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The aging population in Australia has become a hot topic of discussion with most analysts as it has transformed both the economic & the social policy of Australia. Children are projected to make up a smaller proportion of the population as older people (65years or above) will increase. The following occurrences would result in an aging population.
Income support being high
Health & disability services
Family & community care
Baby Boomers are set to retire from the workforce during the next decade. Upon their retirement they will take in the medium-term, irreplaceable levels of experience with them. Lower birth rates will result in lower younger employees in the workforce in the future. The current Australian fertility rate of 1.2% which is below the requirement level is forecasted to dip to a lower rate of 0.85% by 2016. (www.abs.gov.au , Scenarios for Australia's aging population 16 August 2010).
Increased numbers of older Australians may have implications for expenditure on income support, housing and health services. A healthy independent older population can form a valued social asset, for example in providing care for others, sharing skills and knowledge and engaging in volunteer activities. The population aged 65 years and over is projected to increase from 2.5 million in 2002, to 6.1 to 11.7 million in 2101. (www.abs.gov.au , Scenarios for Australia's aging population 16 August 2010).
It is important to analyse how the population is increasing at a rapid rate. The following factors could enable us to better understand on why the population is increasing at such a rate.
Increase in life expectancy, due to declining death rates - Changes in food consumption (Diets), reduction in smoking and increased physical activity.
Improvements in the health sector enabling better medical services
Aged care centres located Australia wide.
The following report will discuss the implications organisations are facing with the recent decision the Australian government made on the pension eligibility criteria for future retirees.
It will reiterate on how organisations are coping with this situation at present & how younger employees are affected by older employees at the workplace.
The Government's Decision on Pension eligibility
The pension eligibility criteria has changed to 67years as of now & it would start in 2017 & looking to come in to full effect by 2023. The main reason behind this has been the quality of life Australians are enjoying.
For example - Australians are healthier & living longer
The qualifying age will be increased by six months every two years commencing from the 1st of July 2017 & reaching 67 on the 1st of July 2023.
The Government has reiterated the importance of such a decision by informing the public the increasing pension age is a responsible reform to meet the challenge of an ageing population and the economic impact it will have for all Australians. It is estimated that a person will be in retirement much more at present than it was in the early 20th century. In this scenario it is vital that the government introduced a scheme as this to prevent major economic & social implications. (www.young
Example - Rising Health costs
Many other developed countries have made the decision to increase their pension age. For example the United States, Germany, Norway, Denmark and Iceland are progressively increasing their pension age to 67 while the United Kingdom has increased it to 68. (www.youngandgrumpy.com, 16 August 2010)
The decision to increase the pension eligibility age has impacted the organisation's behaviour towards their employees. The report will now discuss the implications of this decision in the context of Human resources & Organisational development.
Organisational Implications - HR & OD
The importance of mature age workers - The increase in pension eligibility criteria has further reiterated the importance of mature age workers. The experience of these workers is the main asset for the organisations as it will help younger employees to groom themselves in to future managers by working alongside experienced professionals.
With the continuing ageing of the workforce, agencies will need to ensure their management and work practices are geared to maximising the contribution of mature-aged workers and encouraging those who are making a valuable contribution to stay longer in the workforce. Organisations can influence the retirement plans of mature aged workers by giving attractive remuneration packages to keep them in the organisation for another year or so. The main reason in doing so the continuing decline of young people in the workforce. Mature aged workers will be an asset to retain as they would help in the progress of younger employees in the organisation. Organisations can also present mature aged workers with a flexible working schedule that suits them. This would motivate staff to get involved in the organisation more than usual as it suits them better. Human resources play a significant role in regards to these issues. Human resources need to be aware of the current situation in the labour market & act accordingly to mitigate the problem.
(www.apsc.gov.au, Organisational Renewal, 16 August 2010).
For example - Providing more flexible working arrangements as discussed above, such as part-time work and phased retirement would assist in the retention of mature-aged workers. Human resources could also consider giving mature employees more license to use their skills more creatively (mentoring, skills transfer, and different roles with the opportunity, where desired and appropriate, to phase out managerial responsibilities).
(www.apsc.gov.au, Organisational Renewal, 16 August 2010).
Human resources need to initiate a plan to encourage mature workers lead by example & develop themselves in accordance with their younger counterparts who consists of paper qualifications. Negative implications by mature workers could result in negative results for the organisation. So it is important to keep mature workers involved as much as possible to mitigate any negativity that could affect the organisational development.
(www.apsc.gov.au, Organisational Renewal, 16 August 2010).
The myth that older people cannot contribute - Is this really a myth or is it reality? There is a growing perception among recruitment agencies & Human resources departments in certain organisations that mature workers contribution towards the development of an organisation is limited. Most organisations are looking ahead when recruiting their employees. Overlooking these mature employees can be termed as an act of discrimination. As we discussed earlier, there is still a perception that older workers may not be able to carry the weight of day to day organisational operations. (www.msnbc.msn.com, Grey hairs not the issue for older workers, 16 August 2010 by Eva Tahmincioglu).
Example - With the introduction of new technologies, mature employees are finding it difficult to enter in to the labour market. The main reason behind it being, the lack of technological knowledge that mature workers possess. This has become an added advantage towards the younger population as employment opportunities has come much easier.
The new pension scheme has allowed mature workers to work an extra two years before going on retirement. Will this decision backfire in terms of contribution levels of mature workers? As discussed above Human resources plays a significant role in the process of retention & development of these employees. Human resources need to use their expertise in organisational development so they can contribute in certain ways. Experience workers will be mostly useful when they train younger employees. The younger trainees will develop skills from the more experienced individuals & become job ready quicker. The worst HR could do is to give these mature employees a dead end job that de-motivates them. This would have negative implications to the organisational development. (www.apsc.gov.au, attraction & retention 16 August 2010).
Recommendation - Human resources can further develop mature employees by training them on new technological advancements, so that they won't have to rely on their younger employees all the time.
So it is a myth in a certain way that mature employees cannot contribute towards the enhancement of the organisation. It is the responsibility of the Human resources departments to get the best out of these workers.
Managing older workers - By increasing the pension age eligibility criteria, there has been certain problems between younger workers & older workers. The main reason being the thought process that young people have on their older counterparts.
Example - Many mature workers are concerned about what their younger workers think about their work ethic. There are many older workers who try to work harder to mitigate these feelings that younger people have.
The management & the HR division have to be responsible in handling these mature workers in the correct way. Â Generation X managers need to know on how to motivate and manage this pool of older workers. As discussed above both generations have very different views of one another and will need to learn how the other generation works. It is up to the managers to take initiative and create the climate in which older workers will remain engaged and productive in their work process. (http://management.about.com, how to manage older workers, 16 August 2010 by F. John Reh).
Recommendations - Human resources needs to communicate properly with these mature workers in order to better their organisation. It's better not to assume they know what's expected of them. Management needs to be clear on the objectives & goals they need to achieve. If management acts in a positive way, these negative organisational implications can be avoided.
Intergenerational tension - Unlike 20 years ago older workers plan to work longer as the pension eligibility age has increased last year. This decision to prolong their careers has had negative implications in certain organisations worldwide. Forms of discrimination associated with ageist practices and negative perceptions regarding their ability to compete on equal terms with younger workers. In turn older workers have also associated with ageist practices towards their younger counterparts. This is called intergenerational tension. (http://researchrepository.murdoch.edu.au, Intergenerational tension in the work place by Teh Eng Choo Elainev, 16 August 2010).
The differences in attitudes between these two groups can diminish the efficiency in an organisation.
Example - Many younger managers are hired to supervise their older workers in organisations. In this instance the traditional hierarchy has been turned upside down. This intergenerational gap can be disturbing to the older workers as they are individuals who don't like to be supervised by younger & less experienced workers. This could be a problem for both sets of groups as younger people are not so inclined to direct older workers work & older people maybe resistant in taking orders from their younger counterparts. Other problems could be due to the following
Making fun of older workers
Favouritism towards younger employees
No respect towards older employees
Showing impatience towards older employees
Recommendations - It is important that organisations look in to this matter seriously as unhappy workers will not work efficiently in a team environment. The Human resources department needs to prevent this from happening and try to forge a unified unit where all parties can work effectively together.Â Management needs to clarify the misconception the two groups have on each other to mitigate the problem. Misunderstandings between the groups have to be rectified as it could lead to major problems if not done so. In this case there is a possibility that intergenerational tension could apply to organisations if the pension eligibility age rises.
Giradi, A, and E.C Teh.Â Human Resources & Organisation Development practice manual, readings & cases. 2nd editionnd ed. South Melbourne, Victoria: Cengage learning Australia, 2009.
Younger workers being deprived of promotions- There is a growing trend worldwide that younger workers are finding it difficult to get promoted whilst older workers are more experienced in the trade. The increase in pension eligibility age has further enhanced this fact. As older workers work more it deprives younger workers of their opportunity in management. This has further increased their intergenerational tension between the two parties. The result of this being conflicts between the two parties that affect work efficiency. Human resources need to be aware of the fact that they need to award promotions based on the skills & qualifications of the individual rather than their age.
More concern about the health of older workers - The more elder the employee is, the more accidents that could occur. The increase in the pension eligibility age has in a way increased the danger of elder employees getting injured while at work. This will result in major increases in health cover costs to the company. Older workers tend to have severe injuries & take longer to recover. This will impact negatively to the organisation in terms of profits as employees tend to be unavailable to work. It is important that organisations understand the situation & work towards achieving their goals. Human resources need to work with the management to ensure that older workers are taken care of in terms of having a healthy work life. (www.ccohs.ca, do aging workers need special accommodation, 16 August 2010).
The Australian government's recent decision to increase the pension eligibility age criteria to 67 years has become a major talking point in the business industry. Workers have been made to work 2 more years that has not gone well with working community. The above report researches the main implications that would occur to organisations if the pension eligibility criteria increased.
The main implications are as follows.
The importance of mature aged workers
The myth that older people cannot contribute
Intergenerational tensions between older & younger workers
Younger workers being deprived of promotions
Managing older workers
The above factors describe the positive & the negative aspects to the organisation. Mature aged workers have been a positive addition to organisations in a way as they help to train younger employees the correct way that they were thought in the past. This is very important to an organisation as it decreases any training costs involved. The younger trainees will have the opportunity of gaining valuable experience from working alongside an experienced worker. Retention of older workers till their 67 can help in a way as it will help to build the next generation.
The writer also found that there are instances where older workers have limited knowledge on new technology that could seem as a disadvantage when working with younger people. This is a negative implication that could occur through this new scheme.
This new scheme has also brought tension between these two parties as younger people tend to ignore the ideas that their elder peers have. The writer also found that older employees are trying to adapt with the younger clang as much as possible to mitigate any tension between the two. The writer feels that HR can develop a program where these workers can communicate with each other much efficiently so that, it will diminish the misunderstandings they have with each other.
The report also discusses the fact that younger people are changing jobs quite regularly due to the lack of promotion opportunities within an organisation.
The most important fact is that organisations need to better manage their employees in a situation such as this as it could hamper the organisation if not managed sufficiently. In a way the new scheme can be deemed disadvantageous as there are too many cons than pros.