Commentary: Global Economy and Early Retirement versus Working Longer

Philip Taylor, professor of employment policy at Swinburne University of Technology, offers up thoughts on why Australia has been increasing its employment of older workers, while at the same time companies in other parts of the world are continuing to offer incentives for early retirment. Thus, he contrasts positive signs that suggest that Australian business has woken up to the potential of older worker, with indications from other countries that raises the question whether "much of industry, wishing to remain globally competitive, will dare employ ageing workforces."

He concludes that a "cautious view would be that global competition will continue to reshape the contours of older workers' employment in uncertain ways. There will be some winners, but there are likely to be many losers. An adequate policy response will to encourage economic activity while recognising the need for a dignified exit."

Source: The Age "Job prospects on rise for older workers" (May 25, 2007)

Australia: Older Workers Show Flexibility, Willingness to Learn

Research conducted by Diversity Council Australia (DCA) shows that, for those mature age people not currently in the workforce, one third of all respondents--and 57% of those aged 60 years or under--would be prepared to return to work if they were offered the right job. In addition, one-third of currently employed mature age workers would relocate and more than half would consider doing further study for the right job.

DCA believes its research results are great news for employers and for Australia: “At a time of strong economic growth and labour shortages, there is an exciting pool of talent, ready, willing and able to work,” said [DCA Managing Director, Ms Rohan] Squirchuk. “This research combined with DCA’s expertise in workplace diversity gives employers valuable information about how to better attract and retain talent in a tight labour market.”

Key results of the project--"Grey Matters: Engaging Mature Age Workers"--include:

• Prior to retiring, the average hours mature-age people worked was 40 hours, while they would have preferred to work 35.
• Employed mature-age workers indicated their top two ideal employment practices approaching retirement would involve: flexibility in start and finish times, and phased retirement
• Around 80% of mature-age people not currently employed said working for an organisation that was supportive of their learning and development needs and careers was important or very important in influencing their decision to remain in the workplace.
• Some 97% of mature-age people indicated working for an organisation that was supportive of older workers was important or very important in influencing their decision to remain in the workplace.

Source: Diversity Council Australia Media Release (May 25, 2007)

HSBC Issues Third Annual Report on Future of Retirement in 21 Countries

The third annual HSBC Future of Retirement study finds that, far from being a drain on society, older people are huge contributors to the economic and cultural wellbeing of their nations. In fact, rather than being dependents whose care drains vital resources from nations struggling to cope with ageing populations, those in their 60s and 70s--through taxation, volunteer work and the provision of care for family members--are the foundations upon which their nations build.

With respect to employment, the report shows that globally, "large proportions of the over-60s remain in work. In mature economies, between a fifth and a half of people are still in work in their 60s. Even in transitional economies, there are large numbers active in the labour market in their 60s and 70s."

Future of Retirement: The new old age, written in conjunction with the Oxford Institute of Ageing, is available for download. In addition, country-by-country fact sheets are available at HSBC Global Forum on Ageing and Retirement website.

Source: HSBC Insurance Press Release (May 22, 2007)

United Kingdom: Call for Retirement Reform To Allow People To Continue Working Past Retirement Age

Under the auspices of the Social Market Foundation, former Civil Service Chief Lord Andrew Turnbull has issued a report that analyses a number of false assumptions which underlie thinking about retirement in the United Kingdom and that calls for a radical overhaul of employment and leadership models that will allow people to continue working past retirement age.

The report--"The New Demographics: Reshaping the world of work and retirement"--argues that current employment models, where you retire at your most senior position and leave the organisation completely, lack flexibility and are a result of widespread ageism in the workplace. Leadership models also suffer from a similar inflexibility with companies assuming they should continue to be led by their oldest employees.

The report’s author, Lord Andrew Turnbull, said:

“We need to alter fundamentally our assumptions about work and retirement and the transition between the two. A profitable decade of mixed working and retirement ought to be the dominant model of how to make the most of our flexible years, easing ourselves into a restricted income rather than plunging into it.”

Commenting, Director of Social Market Foundation, Ann Rossiter, said:

“Lord Turnbull’s report makes an important contribution to the debate about work and our ageing society, questioning the assumptions that see the skills and knowledge of older people wasted through the continuing use of outdated models of leadership and employment patterns.”

Source: Social Market Foundation News Release (May 16, 2007)

Survey: AARP on Georgia's Aging Workforce

A report developed by AARP in cooperation with the Georgia Budget and Policy Institute and the Georgia Department of Labor shows that between 2005 and 2025, fewer people will be entering the job market even as the demand for workers increases because of two trends: Georgia’s age 65+ population will be increasing considerably while its under-age-24 segment will be shrinking and, at the same time, the state’s economy will be expanding.

The report--White Collar, Blue Collar, Gray Hair: The Changing Composition Of Georgia's Workforce--written by Anita Stowell-Ritter concludes that if employers in Georgia are to maintain their competitive edge, they "will need to reach out to mature workers. Doing so may necessitate employers embracing a new vision of how work is done." The report provides a guide to the shifting landscape of work in Georgia with a compilation of employment projections, specific occupational profiles, and job trend indicators.

"We're going to have to change the culture of work because older workers are going to be the workers for the next 20 years," said Alan Essig, executive director of the Georgia Budget and Policy Institute, which also worked on the report. "The business community's going to have to figure out ways to reach older workers, or they're not going to be able to compete."

Source: AARP Research Report (May 2007)

Additional Source: Atlanta Journal-Constitution "Help wanted from older workers" (May 23, 2007)

Survey: AARP Explores Employer Readiness for Boomer Retirements in New York

According to an AARP survey conducted in late 2006, New York businesses understand the value of the knowledge and experience employees gain while working for an organization, particularly over long periods of time. Furthermore, most place a high level of importance on retaining departing employees’ wisdom and recommendations—however less than a third have an organizational process in place to preserve such institutional knowledge.

The survey--Preparing for an Aging Workforce: A Focus on New York Businesses--written by Katherine Bridges and David Cicero finds that, among other things, while 62% of employers believe their business is likely to face a shortage of qualified workers within the next five years, only 23% have taken steps to prepare for potential worker shortages due to baby boomer retirements. In addition:

• 11% say they are offering incentives to encourage their employees to delay retirement
• 72% say it is extremely or very important to retain institutional knowledge that might be lost when employees retire or otherwise leave (although only 34% have a formal process in place enabling employees to pass on their knowledge and experience before they leave
  
• 39% offer reduced work schedules for those considering retirement, mostly on an informal, case-by-case basis, but only 6% of those offering this option have a formal phased-retirement program

Source: AARP Research Report (May 2007)

Singapore: Tripartite Committee on Older Workers Releases Final Report

Singapore's Tripartite Committee on Employability of Older Worker has issued its final report, with an extensive package of recommendations to enhance the employability of older workers which have been accepted by the Government. These include introducing legislative changes within five years to facilitate opportunities for older workers to continue working beyond the age of 62, expanding the employment opportunities of older women and enhancing their employability, a higher Workfare Income Supplement payout to low income workers above the age of 55, and expanding the promotion of fair employment practices.

In addition, the Committee will continue its work for another five years. It will work towards raising the employment rate for residents aged 55 to 64 to the medium-term target of 65% (from the current 53.7%). The Committee will also work closely with the Ministerial Committee on Ageing to tackle the issues of an ageing population in a holistic manner.

The Committee's final report includes an Executive Summary and organizes its recommendations into four key strategic thrusts:

• Expand employment opportunities for older workers
• Enhance the cost competitiveness of older workers
• Raise skills and value of older workers
• Shape positive perceptions towards older workers

Source: Ministry of Manpower News Release (May 17, 2007)

Additional Sources: Channel NewsAsia "NTUC urges bosses not to wait for laws on employing older workers" (May 17, 2007)

United States: Aging Farm Workforce and Immigration Reform

"A labor shortage is already hurting Imperial Valley farmers, but an aging work force in the fields suggests the problem could become much more severe if something isn’t done soon," reports Nick Taborek. Writing for the Medill Reports, he notes that immigration legislation before the U.S. Congress could help boost the labor supply but that some farm advocates suggest that only allowing temporary workers will not help long term.

He reports that Eric Reyes, a farm worker advocate in the Imperial Valley, finds that fewer young adults are opting for the long hours and strain associated with farm work, with the average age of a farm worker being now over 50 years old. In addition,
Ayron Moiola, executive director of the Imperial Valley Vegetable Growers Association, says “You’re not seeing a younger generation take their place.”

With respect to immigration reform,

Reyes said farmers hoping to attract a younger workforce for years to come should push for a bill that grants all new workers an attainable path to citizenship. If farm workers entering the U.S. are only given temporary visas, he doubts that the labor shortage will disappear.

Mark McBroom, a citrus farmer in the Imperial Valley, said there may be no clear-cut solution to the aging workforce in the fields. Rather, the trend for younger workers to shun farm work may be simply a sign of the times.

Source: Medill Reports "Farmers fret over aging workforce in the fields" (May 21, 2007)

OECD Issues Call for Better Protection of Occupational Pension Systems

Member countries of the Organisation for Economic Co-operation and Development (OECD) have agreed on new guidelines for governments and regulators designed to improve how certain types of pension funds are run with a view to making employees’ pensions more secure. The OECD Guidelines on Funding and Benefit Security in Occupational Pensions contain a series of recommendations concerning regulation of the funding of occupational pension plans, and in particular defined benefit pension schemes.

Issues covered by the guidelines include the funding and valuation of pension plans and protection of employees’ interests in company pension schemes in the event of their employer or the company that manages their pension plan going bankrupt. The guidelines also call on tax authorities to consider raising maximum funding levels, so as to allow pension funds to build up reserves that will protect them against a downturn in asset values.

According to OECD Secretary-General Angel Gurría, “[p]eople are living longer and need to be sure that their pensions are safe.” The guidelines "will be helpful to OECD countries to ensure that occupational pension plans offer secure retirement benefits to their members.”

Source: OECD News Release (May 10, 2007)

Survey: Do Employers Really Want Older Workers?

Even though the policy community generally thinks that employers will create opportunities for employees to work longer, with many observers saying that because employers will face labor shortages and a loss of “institutional intelligence” when the boomers exit the labor force, employers will be pushed to seek out older workers, results of a new survey raise a cautionary flag.

As part of continuing research performed by the Center for Retirement Research at Boston College, a survey of nationally representative employers has found that employers generally considered older workers at least as attractive as younger workers and a second survey has found that employers expect that half their employees over age 50 will lack the resources needed to retire at their organization’s traditional retirement age and half of those who lack resources will want to work at least two years longer than similar workers have in the past.

However, further examination of the second survey in "Employers Lukewarm About Retaining Older Workers", by Andrew D. Eschtruth, Steven A. Sass, and Jean-Pierre Aubry, states that employers "are only slightly more likely than not to accommodate even half their employees who will want to stay on." The paper concludes:

For working longer to become a viable response to the retirement income challenge, workers must be willing to extend their careers and employers must be willing to employ them. The results from the Center’s surveys of employers paint a mixed picture about the prospects for longer worklives. Employers surveyed expect one quarter of workers currently in their 50s will be unprepared for retirement and will respond by wanting to stay on the job at least two years past the firm’s traditional retirement age. But employers are lukewarm about retaining even half. This is not good news. It suggests the possibility of a messy and uncomfortable mismatch with large numbers of older workers wanting to stay on while employers prefer that they do not.

Source: Boston College Center for Retirement Research
Issues in Brief (May 2007)

United Kingdom: "Zenployment" Survey Shows Older Workers Searching for "Fulfillment"

According to a survey released by Norwich Union, 66% of British employees say they are "unfulfilled", "miserable" or "drifting" in their jobs, 52% claim they'd happily earn less money in a role that made them feel better about themselves, and 47% say they aim to be in a second career that offers fulfillment and the chance to make a difference ("Zenployment") by the age of 45. William Nelson, of trend analysts the Future Foundation, said: "The ethical and spiritual dimensions of work therefore are more of a priority, and people want to believe their careers contribute towards a better future - not just for themselves but for society as a whole."

The survey also found that withdrawal from work is being rejected in favor of Zenployment, with 50% saying they will not follow the traditional retirement path of their parents and 52% not aiming to put their feet up in a country cottage or villa abroad. In addition, 66% of those aged 45-54 and 72% over 55s are seeing an increasing number of their friends move into second careers.

Source: Norwich Union News Release (May 11, 2007)

Rhode Island: Legislature Again Takes Up Unemployment Benefits and the Social Security Offset

Neil Downing, a columnist for The Providence Journal, writes again about the unfairness to older workers of Rhode Island's law offsetting unemployment benefits for social security benefits. He reports on House hearings on a measure (H5296) that would end the Social Security offset, which follows Senate passage of a similar bill (S0161). "No one spoke in opposition, but there were several supporters, including the AARP, a membership organization for people 50 and older."

Source: The Providence Journal "State law penalizing older workers" (May 9, 2007)

Subsequent History: The House passed H5296 on May 30, 2007.

Australia: ACT Launches Project To Encourage Businesses To Hire Older Workers

Australian Capital Territory (ACT) Chief Minister Jon Stanhope and Chris Peters of the ACT and Region Chamber of Commerce and Industry have launched a "Silver Lining" project to educate employers about the benefits of hiring and retaining seniors in their businesses. In particular, with the baby boomer generation nearing retirement age and the generations coming after being considerably smaller, business should not shun seniors from the workforce and they should be educated that common myths about older works are untrue.

Mr Stanhope said:

“Research shows that workers aged 55 and over are the most motivated and engaged. Older workers are known for their reliability and stability, with research showing that they stay in a job 2.4 times longer than a younger person.

“Given the high cost of staff turnover this level of stability alone represents a great opportunity for business.”

Source: Australian Capital Territory Media Release (May 8, 2007)

Norway: Statistics Show Increase in Employment of Older Workers

According to a report in Aftenposten, numbers releaed by the state statistics bureau (SSB) showed an increase in the number of older workers getting back into the job market. Faced with a labour shortage, many employers have started welcoming retirees who want to go back to work. Specifically, workers aged 67-74 boosted their share of the workforce by 4%, while there were 1.5% more workers aged 55-66 during the first quarter of 2007. The article did note, however, that most of the older workers are in part-time positions, working less than 20 hours a week.

Source: Aftenposten "Jobless rate steady" (May 4, 2007)

Switzerland: Employers Lag Behind Other European Countries in Dealing with the Challenges of Aging Workforce

According to the Adecco Institute's first Demographic Fitness Index for Swiss companies, Swiss companies are less prepared for their aging workforce than the average of selected European Union member states. Specifically, in comparison with 7 EU countries (United Kingdom, France, Italy, Spain, Germany, Belgium and the Netherlands), Switzerland only ranks second last.

By 2020, compared to the year 2000, there will be over one third more Swiss workers aged 50 to 64 years, and one fifth less workers aged 30 to 44 years. While Swiss companies' awareness about these demographic changes is very high, they are among the least prepared in Europe, with almost half of all firms putting no thought at all into this and not taking measures in order to react. In fact, most (nearly 60%) have done no analysis of their company age structure.

Source: Adecco Institute Press Release (April 17, 2007)