Hiring older Australians: lessons from Singapore

Prime Minister Julia Gillard certainly knows how to talk mature aged workers up as she's dropping them off at the curb.

The Prime Minister and her Treasurer, Wayne Swan were lavish in their praise of the "Jobs Bonus", a plan to pay employers$1,000 for each worker aged 50 years plus who is taken on and works a minimum of three months. This was the Federal government's response to a report: The Economic Potential of Senior Australians, chaired by Everald Compton, Fairfax Media reported on Wednesday.

The charade of pretending to do something for a disadvantaged group when actually very little will be done is either cunning or naughty. The government's $10 million scheme is earmarked to subsidize 10,000 businesses hiring mature age workers for a period no less than 3-months over the next four years. That means at best a total of 10,000 Australians (on average one per business) will be hired, or an average of 2,500 new hires per year. How many will stay in the job once the three month qualifying period is up, is anyone's guess. After all, employers need real incentives to recruit and keep employed new staff, don't they? According to the vague press releases, there is no mention if these new hires must be employed full time, part time or casual. In fact there is nothing in the media releases to ensure that Australians alone are employed under this scheme.

The Treasurer extolled the virtues of the over 45's by stressing their low absentee rates, higher rates of retention and the benefits of life experience. Truisms all to be sure. He added that governments should "do all they could to help older people stay in the workforce if that is what they wish".

This begs the question: so why isn't the government really doing "all they could"?

While Federal Opposition Leader Tony Abbott reminds the public that the Gillard's "Jobs Bonus" initiative is little more than Labor aping Liberal/National jobs policy, the real tragedy is that this policy will not only deliver very few jobs, but will turn out to be a nice earner for cunning employers. Remember the Pink Bats Fiasco?

If the Gillard government really wants to make a dent in the numbers of mature aged unemployed and underemployed persons, it can simply pull its head out of the sand and look north-northwest, to the Republic of Singapore to see how economic policy should be crafted.

Most Australians (including this writer) want to believe that the government genuinely wants to make a profound positive difference to the lives of many mature aged workers and in the process help Australian industry and give a fillip to the economy.

The problem lies with the government's ignorance of basic economics and its misunderstanding of human nature. No surprise there. After all, when it comes to running a business, how many Federal cabinet ministers ever done that? Hmmm. Labor seems to wear its lack of commercial acumen almost like a badge of honour. Here it has launched a policy that treats the hire of the low skilled identically to the hire of the very skilled. The "Jobs Bonus" initiative fulfills neither the aspirations of the low skilled jobless (i.e. enough full time long term positions for the very many who seek it) nor does it provide a long run incentive to business owners (i.e. a cash flow incentive over the long run to hire the older jobless). Oh, and as for the high pay highly skilled jobless, a $1000 sweetener will not sway an employer one iota. Such employers have bigger fish to fry.

The Gillard "Jobs Bonus" initiative was the fruit of several studies and consultations including the June 2010 Employment and Retention Strategies of Older Workersroundtable discussion NSW Ministerial Advisory Committee on Ageing. That study showed that Australia was ranked 13th amongst the Organization for Economic Co-operation and Development (OECD) for Labour Force Participation (LFP) of workers aged 55 and over with an average of 60 percent participation across male and females in this age group. This puts Australia below Finland, New Zealand, Iceland, Japan, the UK and the US.

But as the 55 plus age group represents one seventh of the total workforce in Australia, it is therefore a significant and essential component of the labour market. The study concluded that there are two major ways to increase the Labor Force Participation rate of mature workers:

1. Extend the working life of those in employment; and