Cover story: New Zealand’s Grey Quake – Causes Workforce Cracks

There is grey tsunami gathering, ready to break upon the global economy. Forget the current recession, if analysts are accurate in their assessment, the impact of ageing populations worldwide will be devastating.
Despite this, international headlines stuffed with keywords such as “age-crisis”, “baby boomer generation retires”, and “pension shortfall” have been largely ignored, an ironic thumbing of the nose at the wisdom of experience.
For some time, Japan has held the unenviable title of what Foreign Policy reporters Brad Glosserman and Tomoko Tsunoda refer to as: “The greyest country in the world, with 21.5 percent of its population 65 or over.” They go on to lament that: “Not only is the Japanese population aging, it’s also shrinking, from 127 million today to projected 89 million by 2055, the result of plunging fertility rate.
“This unfortunate combination is causing the country to lose its edge and dynamism. Older workers are less innovative; older, more ‘mature’ markets attract less investment. Older populations live off savings, rather than generating new capital. And, as the number of working-age citizens diminishes, pension funds will be exhausted and tax revenues and government budgets will be squeezed.”
Other countries are facing similar issues, with raft of recent studies painting similar slate-toned pictures. The French Institute for Demographic Studies reports poorer states have only small window of opportunity to set up workable pension schemes. If they don’t, the remaining taxpayers of working age will dwindle over the next few decades.
The European Commission for Economic and Financial Affairs is as concerned about its developed nations, stating: “While the first priority is to make the current recession as short as possible, we must not lose sight of the policies and reforms needed to ensure that the elderly have decent pensions and access to health and long-term care without putting an unsustainable burden on future generations.”
The Ageing Report forecast to 2060 shows that the EU “would move from having four people of working age for every person aged over 65 to ratio of only two to one. The shrinking workforce would also mean lower potential growth while, on the basis of current policies, age-related public expenditure would increase on average by about 4¾ percentage points of GDP by 2060 in the EU (more than five percentage points in the European area) through pension, healthcare and long-term care spending.”
The Asian Development Bank released July paper entitled: Ageing Asia’s looming pension crisis where it warns that old-age income support is becoming huge problem, particularly in “East Asia and South East Asia where the demographic transition is well under way”. In turnaround, even China, which for the last 30 years has enforced one-child policy, is starting to encourage couples to try for another. “We advocate eligible couples to have two kids because it can help reduce the proportion of the aging people and alleviate workforce shortage in the future,” Xie Lingli, director of the Shanghai Population and Family Planning Commission, was quoted as saying in recent issue of China Daily, the country’s largest English-language newspaper.
It seems the message about over-population straining resources finally got through to the globe but in dark twist, the subsequent lowered fertility rates have now created new economic burden.
The reports are fairly consistent about where the problems will occur: labour and skills shortages, falling productivity, conservative strategies and embattled pension schemes. long, healthy life doesn’t necessarily equate to strong, healthy economy.
The solution? As local study conducted by the Equal Employment Opportunities Trust (EEO) shows – strategic succession planning, particularly within certain professions and more flexible approach to working hours.

Equal opportunity balances the odds
Workplace age and gender: trends and implications analysed 1991-2006 Census data with sobering results. Conducted by Mervyl McPherson, the study showed: “By 2012, New Zealand is likely to have higher proportion of workers aged over 55 (21 percent) than Australia (17 percent).”
So why is this problem? The answer is fairly self-explanatory. Older workers are reaching retirement age and younger women in the 20 to 30-year-old age group are leaving the workforce to have children. Professions dominated by those two demographics will suddenly find themselves thin on the ground when it comes to manpower.
The characters in law and medical dramas always seem to be populated by good looking young women and lascivious older men. In case of life imitating art, it seems this is fast becoming reality, with these professions likely to experience “double blow” over the next decade. As large numbers of older workers approach the traditional retirement years, some younger women may leave to have children. Of course, the research doesn’t look at appearance or behaviour – that’s reserved for television.
The EEO study warns employers to be ready for “skill-loss issues with potential mass retirement in the short to medium term”. It also advises employers to explore ways of partnering up older and younger workers, particularly where hard physical labour is required – something of brain/brawn swap where skill and experience can be imparted to the physically haler youth. Employers are also going to have to revamp their recruitment strategies, targeting both the young and the old.
In new-age mantra that suddenly seems to have taken on startling economic significance, the pursuit of balance is now tantamount to retaining workforce. The study states: “Those employing combination of younger women and older men may need to explore how women who have the potential to advance to senior levels might be retained through more flexible employment conditions.”
An example of this could be to dovetail the hours of an older man and younger woman on maternity leave. As he approaches retirement he could wind down his hours, while the mother could take on more hours as her child grows older.
As Phillipa Reed, chief executive of the EEO explains: “We have been focusing on flexibility and all sorts of measures that allow people to balance in different ways the demands of their working lives. This is one area where the need for that to continue is highlighted. It will be interesting to see what moves have been made in more recessionary environment, and interesting to see whether people are going to take advantage of that as our economic environment improves.
“This is trend we have seen over the last 10 years. Initially lot of programmes around flexibility were focused around younger women with small children. You can see that broadening with very good reason and justification. It’s not that people just require flexibility in that stage but throughout life course.”
One question that has to be asked, is where all the young men are? According to Reed, the “man drought” is largely due to more young men going overseas, although the contraction of the job market may send some home.
Despite this, it can’t be denied that: “In terms of labour force participation, the age groups showing the greatest increase from 1991 to 2006 were the over-50s. Whilst still relatively small, the number of people aged 70+ doing paid work almost tripled during this period, and those in paid work aged 60-69 more than doubled.”
However, some companies still find it challenging to embrace their grey assets, with Jo Gorman of Adecco Personnel noting in an earlier EEO report that: “It isn’t the same in the permanent workforce, because younger managers can be afraid of managing people older than themselves. No one is open about not wanting older people, so we can’t address it directly.”
Not everyone is worried about the changing demographics in Australia and New Zealand. Optimists scoff in the face of impending disaster, pointing out that these days,