One major problem that the private sector human resource managers face is shortage of labour. The human resource managers are finding it difficult to hire new employees within certain criteria. Even if they can find qualified candidates, the company must still invest in training to further increase their production. The continuous increase in the number over 50-year-olds in the labour supply is currently for many companies not as noticeable as the shortage of skilled labour. The shortage of skilled labour is currently aggravated by the predatory competition between companies on the labour market for young qualified technically skilled person with professional experience. This is also evidence by the high readiness to change employers, especially in this employees group. This shortage of skilled labour affects small, medium and larger companies with medium-sized character more than brand name companies, companies in regions with a low unemployment rate more than those in regions with high employment rate.
Another problem that the organizations face is the loss of expertise resulting from mature workers leaving the organization without passing on their knowledge to others. As greater numbers of “knowledge workers” retire, they take with them insight about managing key customer relationships, handling exceptions to critical processes and a host of other experiences that can cost organizations significant amounts of time, energy and resources to recreate or replace. This will cause the organization to repeat their past mistakes and expose itself to additional financial and operational risk. General Kofi Adnan, United Nation secretary, said that “in Africa, it is said that when an old man dies, a library disappears”.
In 1999, the UK government launched a code of practice on age diversity, which provides guidelines for businesses to prevent age discrimination in recruitment, selection, training and development, redundancy and retirement. (). This mean that employers will no longer be able to dismiss employees on grounds of age. Recruiters will no longer be able to specify age, except in special circumstances, as qualification for a job. The introduction of legislation that outlaw age discrimination in the workplace also had an impact on the companies recruitment and working practice. This is because in general organization belief that older worker are less productive than younger worker and they are more likely to be sick and many are heading to dementia, depression or disability. Influence by this, employers will have the tendency to lay them off but they can’t simply do that as the company can be suit for age discrimination. Therefore, managers need to find ways to rejuvenate their workforce.
The process of population ageing is something that is extremely slow moving but apparently has irresistible momentum. The challenges associated with the ageing workforce often do not receive much attention from managers. Like an individual suffering from hypertension, an organization with an ageing workforce often feels no symptoms for many years. However as the situation advances, companies will soon realized the pain associated with losing expertise, incurring higher cost in recruiting and training, and complying with labour market regulations. Therefore in order to avoid issues that could significantly hamper companies in the industrialized world, companies need to take a proactive action.
With the use of at least two detailed examples show how managers are responding to those problems.
All major industrial countries will experience significant population ageing over the next several decades. In Japan and much of continental Europe national populations are likely to decline. Although population ageing is a world-wide phenomenon, it is occurring at different rates within richer industrialized countries and with different timing in the developing world. Population ageing implies a contraction of the future workforce in many industrial countries and a sharp slowdown of future workforce growth.
In the face of rapid population ageing and the trend towards early retirement, there is a need for the managers in private sector organizations to promote better employment opportunities for older people. At present there are over 3 million more people age 20s and 30s than age 45 and 64. By the year 2020 there will be a million fewer. Employers need to plan for this shift in the age balance of the working age population, which will occur in the next ten years. As the demographic profile changes labour and skills shortages will become more common. The growing number of older people of working age will provide a major reservoir of skills and experience for employers. Much has been said about the need for reform of old-age pensions and early retirement schemes but this may not be sufficient to raise employment rates for older people significantly or to reduce the future risk of labour shortages.
Older worker still have a wealth of experience and knowledge to offer to their organization. Peter Druker stresses that because of the nature of most work in the 21st century, the firm that understands early that they should use the knowledge and talent of workers they already employ will develop significant competitive advantage. In order to keep older worker in the workforce and to attract back retired worker, employers will need to make jobs more desirable. They will need to provide a better working environment in order to reduce the incidence of work-induced stress which often leads to ill-health among older workers, followed by premature retirement. Employees will demand greater autonomy in the workplace and more control over the balance of work and leisure. Gradual retirement will also be attractive to many older workers. In addition to mainstream jobs, older workers will often seek looser forms of employment. These could include sub-contracting relationships, shorter hours or fewer working days, and more work done through teleworking. Many older people can also be expected to participate in a wide range of voluntary activities.
The Japanese have a high regard for the knowledge and experience of older workers. They have implemented a system of age-related job change called “Tienen”, which allows workers to change from senior positions so they do not have to completely stop working. They also have the Silver Human resources Centers, where older workers make the transition from a corporate role to community centered work. These centers have proved to be very popular and help to keep older Japanese active both mentally and physically.
Another example is Finland. Finland, one of Europe most competitive economies, is leading the field in turning its ageing workforce into an asset rather than a burden. Changes to the Finnish pension system now allow for flexible retirement between the ages of 63 and 68, with the state offering an extra 4.5% of pension for each year of service after 63. Workers can combine part-time retirement and part-time work from age 58, providing their employers agree. Now in Finland, older workers are remaining at work longer and passing on skills to younger workers. Finland’s average retirement age has edged up from 56.6 in 1997 to 59 in 2004, while the employment rate of 55 to 64 year-olds has jumped from 36% to nearly 50%. This is one of the highest gains in the European Union.
Companies with a mixture of youth and mature workers can respond best to rapidly changing circumstances. Indeed some employers have already understood the benefits of adjusting the age range of their employees and to develop new management styles. Example of two company that have been successful in dealing with ageing workforce is UPM and ASDA.
UPM-Kymmence, Europe’s No.2 paper manufacturer in Valkeakoshi, 90 miles from Helsinki, has 820 workers and 200 of them will reach retirement age in five years. This exodus threatens a loss of expertise that could hurt the company’s performance. Therefore, in order to retain their ageing workers, the company established a communications program using articles in company magazines, lecturers and meetings. Specialist speakers, including a physician and a psychologist, explained issues of ageing and extending working life. Once worker reaches 55 year-old, their appraisals cover special training requirements and whether the job or work location needs changing. UPM give all their workers regular health tests, and those who notch up 25 (and then 35) years’ of service gets additional paid holidays with full board in a company recreation centre. Employees over the age of 55 are asked when they intend to retire and what measures could influence them to stay longer. Turkka Heinelo, personnel manager at UPM’s said “The goal is to make sure they enjoy life at work”,
The second example is ASDA, UK’s largest retailer with 20,000 employees and 19% of them are over 50 years old. ASDA recognized the value of attracting mature workers and they are making concerted efforts to weed out age discrimination in their workplaces and promote age positive policies where people are judged on their abilities. ASDA has gone to great lengths to seek out older employees – even attending tea dances and bingo nights to find potential recruits. But the real effort has gone into creating a range of flexible working options that reflect the fact that a large proportion of the company’s older employees do not want to be holding down a full-time job. As well as offering unpaid leave for grandparents, ASDA also allow employees to take what has been called ‘Benidom leave’ (three months unpaid leave between January and March). Another innovation is the ‘seasonal squad’, where people can choose to work for 10 busiest weeks of the year over Christmas, Easter and the summer holidays without having to leave and rejoin the company. ASDA has found this focus on ageing workers provided a number of organizational benefits. For example, stores with higher proportion of older workers have absenteeism rates less than a third of ASDA’s average rate. Also in March 2003, ASDA was selected as one of Britain’s top 10 companies to work for, and the UK’s best company for flexible working.
Since the need for a new way of thinking by enterprises, employees and intermediaries takes time, just as the implementation of countermeasures, it is already important today to prepare for the situation which can be expected in a few years, that is broadening the shortages of skilled labour. Workers who are becoming the focus attention are precisely those who, to date, have not been employed or have been underemployed in various forms of hidden reserve, for example, young people in training, woman waiting to return to work, person involuntarily in part-time employment or in early retirement.
The European Foundation for the Improvement of Living and Working Condition (1997,1999) have documented successful examples of good practice as a range of minor and major interventions. These confirm that economic constraints are better matched in the long run by age-related work and employment policies which demand a change of attitudes, behavior and routines throughout the whole organization based on evidence of the benefits for all in combating ageism. This includes a shift of paradigm from reactive personnel policies to preventive actions aimed at an innovative design of work, technology and organization which avoids hazardous stress factors and fosters individual development options.
