination in employment is underpinned by a series of stereotypes and assumptions about older people:

mature age people do not need to work because they have savings, superannuation and access to social security and do not have family responsibilities;

mature age people do not want to work and are interested in early retirement;

mature age people are more likely to be sick;

mature age people are less productive than younger people.

There is ample research available which counters all of these assumptions much of which is already cited in the Employment for Mature Age Workers Issues Paper and COTA's report Older Australians: Working for the Future.

COTA believes that the Commonwealth Government can take a leadership role in educating business and the community about mature age workers. It can also lead by resourcing the policies, programs and strategies which will underpin this process of re-education. This may mean supporting initiatives such as the Australian Employers Convention initiated by Jobs East an Area Consultative Committee in the eastern suburbs of Melbourne.

There needs to be education which addresses:

the benefits to the workforce of having a balance of older and younger workers where diversity and difference are valued

the benefits of retaining the skills and competencies of older workers

the costs to business of losing those skills and competencies

the costs and limitations of having a predominantly young work force

in addition, education is required in the area of human resource management:

employers should be encouraged and educated to provide ongoing training for mature age workers

employers need to be made aware of the benefits of phased retirement and maintenance of the skills of the older workforce.

COTA also believes that it is time for a Federal Age Discrimination Act to be enacted to support equivalent State and Territory Legislation.

Strategy three: Education, training and lifelong learning

Promoting opportunities for education, training and lifelong learning so that all members of the workforce are able to maintain and increase their skills and mature age people are able to maintain skills and attain new skills relevant to the workforce.

COTA believes that the National Strategy for an Ageing Australia must involve a plan for continuous upgrading of the skills of the workforce to ensure that there is a strong correlation between the skills of the labour supply and the needs of employers. In this way, mature age people can be protected from skills attrition which makes them vulnerable to redundancy and creates barriers to re-employment. Lifelong learning is of economic and social importance to all ages. It is important in ensuring the adaptability of mature age workers, and makes a key contribution to older people's capacity to remain independent and active.

There needs to be several elements to a life-long learning and training strategy:

developing a culture of lifelong learning throughout the community backed up by a very wide range of accessible educational facilities to cater for diverse needs;

encouraging people currently in paid employment to pursue ongoing skills upgrading;

encouraging employers to ensure that all workers have up-to-date and relevant skills;

providing opportunities for unemployed people, both those in the social security system and outside it, to engage in training;

ensuring that there are opportunities for people who are not currently in the labour market (eg people with disabilities, people with caring responsibilities) to engage in training activities;

breaking down the mindset amongst some mature age people that they are too old for training.

Many mature age people have reported to COTA that there are a great many barriers involved in retraining for new occupations. They report the high costs of education and training as user pays systems have been systematically implemented through vocational training and higher education courses.

In addition, some people are deterred from training by the very long periods involved in acquiring skills at older ages. This can be a major issue for people with family and caring commitments. Such barriers need to be addressed.

Recognition of prior learning is an important concept in training programs for mature age people. Many mature people argue that they have learned many skills through work and life experience and that these should be taken into account in training programs and accreditation processes. In addition many mature age people have acquired skills through voluntary work

Recognition of voluntary work should be included in National Competencies Standards.

Training for diverse needs

Training for mature age people needs to recognise diverse needs. These needs include:

English language training for people from non-English speaking backgrounds

literacy training for people with poor reading and writing skills

up-dating of skills for people who have been out of the workforce for a long period or whose skills have become redundant

appropriate training for people with disabilities

there may be particular training issues for men and women respectively.

Training for information technology

One of the most important training needs for many mature age people is upgrading of skills in the area of information technology.

Appropriate training methodologies need to be explored for mature age people and barriers to formal training need to be removed.

The Council on the Ageing throughout Australia runs a range of successful programs for older people. Community training is a vital way of involving older people in technology and overcoming the skills barriers for those outside the workforce and educational institutions. Projects currently operating counter a prevailing myth that people's capacity to learn diminishes with age.

Strategy four: Greater flexibility in work and social security

Adjusting workplaces and the social security system to the needs of an ageing workforce

The ageing population and ageing workforce will create a demand and a need for phased retirement programs and more flexible working conditions for mature workers. In addition, the ageing population and ageing workforce will create greater pressures on employers to retain their skills base as it becomes increasingly more difficult to recruit younger workers.

Workplace flexibility is the fourth area that the National Strategy should address.

As people age, many people wish to change the nature of their relationship to paid employment. This may mean reducing hours of work or taking on part time work. It may mean continuing on in work after conventional retirement ages. Alternatively, it may mean changing occupations or industries or working in different jobs in the same organisation.

COTA could find no examples of phased retirement programs in Australia. Similarly, there are few examples in the United States. A recent report of the Committee of Economic Development (CED) New Opportunities for Older Workers (New York,1999) reveals the paucity of phased retirement programs in corporate America.

An alternative to phased retirement programs are rehiring programs for retired workers. Under such programs the company provides opportunities for retired workers to take up casual, contract and informal work opportunities. This arrangement can also be of benefit to companies in having needed skills on tap and knowledge of organisations.

The corollary of flexibility in the workplace is flexibility in social security provisions. Many older people have reported to COTA that they would like to take up part-time or casual employment opportunities but that this is not possible due to the effects of additional earnings on their social security payments, particularly through the operation of the income test.

We are particularly interested in the implementation of a system whereby earnings can be averaged out over a period, similar to the Earnings Credit Scheme abolished in 1996, which provides incentives for people to take up casual jobs. A reasonable limit would be around

$3000 a year which equates to additional income of around $60 per week). Such a scheme would be a particularly useful program for older people who have opportunities for periodic spells of employment rather than continuous part-time work. It may be particularly useful for measure for people in rural and regional areas where there may be opportunities for seasonal work.

The area of flexibility in the work place related to flexibility in social security, is an undeveloped one in the debate on mature age employment, which has been heavily focussed on the lack of opportunities due to age discrimination and poor perceptions of the productivity of mature age people. However, flexibility will be an important issue in the future as opportunities for mature age people increase with receding discrimination and greater recognition of the productivity benefits of older workers. Mature workers will demand greater choices as to how they work and the nature of the contribution they wish to make. Employers will understand the benefits of phased retirement and maintaining a relationship with former retired employees. It is vital that the National Strategy for an Ageing Australia, as a strategy focussed on the medium to long term, incorporates flexibility as a core element.

Strategy five: Adequate safety net provisions

Ensuring that people are not disadvantaged in later life because they are not in paid employment.

A fundamental element of a workforce strategy is to ensure that there is adequate safety net provisions for mature age people who are unable to participate in the labour force for reasons such as ill-health or disability, caring responsibilities or other factors.

The reality is that there will always be a proportion of mature age people whose capacity for paid employment will be limited or non-existent. It is vital that this group is protected from chronic poverty and disadvantage. COTA has raised concerns about the flow on effects in retirement of diminished opportunities for labour force participation in the pre-retirement years in our response to the Independence and Self-Provision discussion paper.

The key elements of safety-net protection include the following:

A social security system that provides adequate income support for everyone who is unable to participate in paid employment and does not lead to impoverishment of savings and assets as a result of the social security means test. COTA has said in its submission on welfare reform that "mutual obligation" requirements and activity testing for social security recipients, are inappropriate responses in the context of mature age employment.

A base of community services and social wage provision to ensure that mature age people are able to access all the services that they need in areas including health, housing and transport and community amenities such as libraries, educational facilities, sporting facilities etc.

Adequate support systems, counselling and training for people who lose jobs. These support systems should be accessible to people both inside and outside the social security system.

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Council on the Ageing (Australia)
Level 2, 3 Bowen Crescent, Melbourne Vic 3004
Tel (03) 9820 2655 Fax (03) 9820 9886
email cota@cota.org.au