Australia's Demographic Challenges
With much reduced growth in the working age population in the future, it will be essential that we generate jobs for those who want them — including those who are currently unable to find a job at all, or who are looking to increase the hours that they work. More flexibility will be required, as will conditions conducive to job creation, such as reducing the amount of regulation imposed on those seeking to negotiate mutually beneficial wages and conditions.
The last 40 years have seen significant changes in the ways in which Australians work, with a dramatic increase in the number of women joining the labour force. In 1962 the participation rate for women was just 35 per cent. It is now 55 per cent. This has profound implications for society, with large increases in the number of families where at least one partner juggles a range of responsibilities, such as parenting or caring. It has also opened up whole new industries, including formal and informal childcare.
Yet looking forward even more flexibility will be required. Rising incomes and an ageing workforce will result in more and more people choosing to work part time. We will need to accommodate these preferences. We will also need to ensure that younger Australians, including those currently reliant on income support, are able to find a job. It is important that our system is flexible enough to address these diverse needs and generate jobs for all those who want them.
The issues are important and incorporate both attitudinal and real changes to the way in which we work. For example, should we consider having longer working lives and reducing regulation on employment so employers seek to employ more people? Could we take other action to increase opportunities for mature age workers? How can we encourage mature age workers to take a broader view as to the type of employment that they could undertake? What can employers do to provide greater flexibility and employment opportunities to meet people’s needs?
The labour market has become substantially more flexible over the last 40 years. The number of part-time jobs shows this. Forty years ago, around one in ten employees worked part time. Now over a quarter of Australian workers work part time.
Part-time workers often are women and the former non-working parents in both single-parent families and dual-income families. Part time work is also attractive to young people who spend long periods studying and workers who undertake further education and retraining over their working lives.
While some see the strong growth of part-time employment as a welcome improvement in labour market flexibility, others see it as the means by which employers can escape rigidities in the regulation of full-time employment. Surveys suggest some part-time workers want to work more hours, and some full-time workers performing both paid and unpaid overtime may want to work fewer hours. This suggests the labour market is still not flexible enough to allow part-time and full-time workers and employers to arrive at mutually advantageous arrangements.
One important factor which contributes to labour market participation is access to child care. Provision of child care assists parents to balance their work and family responsibilities.
Currently around 540,000 families receive child care assistance in the form of Child Care Benefit through the Government’s child care program. The Government has allocated around $8 billion over the four years 2003-04 to 2006-07 to support child care, and recently announced that it will provide an additional $79.5 million over four years for a further 10,000 Outside School Hours Care places, 2,500 Family Day Care places and an expansion of playgroup services.
Australian workplaces, and the Australian workforce, are likely to be very different in the future. There will be a large increase in the number of older workers, and quite possibly, a strong demand for part time or flexible working hours.
What is clear is that government should not distort the system by inadvertently or deliberately hindering people’s opportunity to participate in the workforce. People need more options about how long they work, where they work and what hours they work.
Forty years ago, once a man reached pension age he could expect to live another 12 years. The pension started at 65, and most men worked almost 50 years — starting when they were around 15 years of age and retiring at age pension age. Today, Australian men and women are spending more time in formal education, and starting work later. We are also retiring earlier, with some often accessing superannuation well before pension age. On top of this, in 2004, the average 65 year old man can expect to live for another 18 years and a 65 year old woman another 21 years. In 40 years’ time people could have almost as long in retirement as they have in the workforce.
As we live longer, it will become more important to have flexible arrangements in place for people to make choices about extending their working life, spending longer in retirement and entering the workforce at a later age. This flexibility will become increasingly important. It will allow people to choose what is right for them. Yet some who may want to work longer can face barriers centred on employer and community attitudes, and their own behaviour.
Some employers voice concerns about the potential risks and financial costs of retaining or recruiting older workers because of health and workplace related injury, adaptability and training. Consequently, older workers often are targeted for voluntary retirement or redundancy. Yet research tends to show that the performance of employees declines little with age. Furthermore, the quality of work in skilled jobs tends to increase with age and experience.
Conversely, older workers sometimes perceive age as the key factor affecting their employability. They can underestimate the opportunities of different kinds of work that they could do, particularly if they have worked in the same occupation or industry for a long time.
Mature-age workers are vital to our workforce and we need to support their ongoing participation. This will be more important as Australians grow older and live longer. Forty years ago, people at a set age faced compulsory retirement; we need to firmly establish a culture of employers judging staff on their merits, and people seeing themselves as having ongoing work opportunities, rather than being locked into a fixed date of retirement. The Government has already legislated to remove any age discrimination that exists in relation to the employment of Federal Government employees, and provides leadership in promoting community understanding of the economic and social imperatives of greater participation by mature age people. The Business Council of Australia has recently issued guidelines aimed at encouraging big business to keep more older Australians in the workforce.
The Prime Minister has asked his Community Business Partnership to suggest practical ways to encourage the private sector to employ more mature workers. The Partnership is expected to report back around the middle of this year.
The Government recognises that mature age job seekers may need extra help to get existing local jobs or jobs in emerging industries and therefore through Job Network offers flexible and tailored assistance to these job seekers. For example, Job Network members have access to a Training Account to provide work related training for eligible mature age job seekers. Training Credits are also available for mature age job seekers who complete a certain number of hours in Work for the Dole or Community Work.
The Transition to Work program offers a range of individual and flexible assistance to help parents, carers or mature age people aged 50 years and over who are looking for paid employment or planning to join or rejoin the workforce after an absence of two or more years. The primary objectives of the Transition to Work program are to provide preparatory assistance to an individual that builds self esteem and addresses confidence issues and improves the individual’s prospects of obtaining paid employment through assessment, skills training, support and advice on how to get into the job market.
Job Network members also have access to a new Job Seeker Account to purchase a wide range of assistance to help job seekers secure work. The assistance could include, for example, providing a wage subsidy to an employer, purchasing equipment or help with transport costs. Job seekers unemployed for three months, or identified as highly disadvantaged, can access Intensive Support. This provides individually tailored assistance and support to help job seekers address specific barriers to employment and to obtain suitable work.
Today because people are living longer, we recognise it is reasonable for those of Age Pension age to make their own choices about earning additional retirement income. Increased flexibility in the workplace relations system would allow older workers to choose whether to remain in the workforce for longer in part time work as they approach retirement. A flexible workplace relations system will also enable older workers to balance caring responsibilities by allowing employees and employers to negotiate mutually beneficial family friendly work arrangements. This involves increasing employers’ awareness of the business case of adopting innovative and flexible arrangements in the workplace.
Already an important aspect of flexibility is the ability to tailor wages and conditions to the specific skills and needs of particular individuals and jobs. The Government’s agenda of proposed amendments to the Workplace Relations Act continue to simplify procedures, increase labour market flexibility and link wages and conditions to productivity improvements. However, the full benefits of reform have not yet been realised. Workplace culture has prevented the new options and flexibilities being fully exploited.
Nevertheless, Australia’s labour market has become more flexible through less regulated minimum conditions of employment. The award system has been reduced to 20 allowable award matters. However, areas of overlap and duplication remain, particularly where minimum standards are provided elsewhere in Australian or State Government regulations.
A number of further workplace relations reforms are currently proposed: reform of unfair dismissal laws to minimise their impact on employment, particularly for small business; simplification of procedures for agreement-making; improvements to the remedies and sanctions against unprotected action; improvements to bargaining processes; and improvements to the processes for union right of entry to the workplace. These reforms have been blocked in the Senate.
Wage setting processes also are complicated by cross jurisdictional issues arising from workplace relations issues being covered by State and Australian Government legislation. This can create significant issues for businesses operating in a number of States. Some currently proposed legislation seeks to broaden the federal jurisdiction in workplace relations matters.
Australia’s arrangements for the setting of federal award wages, including the minimum wage, are unique in that they are based on a quasi-judicial process. There are different international approaches to setting wages and conditions. Critics have stated that Australia’s arrangements do not serve the needs of the low paid in that relatively high award minimum wages make it too expensive for employers to take on low skilled workers.
Legislation is currently proposed that would require the Australian Industrial Relations Commission to consider the needs of the low paid, including their employment needs, the employment prospects of the unemployed, and the capacity for employers to pay when adjusting the award safety net. The legislation seeks to ensure that when setting wages and conditions of employment for low paid and low skilled workers it is at a level that attempts to prevent job losses and reduced employment growth.
Previous: Better incentives