Issue 3
Mature age workforce
May 2011
APS Human Capital Matters: Mature age workforce
May 2011, Issue 3
Editor’s note to readers
Welcome 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.
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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 Matters
Human 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 welcome
Thank 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
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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. Fiftyseven 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.
Juhani Ilmarinen, ‘Work Ability—A Comprehensive Concept for
Occupational Health Research and Prevention’ (press download button on
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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.
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
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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:
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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.
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
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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-atease 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
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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