We can’t afford age inequality in the workforce

As a society, we have been slow to recognise that millions of older Australians are locked out of the workforce by age discrimination. At last, however, the issue is on the public agenda.

We are starting to understand the terrible waste of human capital involved. It is a loss to the national economy and to large and small businesses, and a devastating loss to people who are pushed out of the workforce prematurely.

Access to the workforce is blocked for older workers not only by age prejudice but by external barriers; by age thresholds applying to workers’ compensation, income insurance and essential professional licences. Simply put, these barriers, where they cannot be justified by performance issues, must be dismantled.

The projected costs of ageing to the economy have stirred governments into action. The Treasury’s Intergenerational Report estimates that about $60 billion will be added to government spending by 2049-50, two-thirds of which is attributed to an ageing population, and caused by increases in age pension costs, healthcare and aged care. Therefore, encouraging people to stay in the workforce longer is an important national priority.

We are in the midst of a significant age shift in Australia’s population profile. Over the next decades, growing numbers of people will be approaching average retirement age, around 65, while fewer younger people will be entering the labour market.

This projected relationship between retired people and tax-paying workers looks like an upside-down pyramid. If allowed to eventuate, it would cause massive public debt.

With unprecedented increases in longevity over the past century, we are approaching the stage when a quarter of our population will be over 65.

This shift has not been reflected in policies that enable people to keep working beyond 65.

This situation does not fit with the demographic facts of today. For example, females born today are likely to live until 95, and males are not far behind. This means that compared with our grandparents we will have almost another lifetime to live and fund.

With two-thirds of retirees relying on the age pension as their main source of income, government pensions and allowances are by far the most common source of personal retirement income for both men and women. At present, 58 per cent of female and 54 per cent of male age pensioners have limited or no other sources of income.

Add to this the fact Australian census results show homelessness among those 55 and over increased from 14,000 to 18,000 from 2001 to 2006, and there is a compelling human rights argument for governments to ensure older people have access to employment without discrimination.

Remaining in the workforce for longer periods is the most effective way for older Australians to improve their standard of living. Employment provides a higher income than the pension and also means more contributions to superannuation. Age bars in workers’ compensation, insurance and licensing prevent capable and willing people extending their working life to gain these personal and societal benefits.

Though it is true that labour force participation declines as people age, dropping sharply once people reach their 60s, recent data shows that Australians intend to work for longer and retire later in life than in previous decades.

That data also shows that we leave the workforce earlier than we estimate or intend. In other words, barriers prevent us from working as long as we would like, or as long as we imagine we will work, or as long as we need to work to secure a reasonable standard of living.

These barriers not only create financial and security difficulties for older people, they also send a harsh message to older workers that they should not be in the workforce.

This message has to change if Australia is to meet the big challenges of an ageing population. Removing structural barriers and providing equal rights for workers as they age is a vital first step. As older workers become more common in the workplace, adverse and damaging perceptions about older workers would start to fade and ultimately disappear.

Extending workers’ compensation, income protection and superannuation provisions to all people who remain productive in the workforce will go some way towards the objective of older Australians having the same rights as the rest of the working population.

Ensuring that the licensing and regulatory requirements do not discriminate on the basis of age, only on the basis of capacity, will provide opportunities for many skilled people to work as long as they are fit and productive.

On the cusp of massive demographic change, Australia needs its older workers to remain in the workforce.

Susan Ryan is Australia’s Age Discrimination Commissioner. Her paper Working Past Our 60s: Reforming Laws and Policies for the Older Worker is being launched by Employment and Workplace Relations Minister Bill Shorten in Melbourne today at the Australian Institute of Superannuation Trustees.