Got a lot o' livin' to do: opportunities for older workers in the global financial crisis.

• Author: Mountford, Helene
• Position: Contribute Article

The 2009 downturn in the Australian economy brought on by the global financial crisis (GFC) caused many businesses to review staff levels in an effort to reduce costs. But unlike previous recessions, large scale restructuring and retrenchments were less common in favour of retaining skilled staff on reduced working conditions, such as fewer hours. Many employers suffered from skills shortages only a year before. At the same time research began to show that many baby boomers wanted to continue working beyond the early retirement age preferred by previous cohorts, and could fill the skilled worker gap. But older employees, having other demands on their time, want more job flexibility and less responsibility or work pressure. Since the GFC more older workers need to stay at work to improve their retirement funds. The changed working conditions brought on by the GFC will, coincidentally, attract older workers probably more than other cohorts, giving both older workers and employers greater flexibility, while retaining valuable workplace experience.

Introduction

In an effort to reduce costs in the 2009 global financial crisis, many employers reviewed their staffing levels. Instead of the large scale restructuring and retrenchments seen in the recessions of the 1980s and 1990s, however, many have instead sought to retain staff, but on reduced conditions of work. A year before, in 2007-08, the Australian economy experienced 16 years of continuous growth and a gross domestic product (GDP) increase of 3.7 per cent (ABS 2008a). Labour and skills shortages were common and immigration was at an all time high (Healy 2009a). At the same time, employers were being encouraged to retain or hire older workers to alleviate the skills shortage and avoid a sudden loss of corporate knowledge with the departure of the largest generation into retirement. Simultaneously, it became increasingly apparent that the ageing baby boomers wanted to stay at work. But employers had shown little sign of retaining older employees and were reluctant to hire anyone aged 50 or more. The GFC has brought about unexpected change in parts of the Australian labour market by opening up flexible opportunities for employers from which baby boomers can benefit. New employment conditions such as shorter hours, job sharing and contract or block employment, introduced by organisations to restrain costs while retaining workplace skills, are, coincidentally, preferred by older workers and can be utilised by both baby boomers and employers to mutually beneficial effect.

This article sets out to describe the place of baby boomers in the labour market and the economic problems anticipated if they were to take the early retirement of previous cohorts. It then reviews the literature which indicates that, before the GFC, the boomers wanted to stay at work longer and that, afterwards, many need to work longer to increase their retirement funds. It explores how previous recessions have seen widespread retrenchments, particularly of older workers, whereas this downturn has witnessed a change in conditions, such as reduced hours, in an effort to contain costs while retaining skilled workers. It concludes that coincidentally these changed conditions are more likely to suit the needs of older workers than those of other age groups.

Older Workers in the Labour Market

Older workers are defined by the Australian Bureau of Statistics as employed people of 45 years and more. In 2009, members of the baby boom cohort (born between 1946 and 1964) were aged between 44 and 62, and fit fairly closely within the ABS definition. In this paper the terms older worker and baby boomer are used interchangeably. Baby boomers are the single largest cohort in the population. In Australia 4.2 million people were born into this generation (ABS 2003), but statistics usually include migrants bom overseas during the same years, bringing the total to about 5 million people (ABS 1999)--almost a quarter of the total population. At 3.9 million workers, the employed baby boomers comprise more than a third of the 10.7 million work force.

Although baby boomers are often thought of as a cohesive group, demographers are now distinguishing two components--those born between 1946 and 1956, the older baby boomers, and those born between 1957 and 1966, the younger baby boomers (ABS 2009a; Phillipson, Leach, Money and Biggs 2008; Timmerman 2007). In 2009, the older group was aged between 53 and 62 years and had life and work experiences which differed from those of the younger group, which was aged between 43 and 52 years. The older group of baby boomers experienced major social change and entered the workforce when there were high rates of employment and burgeoning economic conditions. They can remember the Vietnam War--the first war to be broadcast nightly on television news. The younger members of the generation have not had the same employment opportunities throughout their lives, with many affected by the recessions of the late 1980s and early 1990s (ABS 2009a; Ozanne 2009). Many baby boomers do not feel 'old' and most of the older ones are healthy and active. As they have aged, later generations with lower fertility rates (below replacement level for more than 30 years), combined with greatly increased life expectancy, have raised the age profile of the total population (ABS 2006a).

At the same time as the baby boomer cohort moved through the workforce, the labour market changed from one dominated by manufacturing industry to one where service industries became the largest employers. While manufacturing employment declined, particularly in the past 40 years, the proportion of employees in the service sector has increased to more than 80 per cent of all workers (ABS 2001). Much of this increase is attributable to female part-time workers increasing their participation rate from 57 per cent to 75 per cent between 1971 and 2001, with the proportion of employed women working in service industries increasing from 74 per cent to 87 per cent over the same period. The 10 fastest growing occupations between 1986 and 2001 were in white collar employment (Cully 2002; Richardson 2009) and they are projected to increase further as a percentage of total employment (Tan and Richardson 2009).

Older workers are now heavily represented in most administrative occupations, particularly in education where they comprise 47 per cent of total industry employment, and health and community services (42.3 per cent) (ABS 2004). But there are some estimates that more than half the Australian baby boomers intending to retire early are concentrated in only six white collar occupations in which they are over represented as a proportion of the workforce: specialist managers; science, building and engineering professionals and associate professionals; education professionals; business administration associate professionals; and secretaries and personal assistants (Jackson and Walter 2009). These occupations particularly will suffer drastic numeric and informational losses unless older workers are encouraged to postpone early retirement and pass on their knowledge to younger colleagues.

Economic Consequences of Retirement

For more than 20 years, Australian policy makers have warned about the economic consequences of the baby boomer cohort retiring from the workforce (Carey 1999; Clare and Tulpule 1994; Department of Health and Aged Care 1999a, 1999b; EPAC 1988, 1992; Productivity Commission 1999). Initially, concern focussed on the increased cost to the economy of pensions and health care services because the fewer workers in the subsequent generations would be unable to support the larger retired population without substantially increased taxation. For example, in 2007 for each older person, there were five working-age people, while in 2056, when the number of people aged 65 to 84 years is projected to reach 6.4 million, there will be fewer than three working-age people to provide taxation revenue (ABS 2009b). More recently, policy makers have been more concerned about the economic consequences of a skills shortage if the baby boomers retire at the same early age as previous cohorts, commonly in their early 50s (IRG2 2007).

The idea of encouraging older employees to stay at work was particularly stimulated by the first Intergenerational Report (IGR1), published in 2002 when Australia was said to be facing an 'ageing crisis'. At the time of the report workforce participation by those aged more than 55 years was low, and the report assumed that the baby boom generation would replicate the older groups' 'traditionally lower labour market attachment'. It projected that the total participation rate would fall from 64 per cent in 2007-08 to 56 per cent participation 25 years later. The second Intergenerational Report (IRG2 2007)increased the projected participation rate to 57.1 per cent, recognising substantially increased participation in all working age groups, particularly women. The IGR3 (2010) again increased the projected total participation rate to 60.06 per cent in recognition of historical increased migration and participation.

IGR2 (2007) set out to encourage greater participation of older workers by targeting the baby boomers. The Coalition Federal Government introduced tax and superannuation incentives in 2000 and 2007 to encourage retention, but much of the subsequent commentary continued to spread gloom about a substantial labour shortage as the baby boomers aged and retired. Simultaneously, the Australian economy continued to grow at such a rate that it was claimed as the 'longest economic expansion in its history' (Costello 2007). The strength of the economy produced the lowest unemployment level in more than 30 years - 4.0 per cent in March 2008 (ABS 2008b). This was far below the 30 year average of 7.2 per cent and the average over the past 100 years of 5.6 per cent (Kennedy 2007). With unemployment effectively...