Managing the impact of an aging workforce

We’ve known for some time now that we have an aging population – both in Australia and globally. According to the ABS, the proportion of Australia’s working age population has dropped from 67.5% in 2009 to 65.9% in 2016. There’s also a significant increase in people over the age of 65 in the country. The trend is also occurring worldwide.

Australia’s population is aging for a couple of reasons. Firstly, Australian families are, on average, having fewer children. The “Baby Boom” of post World War II is well known to have created a surge in the population, and those born during that time are now beginning to reach retirement age.

People are also living longer, thanks to improvements in healthcare and medical technology. In fact, people are living on average a decade longer than they were in 1960.

The main implication of an aging work force is that a large number of skilled workers will be exiting the workforce at a similar time. As the Baby Boomers begin to retire, their skills and experience go with them. Replacing these skills and experience require time and money, both in hiring new employees and providing the training to up-skill them.

Unsurprisingly, the looming mass exodus is causing business owners some level of stress. But with proper planning, the blow can be significantly lessened.

One way to do this is by structuring a phased exit for the Baby Boomer cohort. Making changes to allow a more flexible workplace for aging workers, such as offering reduced and flexible hours, allows workers to enter “semi-retirement”. This means they can still be present to pass on valuable skills and expertise, as well as spreading out the hiring process to replace them.

For businesses, a phased exit allows them to avoid losing all of their experience and skills at once. Creating successful mentoring and handover programs to up-skill new workers engages outgoing Baby Boomers with newer counterparts.

Most importantly, allowing a gradual exit for the aging working population helps maintain a positive corporate culture – firstly by softening the landing for exiting workers, and also by ensuring the remaining employees are satisfied with how their more experienced counterparts are treated as they enter retirement.