Issue 3

Mature age workforceMay 2011

APS Human Capital Matters: Mature age workforceMay 2011, Issue 3

Editor’s note to readersWelcome to the third edition of Human Capital Matters—the digest for time poor leaders and practitioners with an interest in human capital and organisational capability. This edition brings to your attention articles that examine the multi-faceted challenge of the mature age workforce.

Ahead of the Game: Blueprint for the Reform of Australian Government Administration (the Blueprint) identified an ageing and growing population as the first of five powerful domestic forces that government and the APS will need to address. The greater demand on health, aged care and social services combined with the reduced proportion of the population participating in the workforce ensures that the APS will be at the forefront of the national response to this challenge. The Blueprint also recognised that the APS will need a talented workforce to meet the growing needs of citizens and to solve complex policy problems but the competition for the best and brightest will be intense.

The articles in this issue of Human Capital Matters address not only the scale of the problem but also the multiplicity of its effect and the ways in which we might respond. However, we need to approach this risk with an open mind. The mature age workforce will be more diverse in terms of the way it does work, in its capacity and capability, and in its attitudes and motivations. This group will challenge our assumptions about work, people and behaviour. Consequently, our focus should be on changing the way we work to suit the workforce we have rather than on trying to change the workforce to suit the way we believe the work should be done.

Similarly, there is a need to avoid hype and speculation. There is a need to accumulate an evidence base that goes beyond demographics to explore the attitudes and opinions of older workers in relation to the way they want to work. Our expectations of work and life are reshaped over time. So, it is not enough to be attuned to what is going on inside our organisations—there is also a need to consider how the broader social patterns of Australian society are influencing behaviour and attitudes. The Australian Public Service Commission will be looking closely at the mature age workforce in order to establish an evidence-base that might inform a public sector response to the challenges and opportunities of a mature age workforce.

The articles summarised in this issue of Human Capital Matters provide a variety of perspectives on dealing with the ageing workforce.

Deloitte Australia have produced four reports that deal with the programs and initiatives being implemented by the New South Wales, Victorian, Queensland and Western Australian Governments to address the challenges of their ageing public sector workforces.

The Department of Education, Employment and Workplace Relations (DEEWR) has produced a guide for government and private sector employers across Australia who are employing, or who are considering hiring people aged 45 years and over.

Susan Hannam and Bonni Yordi have produced a report that identifies and examines six trends occurring in both the public and private sectors and explores ways in which managers can deal with the (often new) challenges associated with these trends.

In an article that sets out the basic elements of ‘Work Ability’ the distinguished Finnish academic Juhani Ilmarinen details its reception and application, first in Finland, and then internationally. Ilmarinen stresses the need for more evidence-based concepts to prevent work ability from declining and to promote it within the demanding context of globalisation, new technology, and demographic change.

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Roddy McKinnon analyses the human resources management (HRM) and service delivery implications for OECD public services of an ageing public sector workforce, and in particular, the impact of rising rates of retirement of public servants employed in the ‘social protection sector’ (i.e. social security and welfare work).

An OECD report explores how (HRM) in government is being (and will continue to be) affected by pressures for change in public sector service delivery arising from the demands of ageing populations across the OECD. The experience of nine countries is examined: Australia, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands and Portugal.

A second OECD report examines the latest edition of the OECD’s Pensions at a Glance series on the global ramifications of an ageing population for pensions and retirement provision. It examines why people are living longer and the (already emerging) serious implications of this for OECD governments and economies.

The University of Vermont, School of Business Administration examines the likely effects (some already apparent when it was written in the early 2000s) of an ageing workforce in the USA, more specifically, the issue of how to realise the human capital potential of ageing employees.

About Human Capital MattersHuman Capital Matters seeks to provide APS leaders and practitioners with easy access to the issues of contemporary importance in public and private sector human capital and organisational capability. It has been designed to provide interested readers with a monthly guide to the national and international ideas that are shaping human capital thinking and practice.

Comments and suggestions welcomeThank you to those who took the time to provide feedback on earlier editions of Human Capital Matters. Comments, suggestions or questions regarding this publication are always welcome and should be addressed to: humancapitalmatters@apsc.gov.au.

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Deloitte Australia Deloitte Australia, ‘Responding to the Challenge of Australia’s Ageing Workforce: A

NSW Public Sector Perspective’ (Report), 2010, 16pp. Deloitte Australia, ‘Responding to the Challenge of Australia’s Ageing Workforce: A

Victorian Public Sector Perspective’ (Report), 2010, 16pp. Deloitte Australia, ‘Responding to the Challenge of Australia’s Ageing Workforce: A

Queensland Public Sector Perspective’ (Report), 2010, 16pp. Deloitte Australia, ‘Responding to the Challenge of Australia’s Ageing Workforce: A

Western Australia Public Sector Perspective’ (Report), 16pp.

These four reports deal with the programs and initiatives being implemented by the New South Wales, Victorian, Queensland and Western Australian Governments to address the challenges of their ageing public sector workforces. They also propose further approaches for change which might better prepare their agencies to deal with the coming shift in workforce demographics and the consequent talent loss they will experience.

The text of the reports are largely similar, with Deloitte inserting where appropriate (and in the Conclusion) state-specific proposals and statistics. Despite their sameness, the reports succeed in highlighting the distinctive trends and developments in each state. The reports rely heavily on age retirement surveys conducted by individual public services, for example, the Retirement Intentions Survey conducted by the NSW Government in 2005 and a similar Victorian Government investigation which took place in 2004. The NSW survey, for example, revealed that the wave of retirement and skill loss in that state’s public sector is well underway. Fifty-seven per cent of the more than 18,000 public servants aged 45 years and over who were surveyed planned to retire by 2015, 27% of these were intending to retire by 2010 (68% of whom had 20 or more years of service), and 30% or more were planning to retire by 2015.

In Victoria, of the public servants aged 50 years and over who were surveyed, almost 40% planned to leave the Public Service within five years. In the case of Queensland and Western Australia, Deloitte drew on reports by the Auditor-General and the Department of Premier and Cabinet respectively. Among the proposals for addressing this drain in people and skills, Deloitte suggests streamlining back office functions, implementing low-cost delivery and operating models, improving leadership, greater collaboration in addressing the retirement challenge, and more innovative approaches to dealing with it.

Deloitte Australia is an affiliate of Deloitte Touche Tohmatsu, an international research and consultancy firm specialising in audit, taxation, consulting and financial services.

DEEWR, Australian Industry Group and the Consultative Forum on Mature Age Participation, ‘Investing In Experience’, Commonwealth of Australia, Canberra, 2011, 20pp. (The document is accompanied by a 2pp Employment Charter )

This is a guide for government and private sector employers across Australia who are employing, or who are considering hiring people aged 45 years and over. It is the result of a collaboration between the Department of Education, Employment and Workplace Relations (DEEWR) and the Australian Industry Group, and has been user-tested across employers in a range of industries. It is designed to build employer confidence in recruiting and retaining mature age staff, and to encourage positive age management practices in Australian workplaces.

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The Guide is one component of the Australian Government’s Consultative Forum on Mature Age Participation. The Forum, which was established in February 2010, comprises representatives of senior’s organisations, unions, employer and industry groups.

Actions set out for attention by employers include reviewing present practices and where necessary introducing improvements in seven areas: recruitment; selection; training and development; health and well-being; management/supervisor skills; redundancy; and retirement.

Accompanying the Guide is a brief Investing in Experience Employment Charter.

The Department of Education, Employment and Workplace Relations has overall responsibility for workplace policy. The Australian Industry Group is a peak body representing the interests of more than 60,000 businesses across all sectors of the economy. The Consultative Forum on Mature Age Participation provides advice to the Government on issues such as attitudes toward mature age people and age-based discrimination.

Susan Hannam and Bonni Yordi, ‘Engaging a Multi-Generational Workforce: Practical Advice for Government Managers’ (Report), February 2011, 29pp. The authors acknowledge that the US workplace is undergoing ‘a significant transition that presents unchartered territory and tremendous opportunity’ for improvements across all sectors. They note that over half the national workforce appears to be unsatisfied with their jobs and that addressing this will almost certainly be more difficult than in the past because the workforce now spans four generations. For example, each of these generations has different learning and communication styles, different work-life balance needs, and different preferences in relation to how their contributions are recognised. Understanding these differences and preferences can contribute a great deal towards organisational capability.

The report identifies and examines six trends occurring in both the public and private sectors and explores ways in which managers can deal with the (often new) challenges associated with these trends. The trends are: 1) increased use of new technologies to communicate; 2) increased expectation for work-life flexibility; 3) increased expectation for continual development; 4) increased need for new ways to reward and recognise employees; 5) increased need to engage the entire workforce; and 6) increased emphasis on innovation.

Some solutions proffered by Hannam and Yordi for addressing challenges would have dual benefits; for instance, increased mentoring of younger employees by experienced workers could be matched by ‘reverse mentoring’ where young employees (the ‘Millenial Generation’) help older workers develop the full complement of computer and social media skills and understand the networking demands of workplaces today and tomorrow.

This report was undertaken for the IBM Center for The Business of Government and IBM Global Business Services.

Susan Hannam is Dean of the College of Health, Environment, and Science at Slippery Rock University, Pennsylvania, USA. Bonni Yordi is Director of Surveys and Business Research for MRA—The Management Association.

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Juhani Ilmarinen, ‘Work Ability—A Comprehensive Concept for Occupational Health Research and Prevention’ (press download button on link), Scandinavian Journal of Work, Environment & Health, Vol. 35, No. 1, 2009, pp. 1–5. During his time at the Finnish Institute of Occupational Health (FIOH) in the early 1980s, Professor Ilmarinen headed a multidisciplinary team which devised the Work Ability Model and its central component, the Work Ability Index (WAI). Since then, these have been used extensively to identify key factors for attention in extending people’s working lives.

This article sets out the basic elements of ‘Work Ability’, and details its reception and application, first in Finland, and then internationally. The author defines the concept as being primarily ‘a question of a balance between work and personal resources’ (p. 2). The Index is a means of determining this for individual employees and maintaining it throughout the changes and rigours of working life from young adulthood to old age.

Following its introduction in Finland, Work Ability has been widely adopted by all levels of government in many countries. By 2009, the Work Ability questionnaire was available in 26 languages. Key elements canvassed by the Work Ability questionnaire include/relate to an individual’s current performance compared with their lifetime best performance, questions relating to an employee’s resilience in the workplace, the number of sick leave days taken by an employee over the past year, and an individual’s likely assessment of their work ability two years from now.

The author stresses that the development of more evidence-based concepts to prevent work ability from declining and to promote it within the demanding context of globalisation, new technology, and demographic change are urgently needed (p. 4). An encouraging instance of this is the growth in the number of national networks and databanks established to enhance work ability research and strengthen networks designed to address the work ability challenge internationally.

Juhani Ilmarinen is Professor Emeritus, Finnish Institute of Occupational Health, and Visiting Professor of Occupational Wellbeing and Work Ability at the Swinburne University of Technology in Melbourne. His 500 publications in the fields of occupational health, work physiology, work ability, and ageing include the handbook on age management, Towards a Longer Work Life (2006).

Roddy McKinnon, ‘An Ageing Workforce and Strategic Human Resource Management: Staffing Challenges for Social Security Administrations’, International Social Security Review, Vol. 63, Issue 3–4, July 2010, pp. 91–113 <http://onlinelibrary.wiley.com/doi/10.1111/j.1468-246X.2010.01371.x/full> (subscriber access only to full article)

The author analyses the human resources management (HRM) and service delivery implications for OECD public services of an ageing public sector workforce, more particularly, rising rates of retirement of public servants employed in the ‘social protection sector’ (i.e. social security and welfare work). Many employees in this realm, which grew rapidly during the 1970s and early 1980s, have already retired (or are about to do so). The author argues that, despite long-standing indications that this would happen, public sector planners have been slow to react to this development. As a result, it is proving difficult to fill these positions—a trend that is likely to continue.

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As well as outlining possible policy responses to this challenge, the author explores the difficulties of successfully implementing these in a systematic way. He identifies a number of obstacles: a reluctance on the part of many OECD governments to recognise this as a major public sector capability dilemma; and the nation-specific features of social security administration and staffing systems, which makes it hard for best practice bodies such as the OECD to develop solutions to this problem appropriate to individual nations. The author acknowledges the additional problem of the paucity of published national comparative evidence about the precise challenges facing individual nations in this area and what countries are already doing to address them.

Roddy McKinnon is a research analyst employed by the International Social Security Association based in Geneva.

OECD, ‘Ageing and the Public Service: Human Resource Challenges’ (Report), OECD, Paris, 2007, 260pp (Executive summary only is available via hyperlink; report purchasable at http//www.oecd.org.

The report explores how human resources management (HRM) in government is being (and will continue to be) affected by pressures for changes in public sector service delivery arising from the demands of ageing populations across the OECD. The experience of nine countries is examined: Australia, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands and Portugal.

The first chapter of the report identifies the main issues surrounding government service delivery within the context of steadily ageing populations; public sector workforce numbers, for example, are growing even more rapidly than those in the rest of society and the wider labour market. Chapter 2 describes the HRM policies of the nine countries examined. The third chapter reviews the different strategies that are being (or could be) implemented by countries in response to these challenges.

Chapter 4 outlines actions which governments could undertake for addressing their HRM challenges in the form of a checklist. This would be especially relevant to nations seeking to develop a national ageing strategy for their public sector. It encompasses:

reviewing the potential consequences of ageing public sector workforces within the wider financial and labour market contexts;

deciding on the most appropriate ways of increasing productivity in delivering public services while reducing costs;

where appropriate, focusing on maintaining capacity in some sectors and increasing it in others; and

promoting institutional changes which address the ageing challenge (a wider ‘multi-level governance’ approach).

The OECD sees the report as having relevance beyond the countries examined. It is based on a literature review, scoping research in all OECD member countries, and the analysis of data from the OECD Survey on Strategic Human Resource Management.

OECD, ‘Pensions at a Glance 2011: Retirement-Income Systems in OECD and G20 Countries’ (Report), OECD, Paris, 2011, 325pp (Executive summary only is available via hyperlink; report purchasable at http://www.oecd.org.

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The theme of this report, the latest edition of the OECD’s Pensions at a Glance series on the global ramifications of an ageing population, is pensions, retirement and life expectancy. It examines why people are living longer and the (already emerging) serious implications of this for OECD governments and economies. In most OECD countries, declining birth rates mean that non-working over-65s will continue to account for an ever larger proportion of the population than they do today. In 2000, for example, approximately 33% of people in OECD nations were aged over 65; by 2050, this is forecast to rise to 41%.

To address this issue, around half of OECD countries have already started, or are planning to start, raising ‘pensionable ages’, that is, the age at which people qualify for a full pension. By 2050, the average in OECD nations will reach just under 65 for both sexes—nearly 2.5 years above the current age for men and four years for women. Over the second half of the 20th century, the average pensionable age in OECD countries fell by two years, before beginning to rise again in the 1990s. If today’s forecasts are accurate, by 2050 it will be about three months above what it was in 1948—64.6 years.

The report explores the incentives different countries have introduced to encourage people to work longer; how governments plan to ensure that there are enough jobs for older workers, and devotes five special chapters to the major issues of this public policy challenge. More countries are analysed in this edition than previously, including four new OECD members (Chile, Estonia, Israel and Slovenia)—43 nations in total.

The University of Vermont, School of Business Administration, ‘Implications of an Aging Work Force on the Development of Human Capital’ (Research Paper), 16pp, 200?This article examines the likely effects (some already emerging when it was written in the early 2000s) of an ageing workforce in the USA, more specifically, the issue of how to realise the human capital potential of ageing employees. It argues that, at a time when a fundamental shift is occurring towards a knowledge-based economy within a more perilous global economic environment, employers should pay greater attention, not only to recruiting and developing younger employees, but to retaining older ones.

The authors assert that the ageing worker occupies a precarious place within today’s working world. They give a number of examples. The ageing worker is often dismissed as being ill-at-ease with and not proficient in the new technology even though the current literature suggests that they are easily trained, motivated, loyal to their organisations, and productive. In addition, the authors argue, age-based stereotyping perpetuates discriminatory practices and discourages older workers from remaining in or returning to the workplace.

Accordingly, the authors insist that the older employee needs to become a key focus for employers. After reviewing the topic of age discrimination, statistics about the ageing US labour market, future workforce projections, and existing organisational recruitment and retention strategies, as well as the initiatives and behaviour of several progressive companies in developing and retaining older workers, the authors provide 12 best practice recommendations for employers on hiring, developing and keeping their older employees. Some require the involvement of governments.

These include: maintaining an age neutral organisational culture; recognition and rewards for organisations employing older workers; zero tolerance in regard to age discrimination against older employees; tailoring recruitment efforts so as to take older workers’ requirements into account; and organisational audits to determine whether or not an organisation is age neutral in

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its policies and practices. The authors conclude that including the older employee in the human capability equation is essential to successful development of human capital in all sectors.

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