Executive summary

Australias population is aging. We are living longer and birth rates are much lower than 10 years ago. These two factors combined lead to a lower amount of people who are able to participate in the workforce. Workforce participation rates are an important factor in Australias economic growth. High workforce participation is required with the aging population as more taxes generated from the labour force will assist in offsetting the required health and social security costs. In order to increase our economic growth, we need to increase Australias population, labour supply and productivity. As the Baby Boomer generation is beginning to enter retirement age, we need to find ways to ensure that the economy stays strong that that we have enough money to service those on the aged pension. Indigenous adults, the disabled, sole parents, and immigrants (particularly those from non-English speaking backgrounds) were among the groups identified as being significantly disadvantaged in workforce participation terms (Business Council of Australia, 2008 p2). Government and employers have developed numerous policies and incentives to encourage more individuals of working age into the workforce or to increase their hours worked and attract older people to remain in or re-enter the workforce. These include: Paid parental leave schemes and returning to work after child birth. Child care benefits to encourage parents to put their children into child care and return back to work. And, tax subsidies for parents with young children; to encourage births without as much disadvantage. To encourage more workers, the tax free threshold is increasing from 2012 to $18,200. The aged pension will be increasing from 65 to 67 and for aged pensioners, only of the first $500 of fortnightly income being counted as income. Employers are offering a variety of flexible working options to encourage employees to work and employees can also request flexible work arrangements to assist them to care for their children who are under school age or those that are under 18 who have a disability. Disability support is provided by the Employment Assistance Fund to help people with a disability or mental health condition to find and prepare for work by providing financial assistance to purchase a range of work related modifications and services. With the launch of the National Aboriginal and Torres Strait Islander Education Policy (AEP) in 1989, Indigenous Australians are beginning to gain equity in education and training outcomes through targeted programs that will in effect increase the employability of Indigenous people. Recommendations are made to train and retain older employees including promoting a gradual step down into retirement. Offer apprentice training programs from year 10 and finally to develop stronger educational campaigns targeted at employers to reduce stigmas towards those identified in the disadvantage groups to encourage a more diverse workforce.

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Table of Contents
Transmittal Letter ........................................................................... Error! Bookmark not defined. Executive summary .......................................................................................................................... 1 Introduction ...................................................................................................................................... 3 The Ageing Workforce and Workforce Participation ...................................................................... 3 Recommendations ............................................................................................................................ 5 Conclusion ........................................................................................................................................ 6 References ........................................................................................................................................ 7 Appendices ....................................................................................................................................... 9 Appendix A: Fertility Rates 1929 2009..................................................................................... 9 Appendix B: Age Specific Fertility rates 1929-2009 ................................................................ 9

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Introduction
Australias workforce is in dire straits the population is getting older and our workforce participation rates are decreasing. The workforce in Australia today is very different from some 20 years ago. On one hand organisations are seeking to produce more goods in less time at a cheaper rate to increase profits which will in effect increase Australias economic growth (Lamkin 2010, p 104). On the other hand, individuals are seeking more work-life flexibility in their working arrangement. With Australias aging population inherently meaning an ageing of the workforce, Australia needs to look at ways to increase participation rates and extend the working life of individuals and to create a balance that is mutually agreeable for both employers and individuals. If Australia does not act on these two important issues, there will be fewer taxes to fund social and welfare programs in particular increased health and social security costs associated with an aging population (Business Council of Australia, 2008 p1). This report will look into these contemporary labour market issues in Australia and the strategies that have been developed to combat them.

The Ageing Workforce and Workforce Participation

As a nation, Australians are living longer. With the median age of Australias population expected to increase from 36.8 (in June 2007) to between 41.9 years and 45.2 years in 2056, Australias workforce is also aging (ABS 2008). Workforce participation rate refers to the number of people in the labour force as a proportion of the civilian population aged 15 years and over (ABS 2011). Workforce participation rates are an important factor in Australias economic growth. The Business Council of Australia (2008) highlights the importance of high participation rates; higher workforce participation is required with the aging population as more taxes generated from the labour force will assist in offsetting the required health and social security costs. In June 2011, ABS data showed the participation rate to be at 65.6% of the civilian population (ABS 2011c). Abhayaranta & Lattimore (2006) identified three key factors that have an impact on increasing the workforce participation rates, which will in effect increase our economic growth. These key factors are: population, labour supply (total hours worked) and productivity. Population refers to fertility rates, morbidity rates and the amount of people migrating into Australia; it is of great importance that Australia has an adequate number of individuals able to participate in the labour force one of the main factors being age. Labour supply looks at the number of people employed, how often they are working and how they are employed eg. full time or part time. A high supply results in a higher potential of output subsequently increased economic potential. Life expectancy has increased remarkably over the last 30 years with ABS statistics showing life expectancy increasing from an average of 49 years in the 1980s to 81.6 in 2007-2009 (ABS 2011a). Coupled with a decline in birth rates over the last 90 years, and fertility rates at just 1.90 babies per woman in 2009 compared to 3.5 babies per woman in 1961 in the baby boom era as shown in Appendix A (ABS 2010, p.9) the problem of the ageing population in Australia needs to be addressed. With 27% of Australia's resident population being born overseas, 76% of these residents are of working age (as at June 2010) (ABS 2011b). Indigenous adults, the disabled, sole parents, and immigrants (particularly those from non-English speaking backgrounds) were among the groups identified as being significantly disadvantaged in workforce participation terms (Business Council of Australia, 2008 p2). These groups are often seen as disadvantaged and are subject to forms of discrimination when seeking employment. By developing policies to increase participation rates for these groups in the labour market the economic pressures associated with providing welfare support will be reduced and the individuals will feel more included socially. (Abhayaranta & Lattimore 2006, p.2) Page |3

A study conducted by the ABS in 2008-2009 on barriers and incentives to labour force participation highlighted incentives that would encourage individuals to join or increase their participation in the labour force. Important issues were having indicated as the ability to work part time hours (51% women, 28% men classed this as very important), with statistics showing that women are choosing to delay having babies until their thirties (Appendix B ), being able to receive financial assistance for childcare was high for women with 55% stating this as a very important issue. A financial incentive that was also highlighted was to be able to keep more pay with 37% of individuals reporting this as very important (ABS 2009). The children of the baby boomer generation are beginning to enter retirement age causing a decrease in experienced, skilled and knowledgeable workers in large amounts. Australia needs to ensure that there are enough tax payers to keep the economy strong and enough money to service those on the aged pension. It is imperative that this vital information in retained by employers. In order to tackle the important issues of workforce participation and the ageing workforce, the government and employers have developed numerous policies and incentives to encourage more individuals of working age into the workforce or to increase their hours worked and attract older people to remain in or re-enter the workforce. Some of these are detailed below. Parental Leave: Paid parental leave The Australian government brought in the paid parental leave scheme in January 2011. This scheme encourages women to join the workforce or rejoin in-between giving birth to their children by providing 8 weeks of paid leave at the minimum wage when they have a baby if they have been working with their employer for a minimum of 12 months prior to the birth of their child (Family Assistance Office 2011). An alternative to this is the baby bonus where a lump sum payment is provided on the birth of a child. Some employers also offer employer provided paid maternity leave incentives generally to reward women who what been employed with the company for a period of time, this incentive may also attract women to work for this employer. The government has also implemented a policy to encourage workers back into the workforce: employees can take 12 months of unpaid parental leave (with the option to extend for a addition 12 months) to be the primary carer of a new born or newly adopted child, if they have worked for their employer continuously for 12 months, after this time employees are entitled to come back to the position they were in immediately before going on leave, if that position no longer exists at the business, the employer must offer the employee a suitable available position for which the employee is qualified which is nearest in pay and status to their original position (Fair Work Ombudsman 2010). Child care benefits: Child Care rebate In order to encourage mothers (and caretakers) back into the workforce after having their children, the Federal government provides subsidies for childcare including 50% of out of pocket child care expenses back (Family Assistance Office 2011). Jobs, Education and Training (JET) Child Care fee assistance This is similar to the child care rebate but is for people who are currently receiving income support. It was developed to for people who are working, training or studying to enable them to enter or re-enter the workforce. This payment covers the gap fee of child care that the childcare benefit does not cover.(Family Assistance Office 2011). Family tax benefits A & B The government provides tax benefits to families with dependent children to assist with the cost of living. For families with a single income only that is less than $150,000p/a, the family tax benefit B is available as a supplementary payment (Family Assistance Office 2011). By providing these benefits, people are not as disadvantaged for having children and are even given more money if they have more than 3 children to promote more births per woman. Working hours: Employers have had to also adapt in order to encourage workers into the labour force to assist them in meeting their productivity goals, as consumers want access to goods and services outside the traditional working hours. This has meant a change for employers by offering a variety of flexible working options to work with employees or potential employees lifestyles; this includes part time work, job sharing and working from home. (Lamkin 2010, p 105-109). As part of Page |4

the Fair Work Act (2009), employees can request flexible work arrangements to assist them to care for their children who are under school age or those that are under 18 who have a disability. Businesses can benefit from offering flexible hours by an increased staff retention, decreased absenteeism and greater productivity through increased employee job satisfaction (Fair Work Ombudsman 2010) Training: Training Schemes for current employees In order to up skill Australias workforce the government offers financial incentives up to $4000 to upskill and refine the skills of new or existing employees who currently do not have a formal qualification are able to obtain one in their field of employment. (Training.com.au and Australian Academy 2010). The Business Council of Australia (2007) highlights that workers approaching retirement age and those with skills that are becoming outdated should be retained by employers, for this to happen initiatives need to be put in place. By employers offering this to employees, they may be seen as more dedicated to their employees who will see an increase in retention rates. Tax Reforms In July 2012, PM Julia Gillard announced that from 1 July 2012, the tax free threshold will be increasing from $6000 to $18,200 (Swan & Gillard 2011). This increase will encourage people such as stay at home mothers and students to take up part time work or even increase the current amount of work they are doing without being penalized by taxes. Aged workforce: Changes to the Age Pension In 2009, it was announced that aged pension (effectively the retirement age) will be gradually increasing from 65 to 67 commencing from 2017. This is to encourage more people to work longer. Changes to how income is assessed for pensioners were also brought into effect, known as the work bonus, only of the first $500 of fortnightly income being counted as income. This has meant that aged pensioners can do a small amount of work with their pensions not being affected. (Centerlink 2009) Compulsory Superannuation: In the early 1980s the ACTU developed strategies that would address Australias ageing population. Research demonstrated that there would be insufficient tax payers to sustainably meet the cost of pensions for retiring baby-boomers. The response was compulsory, universal superannuation (ACTU 2005). Disability support: Employment Assistance Fund This fund is to help people with a disability or mental health condition who are about to start a job or who are currently working, as well as those who require assistance to find and prepare for work by providing financial assistance to purchase a range of work related modifications and services. These services include awareness training for current employees. (Job Access 2011) Indigenous Support: The main hindrance for Indigenous Australians entering the workforce is their low literacy and numeracy rates. The National Aboriginal and Torres Strait Islander Education Policy (AEP) was launched in 1989. The AEPs overarching objective is to bring about equity in education and training outcomes for Indigenous Australians (DEEWR 2000). Many targeted programs have been implemented to help achieve higher education levels for the Indigenous Australians such as the promotion of the importance of education, regular school attendance and future employment opportunities to Indigenous students, parents and their communities by high profile Indigenous Australians. Funding to cover travel costs for students studying VET and higher education courses and tutor assistance for those in higher education.

Recommendations
Older employees often miss out on employer- provided opportunities for further training as they believe that the employee will not be with the company for too much longer or possibly that they are already knowledgeable. In order to encourage older employees to remain in the workforce, employers should offer this incentive to them also. Training should also be in computer skills as the baby boomer generation was not raised with this technology and often has limited or no skills in this area. Page |5

As valuable skills are going to be lost as the baby boomers retire, employers could look to put in schemes to gradually decrease the working hours of older employees as opposed to going from full time to retirement there may be gradual steps. The retired/retiring workers could be employed as consultants by companies to gain valuable information and insight. These employees can be used to train and mentor junior staff who are taking on their role. High Schools could offer apprentice training or pre-apprentice training programs from Year 10. Students can begin to gain the necessary trades skills whilst still gaining their education. On completion of high school, these individuals can immediately commence employment without the need, or little further requirements of further training in this area. The government needs to develop a stronger educational campaign targeted at employers on hiring those in the disadvantaged groups. The campaign should look at how to reduce the stigmas towards these people and education on the benefits of having a more diverse workforce.

Conclusion
We need to be strategic in our workforce management policies in order to draw out and encourage as many non-participating civilians into the workforce by reducing discrimination and increasing training. Older workers need to be encouraged to remain in the workforce and rewarded for their contribution. While the Government is trying to encourage more births and a higher labour force participation rate, alternative options need to be considered to ensure we are not left with more social security costs than the nation is producing in taxes.

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References
Abhayaratna, J. and Lattimore, R. 2006, Workforce Participation Rates How Does Australia Compare?, Productivity Commission Staff Working Paper, Canberra. Viewed 16 July 2011 <http://www.pc.gov.au/__data/assets/pdf_file/0008/60479/workforceparticipation.pdf> Australian Council of Trade Unions 2005, History of Super, viewed 23 July 2011, <http://www.actu.org.au/super/about/super_history.html> Australian Academy 2010, Funded Traineeship Programs to Up-Skill Your Workers, viewed 23 July 2011, < http://www.australianacademy.edu.au/Employers_Schools/Government_Funding.aspx> Australian Bureau of Statistics 2008, Population Projections, Australia, 2006 to 2101, cat. no. 3222.0, ABS, Canberra, viewed 23 July 2011, <http://www.abs.gov.au> Australian Bureau of Statistics 2009, Barriers and Incentives to Labour Force Participation, Jul 2008 to Jun 2009, cat. no. 6239.0, ABS, Canberra, viewed 19 July 2011, <http://www.abs.gov.au> Australian Bureau of Statistics 2010, Births Australia, 2009, cat. no. 3301.0, ABS, Canberra, viewed 23 July 2011, <http://www.abs.gov.au> Australian Bureau of Statistics 2011a, Australian Social Trends, Mar 2011 , cat. no. 4102.0, ABS, Canberra, viewed 23 July 2011, <http://www.abs.gov.au> Australian Bureau of Statistics 2011c, Labour Force Australia June 2011, cat. no. 6202.0, ABS, Canberra, viewed 19 July 2011, <http://www.abs.gov.au> Australian Bureau of Statistics 2011b, Migration, Australia, 2009-10, cat. no. 3412.0, ABS, Canberra, viewed 23 July 2011, <http://www.abs.gov.au> Business Council of Australia 2008, Engaging our Potential: A Checklist to Reduce Barriers to Workforce Participation, Melbourne , viewed 16 July 2011 <http://www.bca.com.au/Content/101394.aspx> Business Council of Australia 2007, New Thinking Needed to Find Jobs for Those Who Want Them, Melbourne, viewed 16 July 2011 < http://www.bca.com.au/Content/101208.aspx> Centerlink 2009, Secure and Sustainable Pension Reforms, Australia, viewed 19 July 2011 <http://www.centrelink.gov.au/internet/internet.nsf/filestores/co597_0909a/$file/co597_0909en.pdf> Department of Education, Employment and Workplace Relations 2000, Indigenous Education (Targeted Assistance) Act 2000 - PROGRAM GUIDELINES 2009 to 2012, Australian Government, Viewed 23 July 2011 <http://www.deewr.gov.au/Indigenous/HigherEducation/PolicyGuidelines/Documents/ITASGuidelin es.pdf> Family Assistance Office 2011, What payments we offer, Commonwealth of Australia, viewed 19 July 2011 <http://www.familyassist.gov.au/payments/> Fair Work Ombudsman 2010, Parental Leave, Commonwealth of Australia, viewed 23 July 2011 <http://www.fairwork.gov.au/ >

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Job Access 2011, Employment Assistance Fund, Australian Government, viewed 19 July 2011 <http://jobaccess.gov.au/Services/A-Z_list/Pages/EmploymentAssistanceFund.aspx > Lamkin, K 2010, Contemporary Issues in the Labour Market Study Guide (MNG03259), 2nd Edition, Southern Cross University Swan W, Gillard J 2011, Combining Tax Cuts with Significant Tax Reform, Media Release 081, Canberra, viewed 16 July 2011 <http://www.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2011/081.htm&pageID=003&min =wms&Year=&DocType=0> Training.com.au, no date, Existing employees, viewed 19 July 2011 <http://www.training.com.au/pages/menuitemcd1422a0a4754690f9fa5a1017a62dbc.aspx>

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Appendices Appendix A: Fertility Rates 1929 2009

Source: ABS 2010, p. 9

Appendix B: Age Specific Fertility rates 1929-2009

Source: ABS 2010, p. 10

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