The reality of an ageing society is a challenge Australian employers need to be prepared for.
By 2050 1 in 6 people in the world will be over the age of 65, up from 1 in 11 in 2019^1 (World Population, Ageing, United Nations, 2019). Often referred to as the longevity revolution, increasing life expectancy has major implications for when a person decides to retire, and this delay in retirement can impact workforce planning. For employers, the ability to plan resource needs and requirements is an essential HR practice, critical to the success of ensuring business continuity and marketplace competitiveness to future proof your business
It has been identified that in the next decade, the number one concern for businesses in managing their workforce planning is going to be managing an ageing workforce.
While the baby boomer generation started reaching retirement age in 2011, there has been little labour market impact, with the bulk of boomers set to begin retiring between 2022 and 2037^1. This is going to create a shrinking talent pool creating potential skills gaps for organisations who have not planned to manage the loss of experienced employees.
How ready are Australian businesses?
The upcoming impact of this brain drain was highlighted in Aware Super’s 2021 Ageing Workforce Employer survey, with 6 out of 10 employers stating that 10% or more of their workforce will reach retirement age in the next 5 years.
Worryingly, close to 70% of employers surveyed in our report do not have a plan to manage to lose of employees as they retire^2.
What does the ageing workforce look like?
The issue of an ageing workforce isn’t as simple as a large number of older Australians leaving the workforce. What retirement looks like and when Australians can retire is challenging traditional thinking as both workplace and individual expectations change.
The Australian HR Institute’s “employing and retaining older workers” report called out that since 2014 the percentage of employees expecting to retire past the age of 66 has increased from 49.1% to 65.3% in 2021.
Aware Super’s research suggests that financial concerns are dictating that many older Australians aren’t retiring at 65 but are planning to work longer.
Our research showed that 30% of those surveyed did not believe they’ll have enough money to retire when they want to and live comfortably. To add to this concern, over 59% of those surveyed are worried that they will run out of money in retirement.^3.
The resultant extension of planned working life is a consequence that employers will need to manage with increasing priority.
How do you support ageing workers to remain in the workforce?
AHRI’s research highlighted that the poorly managed departure of employee’s is a concern for employers, with 59.5% of employers claiming they have lost key skills or knowledge from their organisation due to the departure of older workers. Sadly, the research also showed that only 22% of organisations are methodically capturing corporate knowledge from exiting workers^4.
AHRI’s research also highlighted that the number one way to encourage older workers to stay in the workforce is to offer flexible work options, specifically flexible working hours and part time options^4.
Depending on your organisation, there may be simple policies that you can institute to support your employees and enable your older workers to make flexible working choices, to facilitate ongoing contribution to the growth of your organisation.
Some common workplace policies may include:
- Options for job sharing
Allowing your older workers to move to part-time work encourages job sharing, thereby not only enabling them to continue to positively contribute to your organisation, but creates more employment and upskilling opportunities for younger employees.
- Flexible workplace policies
Flexible workplace policies can include benefits such as flexible hours and flexible work locations; both of which support ongoing employment and the process of transitioning from full-time work.
- Succession planning and open exit strategy discussions
Talk of retirement in the workplace is often considered taboo by employees who may fear being disadvantaged by making known to their employer that they are considering retirement. By fostering a safe and supportive environment, through clear policies and open discussion, organisations and their leaders will be better placed to successfully manage and facilitate resource planning
How can you support your employee’s as they near retirement?
Retirement is complex. It can be a roller coaster ride as people come to terms with the social, emotional and financial impact of stopping work. For an employer, discussing retirement with an employee is fraught with complexity. Our research highlighted this, with over 50% of employers stating that they are not confident in explaining retirement options to their employees2.
As a super partner to some of Australia’s largest employers, Aware Super understands the difficulties that retirement presents. We offer broad ranging education, guidance and advice to our members, through our webinars, seminars and other education tools.
For employers we do more than simplify your super administration through our clearing house and STP solution. We work with you to understand your workforce needs to enable valuable workplace education, positively contributing to your employer value proposition.