Oh won't you stay just a little bit longer: changing employers' views of older workers.

• Author: Mountford, Helene
• Position: Contributed Article

Abstract

The effects of the 2009 economic downturn in Australia, followed by a comparatively rapid recovery, have seen a surprising growth in the number of older workers in employment. If this increase in older workers is the harbinger of permanent change in the labour market, it can only come about if employers modify their traditionally negative attitude towards mature employees. In the first comprehensive overview of the literature and case studies, this paper explores employers' attitudes towards older workers and finds that most of the stereotypical myths are readily overcome in the current labour market. If a labour shortage drives employers to offer more flexible working conditions as first seen in the Global Financial Crisis, they will be taken up by the largest working cohort--the baby boomers--and the problem could be largely averted.

Introduction

History may show that the 2009 economic downturn caused by the Global Financial Crisis (GFC) was wedged between two periods of substantial labour and skills shortages in Australia. Before the GFC Australian economic growth had continued unbroken for 16 years, unemployment dropped to a record low of 4 per cent (ABS 2008), and immigration grew to an all-time high, with net overseas migration at almost 300 thousand people a year, the highest on record (ABS 2010a). In 2009 the GFC had a substantially greater impact in the United States and Europe than it did in Australia. In those countries, unemployment rapidly increased to almost 10 per cent whereas Australia's peaked at 5.8 per cent (ABS 2009a). It gradually declined to 5 per cent by the end of 2010 (ABS 2011a) compared with an OECD average of 8.3 per cent (OECD 2010a), and it is expected to fall to 4.5 per cent by mid-2012 (Swan 2010). Total workforce participation increased to a record high of 66.1 per cent (ABS 2010b).

Against an increase in recent older-worker participation, this paper reviews employer attitudes towards the largest labour market cohort, the baby boomers. The paper argues that employers--faced with a reduction in available labour through fewer migrants and smaller numbers of workers in the age groups that followed the baby boomers--will either adapt their human resources (HR) policies to retain the skills and knowledge of mature employees, or suffer the consequences of a considerably smaller labour pool and consequential skills and labour shortages. Baby boomers have already expressed their preferences for staying in the workforce and for workplace conditions. Human resource departments have a key role in driving through the necessary changes in organisations which need to adapt to an ageing workforce.

This paper first considers the recent changes in the older-worker labour market and then reviews employers' previous attitudes through the literature and case studies. It is about the employer view of older workers in contrast to the older employees' view of staying at work previously published in this journal (Mountford 2010). Overall, the literature is not encouraging, but the case studies show that some organisations were prepared to modify HR practices for older workers, particularly when they had recruitment or retention problems. These examples, gathered over the past few years and not previously consolidated, are few and far between. The theory and practice of older-worker retention follows. We look particularly at the importance of supervisors and the perceived cost of older-worker retention, before the discussion and conclusion.

Labour Market Change

In the financial year 2008-09, Australia was one of only two of the 30 OECD countries not to be in a recession; the other was Poland (OECD 2010b). Australia's Gross Domestic Product (GDP) continued to increase to record the 17th successive year of growth (ABS 2009b), albeit at a slower rate. During recessions a common organisational response is to retrench workers and restructure to reduce overheads. Consequently, economic downturns are typically characterised by falling employment, rising unemployment, and a decrease in the participation rate. Older workers are often at the forefront of retrenchment and long-term unemployment, leading to their 'early retirement' (ABS 2000). In the United States and Europe the GFC (or 'Great Recession' in the United States) (Elsby, Hobijn and Sahin 2010) caused this typical pattern, but in Australia there was only a small rise in unemployment and an unexpected increase in the labour force participation of older workers. In 2009-10 there were more than 12 million Australian workers, including about 4.3 million aged 45 years or more (ABS 2010c). The baby-boomer cohort was aged between 46 and 64 and fitted the ABS definition of 'older workers'--employed people aged 45 to 64 years (ABS 2004).

Since 2000, older-worker participation has begun agradual upward trend, which is greater among female part-time workers. Between 2000 and 2005 mature-age employment increased from 48.3 per cent of the total cohort to 55.5 per cent. The total figure is skewed by the larger increase in participation for female older workers of 9 percentage points from 35.6 per cent in 2000 to 44.6 per cent in 2005, compared with the older male participation increase of only 5.5 percentage points to 66.3 per cent over the same period (Kennedy and Da Costa 2006, p.33). The rises are led by older females in part-time work, whereas men have not favoured this type of employment.

Before the downturn the Australian labour market suffered from a severe skills and labour shortage. From late 2008, when the GFC began to take effect, employers were slow to retrench; they believed that to reduce staff would put them at a competitive disadvantage when the economy improved. They reportedly negotiated a variety of non-standard working arrangements to reduce overheads but also to retain the connection of the staff with the organisation (KPMG 2009). These arrangements, including reduced hours, leave taking, more part-time work, and increased casualisation (Plumb, Baker and Spence 2010) were reflected in a growth in part-time jobs and reduced hours (ABS 2011a). Throughout 2009-10 the labour force participation rate for the 45-64 year age group continued to grow, particularly for the older baby boomers who saw their retirement savings severely reduced by the GFC. Table 1 shows the participation rate of all working-age groups over the past four years. It reflects the lower participation of younger workers and the increased proportion of older employees in the labour market.

As Table 1 shows, the largest increases in participation over the past four years are in the 60-64 year group, followed by the 55-59 year group. The two groups together (55-64 year-olds) increased their participation by 11.3 per cent in the four years to 2010. The 60-64 year-old group's work force participation increased by nearly 4 percentage points during the 2008-09 downturn and stabilised in 2010; participation for this group increased by 6.4 per cent over the four years to 2010. The 55-59 year-old group's participation rate increased by more than 2 percentage points during the GFC, and by almost another 2 percentage points from 2009 to 2010. The total increase over the four years to 2010 is 4.9 per cent. The 45-54 year-old group's participation rate increased only slightly over the four-year period. During the same period, participation of the 15-24 and 25-44 year-old age groups together declined by 6.5 per cent.

The increases in participation for older workers over the past 30 years are substantial, with each of the three older-worker age groups (45-64 years) peaking in 2010 as shown in Table 2.

As with Table 1, Table 2 shows the highest percentage-point increases in the oldest groups, albeit from a smaller base. Participation for each of the three groups peaked in late 2010. Each age group shows considerable growth over the period, but when only just over half of the 60-64 year olds are working, there is considerable potential in this group for further participation increases and relief of labour shortages.

Research undertaken before the GFC indicates that unlike earlier cohorts, many baby boomers want to continue working past the previous average retirement age of early fifties, provided that they are healthy (Mountford 2010). The problem appeared to be that their current (career) employers did not offer the working conditions that they preferred, such as part-time work, job sharing, or contract or block work, which would encourage them to stay in the workforce. Often they had to leave their career employers to obtain their preferred hours or less responsibility elsewhere (Walter and Jackson 2007). As a consequence, the career employer lost substantial corporate memory to a competitor and incurred costs in recruiting and training a replacement. While older workers were looking for flexible jobs to fit their lifestyle and caring responsibilities, most employers were not providing them (Phillipson and Smith 2005). The most recent participation figures for older workers indicate that at least in Australia--where economic conditions remain (comparatively) good and there are still skills and labour shortages in some sectors--some employers appear to be offering reduced hours, which are being taken up by older workers. Some believe that this indicates that early retirement may now be rejected in favour of extended working lives (Taylor 2011). The question remains of whether more employers will retain or hire these willing older workers.

Literature on Employers' Attitudes

There is a substantial pre-GFC literature describing employers' attitudes towards older workers, as researchers tried to establish why there was little reflection in the employment figures of an employer response to policy-makers' and academics' calls to retain or hire older workers. Australian authorities began calculating the economic cost of losing large numbers of baby boomers to retirement and...