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Article from The Business Times, 23 Nov 05
Enterprise 50
Published November 23, 2005
Engaging the elderly
PAUL HENG looks at the twin challenges posed by an ageing population and a mature workforce
THE issue of an ageing population, and the related mature workforce, is an ongoing challenge for many countries in the world. Many western governments, such as Germany, France and Sweden, have initiated measures to address them, but those here in Asia do not seem to have fully grasped the significance and implications of both issues, with the exception of, perhaps, Japan.
The two key issues here in Singapore are falling birth rates and increased life expectancy. From 53,000 babies born in 1980, the stork only visited us 37,000 times last year. Possible contributing factors include rising career aspirations, a desire for a lifestyle that frees both parents from the bonds of child raising, and infertility brought about by a multitude of factors including work stress.
Male Singaporeans can now expect a life span of about 77 years while women can expect to live four to five years longer. The combined effect of these issues can potentially result in a chronic shortage of talent in key areas of our economy. The truth of the matter is that an ageing population does have an impact on a country's economic growth, dragging the issue of possible business failures into the equation, as people are Singapore's key resource.
Has the government's call for pro-hiring practices relating to mature workers been heard? Yes, it has, but publicly available statistics suggest there is room for improvement when it comes to taking action. The largest single public sector employer, the civil service, for example, employs a mere 17 per cent of workers who are 50 to 60 years old (out of a total workforce of about 111,000). For those above 60, it's a mere one per cent. This does not compare well to a national average of 55 per cent and 35 per cent for the 50-60 and above-60 age groups respectively.
To maintain the size of our workforce, we need to increase the number of workers to counter the effect of those leaving. With fewer babies being born, the only solution is to find ways to retain the services of mature workers. Our labour force participation rate (LFPR) is currently 59 per cent. This compares with 65 and 72 per cent in South Korea and Japan respectively, two Asian countries that have implemented effective measures to address the issues surrounding their ageing populations. Singapore needs to do some catching up.
Some prevalent perceptions of mature workers include:
- Reduced innovation and creativity.
- Relatively high employment costs
- Inability to cope with changing technology
- Increased sickness and absenteeism
- Inability to stay long in jobs
- Unwillingness, lack of interest, or inability to re-skill.
Of these perceptions, the only one that is probably largely true is that of decreased innovation and creativity.
In 2002, Nobel Laureate Leo Esaki, winner of the 1973 Nobel Prize in Physics, delivered a speech at the University of Texas in Dallas. He was quoted as saying that most of the great discoveries and innovations occurred at the average age of 32, and that the peak creativity of most scientists occurred around age 20 to 30. He said that as one gets older, experience increases but creativity decreases.
The government has implemented many schemes to address the challenge of keeping mature workers in active work, and creating avenues for others that are out of work to return to the workforce. Committees already formed to tackle specific challenges include the Inter-Ministerial Committee on Ageing Population.
This committee's key role is to formulate and review policies to better prepare Singapore for an ageing population, and to ensure that all levels of society are well prepared for the challenges and opportunities of an ageing Singapore. Schemes such as the Re-Employment Assistance Programme (Reap) and the Job Re-creation Programme have been put in place as part of the overall strategy.
Prior to this, the Ministry of Home Affairs had, to its credit, already put in place a career transition programme to prepare their officers for a civilian career once they draw close to their retirement age. All this is fine so long as employers work hand in hand with the government, to either re-employ mature workers or collaborate with them on re-designing jobs.
Japanese example
Legislation, if any, should be used as a final resort. It is just one way of addressing the situation. In Japan, for example, the government is enacting a law requiring employers to offer re-employment to workers above 60 years of age, and it has also raised the pension withdrawal age from 60 to 63, and eventually 65.
Employers must begin thinking of the ramifications (to their business) resulting from an ageing population. One of the more fundamental things for them to do is to take stock and conduct an audit of their pool of human resources: what they have today, in the near future (six to eight years on) as well as what they would be needing in the longer term.
They should also conduct a skills audit - to anticipate future needs and prepare themselves to have the talent available to meet business needs. There are merits to considering the employment of mature workers, and there may be few other options. As of now, many SMEs will benefit from hiring experienced workers, aged 40 and above, who have had MNC experience. They would have relevant transferable skills that will benefit these SMEs.
The challenge, as in all free markets, is for SMEs to find ways of attracting such talent as, in most cases, they will not have the financial muscle of bigger companies.
However, it is also true that many senior executives in MNCs, having attained a certain level of financial independence, may not necessarily have income on the top of their list when considering alternative career options.
These days, attaining a quality work-life balance is a priority for many. The challenge then would be for SMEs to come up with an attractive proposition to attract this group of experienced, mature workers. Companies may also consider the option of contractual/part-time/interim work arrangements versus regular employment.
Shift in mindset
In my opinion, the biggest challenge is attaining a shift in mindset towards the (positive) value of employing mature workers. Twenty-nine per cent of our labour force will be at least 50 years old by 2015, compared to 13 per cent in 1991. By 2020, China and Japan will be short of 10 million and nine million working age people respectively.
Here's a success story from an article in the Financial Times of July 6, 2005. A German entrepreneur, Se bastian Vallbracht, started a consultancy and named it 'VMVO Senior Expert Consultancy'. He felt it was a huge waste for mature workers to retire 'prematurely' as their years of practical experience and intellectual capital could be put to good use.
His business model was quite simple. He recruited experts in certain fields to work on consultancy projects that his company was awarded. Because they were contracted employees, there was greater flexibility in working hours and location, thus meeting these mature workers' need for work-life balance.
For the company, there was no need to be saddled with high wages and benefits costs, and when the project ended, that was it. There was no need to worry about issues like retrenchment and the peripheral challenges, especially financial compensation, associated with it. When it comes to employing mature workers, companies could take heed of this simple analogy: If you already have the phone number in your head, you can make your call much faster than if you had to look it up in the phone book.
The writer is a certified career coach and HR expert with NeXT Career Consulting Group, Asia. He is also the founding president of the Asian Association of Career Management Professionals
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