Our population demographics show a decreasing number of people aged under-25 and an increasing number of people aged 55-plus.
Fewer younger employees are entering the workforce. In addition, many older people need to work longer, while businesses need to retain and re-skill them.
Extending people’s working lives has become critical for New Zealand.
A birth rate of 2.1 is required to naturally grow the population, but the current rate sits at 1.5. This low birth rate puts strain on governments to fund retirement plans, and other age-related services such as health and transport, now and well into the future.
Put simply, New Zealand is running out of workers, a phenomenon shared with many other countries.
The easing of immigration rules only goes some way in alleviating the labour and skills shortage, as we compete in an international market for migrant labour.
The question then becomes how can a smaller and ageing working population fund not only superannuation but also the extra costs of healthcare, transport, income supplements, and housing?
The simple answer may be to increase the age of entitlement.
Many countries have or are moving down this route. The standard retirement age of 65 is now closer to 67. Some countries are even contemplating 69 or even 72 (Denmark) by 2050.
Moreover, research from the United Kingdom suggests that if people worked an extra three years, this would add up to 3.25% in real Gross Domestic Product (GDP) per year by 2033.
In New Zealand, the Ministry for Social Development has projected that older workers’ earnings will grow to $13.6 billion by 2041 from a base of $4.8b in 2016.
Older workers contribute to the economy like anybody else, adding to government income through taxes and spending.
A fuller working life can also give individuals the chance to have the retirement they choose, and the other social and psychological benefits that working provides.
Encouraging later life working is not only good for the economy and individuals – it’s also good for business.
But despite the strong economic case for fuller working lives, 80% of employers have no strategies in place to retain this older group of employees.
Investing in older workers is well worth it.
Long-standing employees already know your business and have huge amounts of business IP and knowledge.
Research also shows that older workers are more than capable of learning new skills and ways of working – they may just need a little more time and training.
Employers should also engage with those employees who may be thinking about moving on or retiring.
The question should be: “what do I need to do to assist you to stay working for us?”
In fact, employers need to begin talking to current employees who are aged around 35-40. Managing and securing labour supply is critical in the current economic times.
Companies can offer ongoing training courses to help ensure employees maintain their employability and look at greater flexibility for returning older employees.
The notion of doing some work, while also undertaking recreational or volunteering activity, fits well with older and currently retired employees.
The phenomenon of retirees returning to work is gaining momentum.
We see older workers with specific skills being called back by former employers to plug knowledge gaps. Sometimes you need fresh blood to get new ideas, but sometimes you need to get things done quickly - and that’s when you need those with more knowledge and experience.
Providing flexibility around work and working is a game changer, and it’s already happening.
As in all cases, the employer and the employee need to understand each other’s needs and values to best find a solution.
Contrary to popular myth, the evidence shows that keeping more older people in work actually improves employment prospects for the younger generation, and in some cases even increases their wages.
Older workers need to be recognised for their ongoing contributions and valued for their experience and knowledge.
They have plenty to offer, and employers are urged to retain and recruit them, especially now.
