02:30am Friday 15 November 2019

Active ageing – a risky labour policy

Professor Philip Taylor

Professor Philip Taylor

The report highlights a number of institutional barriers to their employment, the removal of which would undoubtedly assist in lifting older workers’ employment participation rates to levels closer to those of other industrialised nations.

In the past, older workers have borne the brunt of industrialised nations’ efforts to grapple with the effects of economic restructuring, with policymakers encouraging their early labour market withdrawal. They have been over-represented in declining industries, under-represented in those experiencing growth and affected by reduced demand for unskilled workers.

Organisational delayering, downsizing of operations and process reengineering has fragmented the traditional employment relationship and undermined the ability of older workers to sustain positions in the labour market. While the large-scale devastation of certain kinds of manufacturing and production industries in the 1980s has ended, global forces continue to shape the employment landscape in ways that may not be conducive to older workers’ job prospects.

But current thinking is that early retirement is not tenable if industrialised economies are to remain competitive and to respond well to the ageing of populations. The European Commission, for instance, has estimated that an increase in the effective age of retirement of one year would reduce the expected increase in expenditure on public pensions by between 0.6 and 1 percentage points of GDP. The economic gains alone resulting from ‘active ageing’ could thus be enormous.

But is this achievable without the risk of hardship for some older workers?

Working later also seems at first glance like an attractive prospect for older workers when one considers benefits such as income and social participation. To achieve longer work lives major reforms are needed and in this regard the present Federal Government has introduced a raft of generally useful initiatives. This latest official report identifies other, remediable factors that discourage the labour force participation of older workers.

However in the rush to promote the benefits of working later, the reality of older workers’ experiences should not be neglected. It is easy to point to gaps in arguments concerning the value of blocking off early exit pathways and instead exposing older workers to the labour market via promoting re-entry and retention. Unfortunately, past policy changes have often been driven more by concern for the economic consequences of population ageing than for the wellbeing of all older people.

It is possible to mount a serious challenge to those who would make a case for active ageing. It is difficult to argue with the principle; after all, it appears to offer something to everyone. But for older workers serious risks are present.

While older workers may nowadays be somewhat closer to the labour market than they once were, their employability generally remains poor. Some unemployed workers will be, in effect, retired but lack the financial wherewithal to withdraw from the labour market. ‘Activation’ in terms of offering the ‘right’ of older people to work, when there is no work to be had (due to age discrimination, a lack of skills currency, or failing health) may simply be condemning many to labour force participation, but with little or no prospect of meaningful opportunities.

In addition, although policy makers would point to the individual benefits of working, if this is not quality work then this may reduce the prospect of a healthy and secure old age. Here the Australian Human Rights Commission report makes a contentious statement, arguing that “working is a protective factor against physical ill-health and poor mental health”. True to a point, but this surely depends on the kinds of work available for older people.

Flexible working has long been promoted in Australia and elsewhere as an approach that has appeal to older workers as they transition to retirement. But the problem lies in how flexibility is defined. It is not always possible for older people to exercise much choice and control over their labour market status. Many, for instance, find themselves trapped in involuntary part-time work for long periods, particularly women.

Many of the jobs to which older workers gravitate do not fall into the ‘quality work’ category. Despite the shift to a knowledge-based economy, many workers are still to be found in physically demanding jobs or in work environments that carry occupational health and safety risks, make it difficult to maintain skills currency, and as a consequence do not lend themselves to prolonged working lives, with a serious prospect of social exclusion and poverty.

The European Commission has acknowledged the potential risks when it notes that “Transition rates into both unemployment and inactivity are considerably higher for older workers in jobs of low quality”. Evidence of continuing inequality in terms of types of employment opportunity would seriously undermine the case of those pointing to a simple measure of employment activity as indicative of changing labour market prospects for older people.

The new policy rhetoric of working until the age of 70 or beyond must also surely ring hollow to job-seekers aged in their 50s or those whose life expectancy, due to a combination of social and health risk factors, is likely to fall short of this or exceed it by very little.

A plausible scenario is one of increasing labour market insecurity and personal hardship as workers can no longer fall back on early retirement. One might say that there is even a ‘lost generation’ for whom the notion of working longer has come too late. Unfortunately, no program of activation could now make very many of them work-ready.

Much work could still be done to adjust official provision for the older jobless and those seeking a career change, to protect people from discrimination on grounds of age, to promote the benefits of employing older workers among business and, more generally, to recast work for an ageing society. However, a pragmatic balance is required between, on the one hand, maximising job chances, and on the other, an escape from diminishing prospects.

Labour markets may not adjust easily or willingly to the ageing of industrialised society. The ongoing reconfiguration of national economies on the back of global shifts brings with it the prospect of turbulent times ahead for at-risk groups such as older workers. Recognising this, an emphasis on longer working lives should then be a policy aspiration, but not an ideological straightjacket. Certainly, any policy armoury that did not contain adequate protection for its older citizens would not be properly equipping them to meet the challenges of the modern labour market.

Professor Philip Taylor is the Director of Research and Graduate Studies at Monash University’s Gippsland campus where he researches age and the labour market.

A version of this article also appeared in The Conversation.

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