AGEING WORKFORCE Issues for Government, Organisations and
Individuals Pat McCarthy, Graduate School of Business RMIT
University, 11 May 2006
Slide 2
The importance of demographic change lies in its impact on
Australias GDP prospects. Growth in GDP is driven by three factors
: population, participation and productivity (Australian National
Treasury, 2003) NATIONAL WELL-BEING
Slide 3
Ageing will reduce global wealth- McKinsey forecast that
household financial wealth in the worlds major economies will be
roughly $31 trillion less in 20 years time than if historical
trends had persisted
Slide 4
Slide 5
POPULATION PROJECTIONS AustraliaItalyJapan 200019.1 m57.5 m127
m 205026.5 m43 m109 m SOURCE:Population Div of Department of
Economic and Social Affairs of United Nations Secretariat
(2001)
Slide 6
Slide 7
Slide 8
Slide 9
Slide 10
PARTICIPATION IN THE WORKFORCE OF PEOPLE 55-65 AUSTRALIA
SWEDEN, SWITZERLAND, NORWAY 49%Averaged over 70% [1]OECD (2002)
OECD Statistical and Analytical Information on Ageing, Summer
2000
Slide 11
Skilled labour shortages increasingly critical - declining
birth rate, low participation rate in work by people over 55 and
poor skill currency Current number of new workforce entrants each
year - 175,000 Between 2020-2030 - average 12,500 per year Source:
Access Economics
Slide 12
Australia faces potential shortfall of 195,000 workers over
next 5 years.Centre for policy studies Monash University Workforce
Tomorrow Report (2006)
Slide 13
Reserve Bank of Aust. Statement on Monetary Policy Feb 06
Skilled and unskilled labour shortages are broad based and have
become an increasing constraint on business growth
Slide 14
Current shortages of skilled people Source: Kevin Chandler and
Andrew Murrowood, Chandler MacLeod 1/3/ 04 Mining- engineers
Apprentices/ tradespeople across the board from chefs,
boilermakers, plumbers etc- have been leaving Victoria for booms in
WA and Qld. Accountants Finance and banking- extremely competitive-
spiralling salaries Hospitality- casual people very difficult
Slide 15
Skilled Migration Migration intakes over recent years- 120,000
( but >50,000 emigrated from Australia in 2002-03) Widely
acknowledged that population policies will have a limited role in
maintaining and improving the living standards of Australian
because migrants age like the rest of us and because other
countries will be competing for migrants- Kevin Andrews (20 Feb
06)
Slide 16
A Drake Study (1999) of 500 employers and HRMs found that they
considered the optimum age for new management recruits to be:
62%-31-40 23%-in 40s 0%-in 50s Note: This situation is changing-
RSA has been funded by government to encourage recruiters to avoid
age based discrimination
Slide 17
Productivity declines little with age, and in many applications
(notably work including intellectual skills) productivity may rise
with age Verbal intelligence remains the same or increases with age
The distribution of management and learning skills among active 65
year olds is more like the distribution among active, healthy 25
year olds Research Contradicts Popular Beliefs About Older
Workers
Slide 18
Chronological age is not a good predictor of the competence of
the older adult Work methods and strategies resulting from older
persons experience may so adequately compensate for any other age
related limitations. That their effectiveness is greater than it
was in their earlier years Research Contradicts Popular Beliefs
About Older Workers
Slide 19
A review of case studies and anecdotal evidence concluded that
the high variation of manual labour performance within age groups
suggests that individual differences are much more important than
age group differences. The need to evaluate potential on an
individual basis, and not by age group has been convincingly
established in these studies. Research Contradicts Popular Beliefs
About Older Workers References: Reid (1989), McNaught and Henderson
(1990), Encel (1992) Salthouse (1994) and Waldman and Avolio
(1986), Levic (1988) Access Economics (2001)
Slide 20
Slide 21
There appears to be a lot of pop culture around generational
differences Todays new managers (compared with managers 20 years
earlier) are enthusiastic, aggressive, ambitious, and well trained:
but some also tend to be brash, weak in human relations, and shy on
team play and corporate loyalty S.A.M Advanced Management Journal
1976
Slide 22
My experience in Silicon Valley is that the older workers are
their own cause of replacement to the extent they dont update
themselves. Ultimately, its their own career and they have to take
responsibility for that. The bottom line is the individual has to
pay the mortgage, not the firm. Personal Communication Gary R.
Oddou, Ph.D Department Head College of Business Utah State
University