Deflating the myth of a demographic time bomb

Healthy ageing and age-friendly workplaces can address workforce shortages in an Australia that is getting ever older, Cathy Gong and Hal Kendig write.

The Australian Government’s intergenerational reports highlight concerns about the rapidly ageing population, which is projected to lead to workforce shortages, increased welfare expenditure, and pressure on fiscal sustainability. Ten years ago, there were five working-age Australians (aged 15-64) for every older person. This number is projected to be less than three by the middle of this century.

But much more can be done to enable the older population to contribute to meeting the challenges ahead.

With people living longer and healthier, and entering the workforce at older ages, working longer is becoming not only necessary but also more feasible. Encouraging and enabling the large Baby Boomers’ cohort of mature age workers to work longer can yield benefits for individual wellbeing, government budgets and economic productivity.

To understand these changes, we looked at workforce transition data over 10 years from the national Household, Income and Labour Dynamics in Australia (HILDA) survey for 1700 people aged 45-64. HILDA enabled us to assess yearly changes in health, wellbeing and welfare dependency as people moved from paid work to unpaid work or early retirement, when compared to others who were staying in paid work.

During the 10 years, about two thirds of this mature age group were working, one fourth were voluntarily not working, and one tenth were involuntarily not working. Most of the involuntary non-workers were forced out of paid work due to their own or their spouses’ poor health or redundancy.

We found older workers who had left paid work to be vulnerable in income, health, and work capacities. Many had limited choices in deciding whether to work or not, and were experiencing adverse consequences. One tenth had most of their household income from governments a year after leaving their paid work, and this proportion would increase over a longer term if they did not return to paid work.

Health is the primary and crucial factor underlying both voluntary and involuntary exits from paid work at mature ages. People with fair or poor health had relatively little personal choice about working or not when compared to those with better health. Individuals who had poor health were at a higher risk of departures from paid work and also less likely to return to paid work after leaving employment.

Leaving paid work at mature ages has different impacts on health and wellbeing depending on whether people felt that they had control in their former workplaces and over their departures, and whether they were financially prepared.

More on this: Does Australia need a universal basic income?

Those who voluntarily left paid work had a stable level of life satisfaction before and after the changes. People who had involuntarily left paid work had a lower level of job satisfaction prior to their leaving. They were much less satisfied with their health, finances and lives, more likely to be psychologically distressed and welfare dependent, and more of them returned to paid work after leaving employment.

Among mature-aged workers who were working, flexible work hours and arrangements are important considering their health and caring responsibilities. Among those who voluntarily left paid work at mature ages, the main policy concerns are their health condition and welfare dependency.

Among those at risk of involuntarily leaving paid work, major challenges arise as to how to update their skills and build up age-friendly workplaces. These actions can enable them to stay in their jobs longer while retraining can facilitate their returns to paid work after leaving jobs.

What can be done? Employers can enhance control, flexibility, workplace health promotion, and re-training among valued mature-age workers. Employers who retain older workers gain from their experience and maturity. They can increase efficiency and productivity by investing in their training and collaboration with the younger people in their workplaces.

Older workers can be especially well suited to customer service, particularly to the growing numbers of affluent older consumers. As case study evidence from the Australian Human Rights Commission has shown “Organisations that are inclusive and diverse report tangible benefits in terms of productivity, performance and innovation while also having access to a broader talent pool and an improved organisational reputation”.

Governments can build human and social capital through health promotion and education across the life course. Baby Boomers are already looking after their own health better with more physical activity while the risks of obesity and chronic disease require ongoing action. Much can be done through individual action and self-help groups, but it is equally important to have age-inclusive health promotion and education in the general community.

Australia has legislation to address age discrimination in employment but ongoing leadership is required to challenge inaccurate and harmful stereotypes of older people. Comprehensive action against pervasive ageism and age inequalities can ensure constructive responses to the challenges of an Ageing Australia.