Mature aged workers need jobs to stay in workforce

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This article was originally published on The Australian Financial Review p39 14 May 2014.

Increasing the pension age to 70 raises questions about the capacity of Australians to work for longer and for industry to accommodate them. From fiscal and labour supply perspectives, the arguments in favour are persuasive. Add to this the argument that links working longer with a successful transition to old age and the case is further strengthened.

However, the new policy rhetoric of “active ageing” rather than the passive receipt of welfare is likely to ring hollow to job-seekers aged in their 50s or those whose life expectancy, due to a combination of social and health risk factors, is likely to fall short of age 70 or exceed it by little.

Many unemployed workers will in effect be retired, but lack the financial wherewithal to withdraw from the labour market, even though this might be the fairer course of action. Active ageing that means unemployment or underemployment is a denial of the modest dignity provided by early withdrawal.

Although advocates for working longer point to its benefits, if this is not “good work” then this may reduce the prospect of successful ageing. Despite the shift to a knowledge and service-based economy, many workers are to be found in physically demanding jobs or unsafe or unpleasant work environments that do not lend themselves to prolonged working lives. Transition rates into both unemployment and inactivity are higher for older workers in jobs of low quality.

For active ageing to work, a number of factors need to be in place. Labour market policy has made limited inroads so far. Both the Coalition and Labor have policies of offering financial incentives to employers who recruit older workers. This is not a new idea. Similar programs have been tried, with limited success in other countries.Employers require incentives to employ older workers

Unfortunately the signal sent is that mature age workers have such work-limiting issues that the only way they can be employed is if the governments pay someone to do it. There is evidence that such schemes mostly benefit younger older workers and those who are most qualified, who would be more likely to find a job anyway. Often, jobs do not last after an incentive scheme ends. Employers find such schemes administratively cumbersome.

There are areas where the government could act to greater effect. We agree that demand for older labour is a problem. Organisational leadership trying to build or maintain competitive advantage in complex environments may have suspicions that older workers represent a serious barrier to organisational change and flexible performance. Such a perspective provides a seemingly coherent and, above all, business-focused explanation for the apparent drawbacks of older workers. Many employers need to be convinced. The widespread promulgation of examples of innovative employer practice targeting the integration of older workers and the greater availability of guidance to managers, would assist industry to respond better. Here the Finnish concept of “work ability” offers a holistic and coherent framework for the design of workplaces, jobs and management structures that can enhance a person’s prospects of continued workforce participation.

The limits of demand for older workers must be identified if governments are to know where their responsibilities end. Policymakers must be wary of pushing older people into labour markets where their abilities are not valued. While at odds with an activation ideology, it is our contention that targeted exit pathways will play a crucial role in the volatile globalising labour market of the early 21st century. Bridging the gap between work and retirement with something other than unemployment assistance would acknowledge the contribution older people have made and recognise their future prospects. The European Commission, for instance, has acknowledged the importance of maintaining a good social safety net for older workers, but to be implemented once efforts at integration such as job-search support and training have been tried.

Finally, there is a need to act at a basic level to change the way age and ageing is viewed. Modifying the institutional framework will not, by itself, undo a solidly anchored early retirement mentality. Efforts to foment attitude change among employers and older workers are necessary but there is also a need to focus on changing wider societal representations of what it means to grow older. This is a long-term project.

In the meantime, policymakers need to accept the current limits of active ageing and devise policy solutions accordingly. Thus, a pragmatic balance is required between, on the one hand, maximising job chances, and on the other, providing an escape from diminishing prospects.


Professor Philip Taylor is at Federation University Australia; Professor Deborah Ralston is at the Australian Centre for Financial Studies; and Michael O’Neil is with National Seniors Australia.

This article was originally published on The Australian Financial Review p39 14 May 2014.