Examine the Implications for the Organization of an Ageing Workforce in Australia free essay sample

Introduction Over the past decades, Australia, as a whole, has been facing the challenges of aging workforce which present difficulties not only for small business but also large enterprise. Proven by many researchers, niche capabilities and potential development of any organization are largely dependent on its employees. Geok, Pok and Noi [2002 pp9] claim that â€Å"the impact of graying population on country’s social and welfare systems, infrastructures as well as economic growth is substantial, several developed nations have been promoted and adopted social policies to address this specific issue†. Many business cases studies regard mature workers at the age of 45 and over are as ageing workforces who are believed to introduce difficulties in business planning and strategies to retain and sustain the balance in workforce within an organization. At the same time, it cannot be denied that the present of older generation within an organization is absolutely essential in term of providing necessary knowledge and working experiences to the younger generation worker. Therefore, it is important for organizations to examine the implications of Australian ageing workforce in order to achieve its targets and development. This paper will discuss the demographics of Australian population and workforce. Benefit of mature workforce within an organization will also be addressed. The consequences of ageing workforce will in turn be examined by in term of Human Resource management as well as cost and productivity level of the company. Finally, this study attempts to indicate certain management measures to maximize the productivity of ageing workforce. The demographics of Australian population and workforce Firstly, it is essential to examine the Australian population as ageing within population will most likely lead to the ageing in the workforce. It can be indentified that the current ageing population within Australia is primarily due to the rapid decreasing in the birth ratio. The fundamental reason behind such decreasing ratio is due the post World War II â€Å"baby boomer† generations that is entering to the age of retirement in the next ten years. In the mean time, birth rate is considerably lower within Australia. The proportion of people aged 65 years and over in Australia has witnessed an increase of 12. 9% between June 2004 and June 2009 [Australia Bureau of Statistics 2009 cat. no. 3235. 0]. In addition, there is an increase in the average life expectancy as a result of the improvements in health and advances in medical service. This emphasizes that there is currently a larger number of older people than ever before and according to Productivity Commission 2005, this trend will continue for several decades. Furthermore, the current generations tend to marry in a later age and have fewer children than previous generation. According to Australia Bureau of Statistics [cat. no. 3306. 0. 55. 001], the median age of males getting married in 2007 was at the age of 31. 6 and that of females was 29. 3. Both males and females median age at marriage has been increasing gradually over the past 20 years. Moreover, in recent decades, there has been tendency for women to delay childbearing until forties, not to mentioned some remained childless [Australia Institute of Health and Welfare cat. o. PER 50]. These have resulted in a rather low supply of young employees while older employees are retiring and leaving the workforce. Figure 1: Average age of full time workers and civilian population ages 15-64 years Source: Parliamentary Library Over the past two decades, workforce has been ageing faster than the general population. The chart indicates that the average age of the civilian population in 2004 is 2. 2 years greater than it was in 1994, rising from 36. 6 to 38. 8 years. On the other hand, an increase in the average of all full-time workers of 3. years, from 35. 9 to 39. 4 can be observed in figure 1. The workforce ageing faster than population is because of the participation of baby boomer women later in life. As a result of social reason such as financial pressure, there is an increase in the number of women in the labor market. The average age of full-time female worker has risen by 5. 6 to 38. 5 years [Parliament of Australia]. Women have been moving to part-time jobs that have more advantages for them than previous decades. Another factor which impacts on the ageing workforce is hat there is currently a trend for mature aged worker to keep working past their retirement age as they still possess the physical capability to make a significant contribution to the economic growth of Australia. Essentially, with the advancement in medical system, people are able to have better health care and in turn live longer life. Consequently, the working period of aging workers can be much longer as their ability and flexibility is still sufficient for the allocated tasks. This in turn affects the decision to retire as it is directly related to required physical capability. Current government’s policies and incentives reflected that the retirement decision, nowadays, depends not only on the organizations but also on individual. Benefits of a mature workforce Current status of ageing population is a controversial topic in society. This requires companies to pay more attention to older personnel resources. Majority of older employees believe that they are still at the peak of their job performance. Organizations with its main employees are matured workers; therefore, need to consider the benefit of its older generation staff in order to look for appropriate measures to attract and retain older workforce. Firstly, flexibility, maturity and patience are one of the most important benefits of the ageing workforce. With the older employee’s experiences, better quality work will be ensured which allow business to reduce a significant amount of production cost. In addition, older employees can help company maintain a stable workforce, reliability, and dedication to work. Secondly, the older generation workers have higher working morality in punctuality as well as ensuring the completion of assigned tasks. Moreover, honesty is the common characteristics of older workers. They understand the value of life, the causes and effects of working and social relationships as well as responsibility. As a result, older generation workers will always come to ensure the integrity of their action by dedicating it to the truth. Furthermore, the intangible value of older workers is meticulous, thorough, focused and attentive which can help companies to deliver a higher quality work package and in turn gaining better niche reputation in the market. Additionally, older workers are also valuable resources within a company as they have the ability to listen and understand the objective of a given task. Therefore, when they are allocated a duty, with certain working experiences, the mature workers know what needs to be done within the entire process to finish their job. They are likely to be more efficient and productive. Next, older employees tend to have more pride within their completed tasks in term of quality which can be difficult to find in younger employees. The younger employees are not attentive with the assigned work which can be completed without any further consideration on quality and improvement of their work. Comparatively, older employees will more likely to spend more time to measure and improve the quality of their given tasks. Older employees understand that working for a company that has meaningful life rather than getting a monthly wage. They are more likely to spend more time, while receive similar wages to complete their assigned tasks as well as fulfilling their goal in life Besides, performance and trust, mutual sharing ideas and advice have made older workers become more ideal. These years of experience working in various fields had given the employees a great insight on how to have the work done more efficiently, saving more time and money for the company [NSW Business Chamber]. Compared to younger workers, older workers with broader experience have greater ability to solve certain problems such as communication or technical errors that might arise during the completion of their task. With their good organizational, planning skills as well as competencies that are built over the years, the mature aged workers have the ability to face and troubleshoot errors without seeking advice from colleagues and high management. Moreover, through experience, older generation workforces also possess better communication skill to negotiate and persuade partners in order to achieve the objectives. These skills allow them to be flexible in a difficult situation. The better working practice and morality characterized older employees as essential resources which can lead to positive influence on other younger employees. Consequently, they can become excellent teachers, the typical example, helping to train other staff to be more reliable and efficient [NSW Business Chamber]. In general, business owner should no longer wonder on whether or not to recruit older workers and should recognize benefits of ageing workforce. The competencies and reliability of older workers ensure that their recruitment become truly more productive and efficient than hiring a younger labor force. With the buildup experience as well as the ability to think thoroughly, older employees should be considered for further business recruitment. A report from Queensland Government states that â€Å"Studies of older people in the workforce have also found that they are flexible in their working hours and conditions, and have good coping skills when faced with changes†. Companies who value to the reliability, competencies and working morality within their employees should consciously consider hiring mature workforce. Their contribution and performance can have positive impact on the company’s turnover and profit for years. Consequences of an aging workforce The aging workforce in Australia has caused certain economic and social concerns such as labor shortage when personnel resources reach retirement stage, difficulty in planning [Shacklock 2005] and aged care workforce issue [Spoehn 2008] and [Kryger 2005]. To begin with, the proportion of ageing population in Australia is increasing, in fact, people aged 65 years is predicted to take 25% of total population in 2045 [Spoehn 2008]. This may lead to labor crisis which is forecasted with a shortage of 1. 4 million skill workers in various industries within Australia [Hannah 2009]. In general, the labor shortage affects not only entrepreneurs but also the government. The shortage is mostly on scientific and technical fields which requires high level of knowledge as well as the necessary skilled and experience. According to [Hudson 2004], within 12 years from 1982 to 2000, the requirement of post-secondary increased more than 50%. Meanwhile, the Hudson study [2004] also showed that nearly 60% of Australian at the age of 17 studying year 12 did not go on to tertiary education in 2001. This information presents a long term a problem for Australian’s scientific and technical industry as it will not be having enough talent pool for further research and development. Essentially, this would lead to the degradation in Australia’s academy system, technical advancement and future development. To the government, high rate of retirement is possibly synonymous with social concern as well as welfare problems. In 2004, the Australian Federal Treasurer – Peter Costello called people to keep working longer since the national budget was suffered rising demand by high aging population [Eric 2005]. Moreover, in the term of human resource, companies are also facing difficulties in personnel planning when choosing the suitable candidates for any specific tasks. For companies to succeed in their respective market human resource planning plays a significant role in term of delegating tasks effectively and efficiently. According to various study, the longer the period of time an aging personnel works, the more difficult it is for human resource department to come up with a scheme to manage and sustain the workforce balance within a company. To clarify the aforementioned point, it is rather ambiguous for either human resource or management to predict the exact retirement day for an aging worker. If retirement day for aging worker is not clearly defined, human resource department may not be able to recruit the appropriate replacement in time to continue the delay works. This delay works would in turn introduce costs in every aspect of the company as productivity level is reduced and it takes time and effort to find and train suitable candidate for the vacancy. [Patrickson and Ranjin 2008]. Therefore, high level of collaboration as well as management had to be performed in order to produce an appropriate future personnel panning. It takes time and effort to find and test if one person is suitable for the vacancy in company or not. In term of salary and cost, due to the experience and responsibility senior employees possess, the company, by nature, will have to assign a relatively high portion of its turnover as salary for older generation worker [Hudson 2004]. Furthermore, aged care workforce issue is one other large amount of cost that Australian government has to solve. Generally, there is currently an imbalance of gender and age in workforce, the lack of health care staff as well as the variety of health care package amongst industries. High number of woman and old people in workforce may lead to increase of cost budget raised from maternity care, incident care, and retirement pension. As a result, companies and government had to allocate large sum of money for ageing workers. According to Spoehn [2008], community aged care rose 6 times from 1995 to 2003 and from 2001 to 2006 and this led to the aged care package went up to 48%. As mentioned above, having older eneration worker would introduce certain benefits into the company’s profile, however, with the rapid developing rate of technology, it was studied that the old worker may find it difficult to accept and adapt to new changes [Patrickson and Ranjin 2008]. For instance, various survey has been done and shown that worker in the age of 65 and over normally assume that new technology is ha rd to deal with. On the other hand, it seems rather easier for younger employee to accept changes and quickly adapt with the new technology in order to complete their tasks at a higher productivity level. Thus, having to train the older workers with new set of skills and technology will result in a large amount of cost as well as time which might be utilized for other aspect of the company. In fact, Patrickson and Ranjin [2008] concluded, human’s ability and flexibility weakens as they age, especially when they reach seventy. However, with the extensive working experience in the industry, it was shown by many research authors, working procedures and strategies resulting from ageing worker increase the effectiveness of the work when compared to the younger generation worker’s [Hudson 2004]. Managing an ageing workforce As a result of a continuing ageing workforce in Australia, it is necessary that all the involved parties such as the government, the trade union and firms implement different policies in order to maximize the benefits of an ageing workforce and reduce the negative aspects. The Australian government and the labor union could essentially cooperate to support mature aged workers. According to Patrickson and Ranzjin (2005), the government has enforced a policy that allows workers to receive higher pension welfare if they continue to work at the age of 65 and over. This incentive is done to encourage older employees to devote their experience to the economic growth for a longer period of time. Moreover, in 2005, the Queensland government has implemented the â€Å"recreation leave on half-pay† policy [Price and Colley 2007 p11]. Essentially, the working age of labor force can be lengthening by the extension of leave which provide the social balance for mature aged workers. Price and Colley [2007] also suggested that the Queensland public services have been supporting older workers to have a social balance between life and work by providing flexibility in the workplace location such as working at home. Apart from the direct assistance for workers, the government’s policies also aim to help employers. These legislations consist of statements revolving around the advantages of employing older workers such as the public acknowledgment for firm’s marketing plan [Patrickson and Ranzjin 2005]. In addition, the labor union has also assisted the government to enforce appropriate policies to an ageing workforce. An example of this is Australian Council of Trade Unions (ACTU)’s campaign to mobilize proper working hours. ACTU’s campaign has leaded the Queensland government to negotiate with enterprises and develop the workload management methods in order to monitor the employees’ issues [Price and Colley 2007]. Managing mature aged workforce is rather difficult for organizations and firms. It was indicated that managers must confront the conflict between the special values of older workers and the requirement sustaining the efficiency and productive capacity [Patrickson and Ranzjin 2005]. However, as it was mentioned above, mature aged workers can benefit firms with their experience while young workers might be dynamic with technology and innovation but tend to lack working experience. Therefore, manager should maintain an ageing diversity workforce. Moreover, firms and organizations should also encourage older workers continue to devote their working ability for longer period of time so that the experience of ageing employees can be best valued. There are four main human resource management strategies that managers can follow to keep older workers stay with their organizations. First of all, as older employees may have devoted to the companies for long time, it is necessary that the firms have a database of information about them such as their expectations and their opinion [Patrickson and Ranzjin 2005]. Although the elderly worker may not be able to acquire new knowledge as quickly as the younger generation do, ageing workers can still be retrained. In reality, according to Burke and Ng [2006], younger employees are likely to be disloyal and can quickly change their jobs because of their desire to grow higher in their career’s â€Å"ladder†. Meanwhile, older workers are possibly worth training as they will continue to contribute to the firms after they are trained. Furthermore, the employment of ageing workers with the aim to train other employees is probably a common but useful HR management strategy. For small and medium firms, this strategy which is also referred to as â€Å"on – the – job training (OJT)† will ensure that the transfer of experience and knowledge from the former generation to the new employees [Beaver and Hutchings 2005 p9]. This allows managers to not only utilize the experience of ageing workforce but at the same time reducing the cost of training new employees. Finally, since the problem of health is the major reason why older workers decide to retire, managers should take actions in order to improve workers’ well – being. For example, it was explained that the improvement in working condition to prevent occupational illnesses as well as a better assistance for workers who have health problems can increase the working age of the workforce [Ilmarinen 2006]. Conclusion Human resource is the most important key in maintaining productivity in a company in particular and in an economy in general. That is why employers and government is putting effort into encouraging people to remain at work as long as they can by introducing certain policies and incentives such as guarantying the health care, welfare, extra-education as well as increasing the role of labor union. Furthermore, within an organization, managers are responsible to create an equal opportunity during recruiting process for all workers regardless of age as well as the experience of the employee. It is necessary for human resource department to manage and sustain the balance in company’s workforce which ultimately will bring out the potential for future success. References BEAVER G and HUTCHINGS K [2005] â€Å"Training and developing an age diverse workforce in small medium enterprises: The need for a strategic approach† Education and Training Vol. 47 Issue 8/9 pp 592 – 604 BURKE R and NG E [2006] â€Å"The changing nature of work and organizations: implications for human resource management† Human Resource Management Review Vol. 6 Issue 2 June pp 86 – 94 FED: Australia Faces Shortage Of 100,000 Tradespeople, says MBA. [1 June]. AAP General News Wire,1. Retrieved March 29 2011, from Academic Research Library. 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