In brief – Ageing workforce likely to lead employers to make significant adjustments

In light of the ageing workforce, employers may find they have to reassess their recruitment practices, consider what reasonable adjustments could be made to accommodate individual workers, take steps to avoid discrimination claims and offer programs to employees to promote a healthy and safe workplace.

Changes to pension age, superannuation contributions and composition of workforce

Between 2010 and 2050, the number of people aged between 65 and 84 is expected to double and the number of people 85 and older is expected to quadruple, which means Australia’s workforce will age radically over the next few years.

These statistics were a significant item on the 2014-15 Australian federal budget agenda, which foreshadowed an increase to the aged pension age, from 65 up to 67 by 2023 and to 70 by 2035. While this does not seem like a significant jump, the addition of other factors will see the needs of the ageing workforce become top of many agendas.

These other factors include the superannuation guarantee contributions proposed at 9.5% as at 1 July 2014 rising up to 12% by 2019 and the inability to access superannuation benefits until age 55, which will be tiered up to age 60 over the next five years.

Paired with the increasing challenges faced by employers with respect to work health and safety, there will indeed be a few hurdles along the way.

Higher life expectancy vs lower health expectancy

On 22 November 2013, the Australian Productivity Commission released a research paper entitled An Ageing Australia: Preparing for the Future, which identified the effects of ageing on economic output and the resulting implications for government budgets, as supported by changes in the three Ps: population, participation and productivity.

Of the many key points made in the Commission paper, the good news is, the mortality rate is lower and people are living longer. However, while death rates may have fallen, the “health expectancy” of individuals who are currently between 50 to 60 years of age is in significant decline.

As a result of this trend, there are currently more people in the workforce with some kind of physical or mental disability or limitation and this will continue to increase as the population ages. Given the expected changes in recruitment practices, mature aged workers will likely be concerned that they will be faced with age and disability discrimination and unemployment aggravated by financial pressures. The outlook is grim.

Duty of employers to ensure health and safety of workers

What does this all mean for employers? Greater importance will need to be placed on health and safety in the workplace, particularly in light of the increased number of workers who are more vulnerable.

The objective of the various pieces of state and federal work health and safety legislation is to protect the health and safety of all workers. All workers are afforded the same protections and as such, the work health and safety legislation does not discriminate based on a worker’s age.

The primary focus of work health and safety legislation is the duty owed by a “person conducting a business or undertaking” (PCBU). This duty is aimed at ensuring, so far as is reasonably practicable, the health and safety of workers engaged in work for the business or undertaking. As such, mature age workers will receive the same level of protection wherever they perform their work, consistent with the protections provided to all workers.

Employers should take steps to avoid discrimination claims

Just as more attention is placed on how the ageing population will affect government policies and budgets, there is an emergent interest in how a mature aged workforce will influence employers’ decision making with respect to recruitment practices, particularly in labour-intensive industries that have higher risks to health and safety, such as the building and construction, mining and petroleum and gas industries.

As a consequence, the longevity and reduced costs associated with employing a younger worker may be given preference over the loyalty and experience of an older worker.

Are employers putting themselves at a greater risk of claims being made against them by older workers by hiring younger, less experienced workers due to growing concerns over, for example, a negligible risk of aggravating a pre-existing injury?

Along with the obligation to protect the health and safety of all workers, the various pieces of state and federal legislation also protect the business or undertaking from any allegations of discrimination based on age or disability. If an individual is not able to perform the inherent requirements of his or her position because of an attribute such as their age or a physical or mental disability, then it will not be unlawful to terminate the person’s employment or use this as a reason not to employ that person.

However, before any decisions are made, an employer must first consider whether or not reasonable adjustments could be made that would enable the person to perform the job, without causing the employer unjustifiable financial hardship.

Incentives to employers to employ older workers

In reality, some employers will not have any option but to employ younger workers, given the nature of certain industries and positions.

For those who have a choice, the hidden costs of employing mature employees may outweigh any additional incentives offered to employers, particularly if the health expectancy of the ageing workforce is in decline and the rising cost of health care increases.

The proposed Restart programme (another highlight of the 2014-15 federal budget to incentivise businesses) to employ workers over age 50 appears to be an afterthought by the government to overcome some of the pressures faced by policy makers. However, it may give employers the ability to offer programs to employees to promote a healthy and safe workplace.

Offering employees workplace programs to improve health expectancy

For those employers who want to maintain productivity and a loyal workforce, a proactive approach over the next 5 to 10 years should be taken to improve health expectancy of the ageing workforce. Employers may want to consider introducing incentives to promote a healthy lifestyle, such as:

  • providing flexible working arrangements (rostered days off, flexitime and job sharing)
  • assessing functional capacities and physical job demands as soon as there is a change to technology, duties and equipment
  • making reasonable accommodations or adjustments
  • providing subsidised private health care or gym memberships
  • encouraging innovation
  • offering reimbursement for courses
  • conducting regular risk and worksite assessments
  • providing access to an employee assistance program
  • offering addiction counselling (smoking cessation and weight loss)

Research suggests that creating a healthy culture in the workplace will increase employee productivity and promote long term health benefits and in turn, a safe workplace.