Welcome to Shades of Grey, a series from The Conversation that examines the challenges posed by Australia’s ageing workforce, Today, Macquarie University’s Ben Spies-Butcher explains how increasing the participation of older workers for purely economic reasons can lead to poverty.
Economists claim that older workers may be our salvation against the perils of population ageing.
A recent report from Deloitte Access Economics has claimed a 5% increase in participation by older workers could increase GDP by $48 billion over 12 years.
But the history of women entering the workforce shows striving for equal participation can be a double-edged sword. Prosperity can accompany greater equality – between men and women, young and old – but without broader economic and social change it can mean growing inequality and insecurity amongst those left behind.
Before the concern over the ageing population began building during the 1990s, Australian governments were preoccupied with another challenge – globalisation. Open markets threatened the traditional economic model, which had protected manufacturing; had seen the development of a stable export trade with our former colonial master – Britain; and had guarded wages and working conditions through a centralised system of court arbitration.
Over the next 30 years, Australia gradually restructured its economy. Markets were opened, wages were deregulated, new export markets were expanded. While many experts hail this process as successful in generating higher incomes, it also resulted in considerably greater financial inequality and insecurity.
Market deregulation threatened to make it even worse. In New Zealand and the USA, it saw a much more dramatic decline in equity and social connection. Australia instead pursued a more moderate reform agenda. Wages were held down, and casualisation did increase. But other measures were taken to cushion the effects on workers. A key part of this cushion was a deliberate move to push women into work.
Even the feminist movement, particularly the “femocrats” involved in policy making, saw an opportunity to advance gender equality with economic arguments. While individual wages might stall, having a second income promised to increase family incomes. And increasing the number of women workers promised to ease labour shortages, particularly in the growing services sector.
Over the 1980s and 1990s Australia’s female participation rate rose 13 percentage points, double the OECD average. These workers have proven invaluable in some of the industries where employment is growing fastest – health, education, retail, and childcare. It has also played a significant role in raising family incomes, and giving women greater financial independence and life choice.
It seems the current Labor government is following a similar formula in promoting the employment of older workers.
Population ageing potentially lowers economic growth, not only because more Australians will be over our traditional retirement age of 65, but because participation rates for those older workers (50-65) are lower than for the young.
But our experience with women workers suggests some caution is needed in promoting this new agenda. When older workers are welcomed, discrimination reduces and experience is valued, proving that there are clear benefits to increasing workforce participation.
But these changes are also likely to see new forms of inequality, and create new economic pressures that mean many, especially those with fewer skills, those who work in manual labour and those with disabilities, will feel compelled to work in insecure or disappearing jobs.
Both these forces were evident in the transition to a more gender equal workforce. Until recently the inclusion of more women in the workforce led to a decline in the gender wage gap and a change in social norms, which saw reduced gender discrimination. These changes have not yet gone far enough – and on many levels have stalled – but it has been a positive shift.
On the flip side, the rise in the number of double income families has sent house prices up, effectively forcing most families to have two earners. Women have also been concentrated to low paid, casual jobs, and have lacked access to childcare. Rather than changing work so that women are welcomed, much of the change has come from financial pressures that force women (and men) to work in unfriendly environments.
We have to think carefully about the broader changes that come from changing work patterns. Recent research has found that three in 10 older workers face direct discrimination. That is unacceptable, and a key reason why older people don’t stay in the workforce for longer.
Alongside policies to encourage employers to welcome older workers, the government has also been wielding the stick. It will be increasing the age at which we become eligible for the pension to 67. Many white collar, professional workers might welcome this. Many will want to work longer, and those that can’t will be able to access superannuation from 60 to ease out of the workforce.
That’s not the case for many unskilled and manual workers, who will struggle to find work and whose bodies will groan in their traditional jobs. It will mean an increasing divide amongst older households.
Over time, this will only get worse as younger generations – where many workers will never be able to afford a home – will reach retirement age. Better educated and secure workers will continue to work in highly paid jobs, in secure housing, without a mortgage. Others will struggle on in private rentals, casual work and frequent unemployment.
Older people remaining in the workforce is to be welcomed – but doing so for purely economic reasons can be a recipe for poverty and social exclusion. Equality and economic participation can go hand in hand, but this requires addressing both issues simultaneously. We want people to work because they find meaning, purpose and acceptance in what they do – not because they will be evicted if they don’t.
Read more in the series:
There’s no silver bullet solution to Australia’s ageing workforce
Michael Lenehan
retired
A wonderful article clearly revealing that work for older people is a "millennial Eden" only for those people with well-paid satisfying jobs who are fortunate to be both dent free and own their own houses outright - and hence who continue to work only because of informed personal choice.
The true beneficiaries of older male and female access to the labour market will be those - like the middle, upper or more socially mobile women from the lower orders in the 1970s - whose education, wealth, status…
Read moreMark Amey
logged in via Facebook
I'm with you, mate. I'm only 52 and I feel like I'm buggered. I'll probably only have to work another 20 years to pay for my retirement. I'll be needing that 'strength of spirit'!
Bruce Moon
Bystander!
Ben
I appreciate this 'series' is (in part) an attempt to address the impacts that may accrue should Australia move to copy the United States and remove compulsory retirement.
All too long ago I was taught that statistics can be construed to support nearly any proposition. I doubt that the claimed economic benefits would accrue as is claimed. All-too-often in economic modelling, important variables are overlooked and the true cost of a proposed policy change is misconstrued.
Over recent…
Read moreDania Ng
Retired factory worker
An excellent article, thank you. The elderly have come to be seen as otherwise problematic if they don't self-fund their retirement, or if they don't continue to participate in the workforce. Their contribution to the informal economy is discounted (e.g., child care, helping their children with interest-free loans, grants, providing the young with accommodation and free board, volunteering, and so on), whilst we decry the apparently high cost they bestow on us as a society. How did we arrive at this point?
Thanks once again.
Ben Spies-Butcher
Lecturer
Thanks Dania (and Bruce, Michael and Mark),
I must admit when you spend a lot of time reading policy documents and economic reports it feels like you're the odd one out questioning the merit of working longer and harder. Its refreshing to hear that I'm not alone - that its normal to want a little time for oneself and for shared community time ;)
And I completely agree that our focus on paid work disregards the many other things we do that make the lives of those around us better. Things you rightly point out we then end up having to pay for without family and friends with time to spare. One of the great things about time (rather than money) is its much harder to generate or tolerate vast inequalities. If people spend time together they tend to share.
Thanks again.
Judith Olney
Ms
Ben, I have friends in their late 40's and early 50's that feel they have nothing to live for, if it means that they have to spend the rest of their lives working, just so they don't end up homeless or beggars in their old age. For many in low paid, and unskilled jobs, (every job requires skills so I really dislike this term), they will be so worn out by the time they reach 65-67 years old, that they likely will not have very many years left after retiring, so I guess wanting people to work longer will serve to put those on low incomes, that do physically demanding jobs, into their graves quicker than those lucky people who work in white collar well paid jobs.
Work, for most people I know, is just a means to make money and survive, and retirement is the reward for being productive for so many years. Without retirement to look forward to, there is not much left to live for.
Peter Reefman
Project Manager
I know it varies depending on things like the type of work that is done, but with our current longevity expectations we are now living MUCH longer than when 65-ish was understood/implemented as "The Retirement Age". Some 50 years ago we might have expected to only live another 5, maybe 10 years past that (on average), with a common experience being that we had people lose their purpose in life when they retired and gave up this mortal toil only a couple of years after retirement.
I accept that…
Read moreEddy Schmid
Retired
Peter,
Read moreFrom where do you get the claim, "we are now living MUCH longer than when 65-ish was understood/implemented as "The Retirement Age". Some 50 years ago we might have expected to only live another 5, maybe 10 years past that ".
I challenge you, to visit a cemetary near you, especially one that has been there for a hundred years or more, go for a walk thru it, take note of the ages of many of the deceased therein, PARTICULARLY the ones in the late 1890's and 1900's, you will find an incredible…
Ben Spies-Butcher
Lecturer
Hi Peter,
Yes life expectancies are increasing. But not as fast as production. Until fairly recently virtually every significant economist (Adam Smith, John Stuart Mill, John Maynard Keynes) presumed that we would slow the economy growing and enjoy more of the 'art of living'. So while its true we have more years, we also have even more stuff (although who exactly the 'we' is means not everyone has access to it).
But you are right that retirement in the sense of being on a perpetual holiday for 20 odd years might not be that rewarding. I'm just not sure that's what retirement needs to mean. Most people outside the paid labour market contribute an awful lot. They often have fulfilling and important roles in the community. My main concern is to avoid a situation where people take on roles they don't really like because of economic imperatives. Ensuring secure housing and a decent (although likely still relatively basic) income for older people would allow a little more choice.
Eddy Schmid
Retired
Seriously, cannot understand why folks such as the author of this article, support and peddle the myth of older workers working longer.
Read moreTo see just how effective and successful such a policy is, all one needs to do is visit the U.S. and see first hand how successful it is there. NOT.
I'm 62 years of age and have been paying my taxes all my working life, according to CURRENT legislation, part of those taxes are supposed to be put aside by the Govt to pay for my pension on retiring.
It's rather…
lavinia kay moore
child and family counsellor
I heartily agree with you eddy. We have always been conned about superannuation. Those of us in the public service were considered to have it better than others, but we too have been scammed with changes in rules, often taking place without our knowledge.
Read moreSome of us got hit by the double whammy, conned by the super which we paid on top of our very high tax, ( and there was no family tax benefit A,B. &C then!), and then get told when we are made redundant that we dont have continuity of service and…
Gil Hardwick
Anthropologist
Doesn't it occur to anyone yet, you too Ben, that the real problem here is bureaucratic, amorphous late modernism and its theoretical constructs?
Say, for example, I refuse to comply with your assigning me arbitrarily, by which I mean without consulting me first, to some prespecified 'age', 'sex, 'gender' or 'class', and on that basis start writing gibberish about what I might do or not do, along with all the others you treat likewise?
What say I refuse to 'act my age', refuse to conform, refuse…
Read morelavinia kay moore
child and family counsellor
Good for you Gil.
I would love to be able to do my chosen retirement work: writing.
I could not do it earlier because i had to support my children.....so thought that in my "retirement" i would have a chance to do what i always wanted to but could not.
I do write.
But I dont get any income from it.....
So I work as well.
I am sure that there are many women who are in the same boat.
Maybe i should wangle a PHD grant and live off that while i write about something that I want to......
Or maybe if I got a decent pension????
David Leigh
logged in via Facebook
It seems to me very simple solutions can be introduced, to improve GDP and engage older workers. Firstly destroy the myths, set up by the young, that older people are doddery and incapable. As a person who did not enter the university system until his mid fifties, I met a lot of bias against age, despite the university policy of a fair go. Irrespective of that, I managed very well and even had young people clamouring to join me in assignments, because my life skills gave me an advantage and better…
Read more