Australian Institute of Health and WelfareA level playing field for older workers: removing barriers to workforce participation
'Australia's Welfare 2011' conference
The Hon. Susan Ryan AO
Age Discrimination Commissioner
Australian Human Rights Commission
National Convention Centre, Canberra
Thursday 24 November 2011
The title of my speech today is - A level playing field for older workers: removing barriers to workforce participation.
I will be talking about the barriers to our workforce participation as we age, and I will be proposing some actions to address these barriers. But before I do that I am going to start with a bit of history about retirement age and social welfare provisions for older people.
First to history.
In Germany in the 1880s, Bismarck set up the first retirement schemes to support people during, and at the end of their working lives. This was the start of the welfare state as we know it. Bismarck’s schemes included unemployment benefits, age pensions and disability insurance schemes for people who were injured at work.
His social welfare system was designed to keep German workers in the fast-growing industrial towns. It was policy to stop workers from immigrating to the United States where wages were higher. And he was successful.
Bismarck made the following statement in 1884. And I quote:
The real grievance of the worker is the insecurity of his existence; he is not sure that he will always have work, he is not sure that he will always be healthy, and he foresees that he will one day be old and unfit to work. If he falls into poverty, even if only through a prolonged illness, he is then completely helpless, left to his own devices, and society does not currently recognize any real obligation towards him beyond the usual help for the poor...
There is something contemporary and almost prophetic about Bismarck words; it is as though he is speaking to us in 2011.
Everyone in our society still needs assurances of financial security and support in instances of incapacity or disability as we get older. We still want to know that we can plan for any contingency, and that our lives and those of our families will not be totally derailed if we find we are unable to work for a period of time. These are basic requirements of security, and they are basic human rights.
But back to Bismarck for a moment. Bismarck is widely credited for setting the retirement age that prevails today. He initially set retirement at 70 years, though it was revised to 65 by other policy makers in 1916. And while Bismarck himself lived to the venerable age of 74 years, at this time most people did not live nearly as long.
In fact, in Australia in the 1880s, the life expectancy for a male child was 47 years and for a girl child it was 51 years.
In Australia, the Commonwealth Age Pension was introduced in 1909 at a time when the life expectancy for men had increased to 55 and life expectancy for women to 59. The pension eligibility age for men was 65 and for women it was 60. With life expectancy rates in the 50s, most people didn’t live long enough to receive the pension.
So today, more than 100 years on, what is different?
Men can now expect to live to 79 and women to 84, and these figures are continually growing higher. Yet in many policies, the assumption remains that retirement will be at about 60 or 65.
Recently it has been decided to increase the pension age, gradually; to 67.But a good deal of government policy makes it difficult for us to work beyond our 60s.
I’m not advocating that we should work until we drop without age pension benefits. The point I am making is that our thinking hasn’t changed much in 100 years.
I am arguing that we should be able to work flexibly for as long as we are productive and we want to work. We shouldn’t be forced into retirement by social policy or by discrimination.
Australia today is addressing a completely different set of social circumstances to those faced by Bismarck, or by the Founders of our federation.
Governments and policy makers agree that we should keep people in the workforce as long as they have capacity and are willing.
ABS studies show that those of us who stay on at work past the notional ‘retirement age’ have improved health and well-being.
Governments are well aware that over the next decades, large numbers of people will be approaching retirement age while fewer younger people will be entering the labour force. Treasury projections show that an ageing population will add about $60 billion to Government expenditure by 204950. We are also heading for serious workforce shortages, and immigration alone will not fix the shortfall.
We need some new visionary thinking.
We can start by a critical review of the policies that discriminate on the basis of age.
I wonder how many of you know that the income protection schemes in Australia generally cut out once people reach 65.
How many Australians know that workers compensations schemes in Australia become limited once we reach 65? In these discriminatory policies, governments and industry seem to send the message that at 65 and beyond, we are of limited or no productive use in the workforce.
Let’s look first at workers compensation. I think most people would agree that workers compensation is an important part of a modern working society. In Australia the State, Territory and Commonwealth governments administer their own separate laws and schemes. According to Safe Work Australia, workers compensation currently covers about 90 per cent of our workforce which is close to 10 million workers. So workers comp. covers most of us except the self-employed, sole traders and independent contractors who need to take out personal injury insurance through the private sector.
Workers compensation does a few things. It provides income replacement when we can’t work and it covers medical costs. It paid through a compulsory levy that is imposed by governments on employers.
Across Australia’s States and Territories, most of the workers comp. schemes contain an age limit that affects the income replacement part of the scheme. In most jurisdictions, income replacement becomes limited or cuts out when you reach 65 years.
So what does this mean in practice? It means that if we are injured at work and we don’t have independent income, we are forced to retire – to live on our superannuation or the Age Pension.
The Age Pension eligibility is set to increase to 67 years.
Under the current situation, many Australian workers will not be properly covered for two years before they are eligible for the Age Pension. The working poor will have no income if they are injured between the age of 65 and 67. This is untenable.
It is difficult to know whether the workers compensation age limits are based on a belief that older people are more prone to accidents and illness and therefore too costly. Where is the evidence for this belief?
The ABS Work Related Injuries report found that people aged 65 years and over recorded the lowest rate of work-related injuries and illnesses of all age groups with 30 per 1,000 people. Interestingly, the highest work-related injuries or illnesses were experienced in the 45 to 49 year age group at 72 per 1,000 workers.
The Australian Public Service Commission puts forward some theories as to why workers older workers have lower rates of injury and illness. They say, and I quote:
... older workers are more likely to be aware of safety in the workplace and, therefore, less likely to have an accident...[they] tend to develop their own coping strategies (such as pacing, anticipation, planning and organisation) as they age, and these strategies may help them to reduce their injury risk... selection factors may be important. That is, older employees may seek to move out of occupations or industries where their risk of injury or illness would otherwise tend to increase with age...
Interestingly, WorkCover SA says something similar, yet in South Australian the income replacement is limited for workers once they reach 65.
Some States have taken positive steps. Queensland, and more recently WA, have removed the age limits on their schemes.
All other States and Territories and the Commonwealth should do the same.
During my term as Age Discrimination Commissioner I will be discussing this issue with governments and policy leaders to encourage them provide basic fairness in the workers comp. provisions for people who work beyond 65.
When the age limits were removed from the WA workers comp. scheme in 2011, the Minister for Finance announced that the changes were to have ‘a positive economic and social impact’ for Western Australia where there is ‘record low unemployment and a need to maintain experienced and skilled people’. This only demonstrates that the age caps in the remaining seven Australian jurisdictions are an anachronism that should be addressed as soon as possible.
I would like to turn now to the issue of income protection insurance.
Income protection insurance covers the self-employed, sole traders and independent contractors who are not covered under the worker’s comp. schemes. It makes regular payments of up to 75 per cent of income during a period of illness or incapacity.
Most people buy their income protection through their superannuation funds because it’s cheaper and easier to get cover.
However, like worker’s comp., most income protection insurance is only available to people up until the age of 65 years and income protection premiums generally increase with age. Here we see policy at cross purposes.
On the one hand, the Australian Government is committed to extend the superannuation guarantee to all workers – regardless of age – and yet on the other hand, these older workers will not be able to insure against injury, accident or illness.
If workers over the age of 65 do become sick or unable to work for a period of time, they may have no other option than to retire. If they had been entitled to income protection insurance or workers comp. they may been able to take time out to recover, and then re-enter the workforce once recovered.
This would have to be particularly true for people working in the trades. While there is no upper age limit to hold an Australian Registered Trade Certificate (ARTC), the main reason to get out of the trades industry before the age of 60 is a lack of income insurance. Many trade industry insurances impose the earlier age limit of 60 years, though some union organisations provide insurance up until the age of 70.
Obviously there are risks in the trade industry, so insurance is a necessary consideration for anyone considering work beyond the age of 60.
Insurance companies could be encouraged to extend their age coverage of workers - based on health and well-being measures - and not on age limits.
The Australian Government could encourage insurers by giving consideration to incentives such as tax rebates for people over 60 with accident and illness insurance coverage. As demand grows for insurers with age caps beyond 60 years, competition may encourage insurance companies to extend their age coverage.
The final point I would like to make is about licencing regimes for professional drivers. As you may know, State and Territory motor registration authorities place licensing requirements on drivers of heavy vehicles and drivers of public passenger vehicles. In many jurisdictions there are standards and tests for professional drivers as they reach age milestones.
The intention of the licensing is to regulate safety within each jurisdiction. However, the different regimes create no real assurance of heavy vehicle compliance, given that drivers routinely cross State and Territory borders. Nationally consistent standards would create greater coherence across the licensing system.
In the case of drivers of public passenger vehicles, the States and Territories have varying medical testing regimes; some of them quite onerous
The Northern Territory requires a medical assessment on initial application and then every 5 years or sooner if a condition is reported. The Northern Territory testing requirement balances a focus on health and safety, without discriminating on the basis of age. There is much to commend this model.
I would like to see a review of all these licencing requirements, and the introduction of licencing schemes that assess the fitness of the driver rather than making assumptions of capability based on age.
In conclusion, these are just some of the barriers that Australian Governments and employers need to address. They are archaic and out-date ‘age’ policies that make it difficult for us to move in and out of the workforce beyond the age of 65 – and in some instances, 60.
We need new visionary thinking. We need to create a more fluid working environment where we are encouraged to keep learning at intervals throughout our life cycle - in a workforce that lets us move in and out - at any age, without penalty.
Our current policies create insecurity for people who work into their 60s and beyond, and they also send a message to older workers that they should not be in the workforce.
The public perception of older workers needs to change, and policy should be the first step to bring about change. Employers will always think they can discriminate if public policy does the same. The ABS has reported that, and I quote:
Of those older underemployed workers who had actively looked for work with more hours in September 2009, 20 percent cited 'being considered too old by employers' as their main difficulty.
Since the implementation of Age Discrimination Act in 2004, the majority of complaints received by the Australian Human Rights Commission relate to employment at just over 69 percent. Most of these complaints were made by people over the age of 45 years.
Older workers have always been, and will continue to be, an important part of the Australian workforce. We are on the cusp of a vastly changing demographic, and it is now necessary for older workers to remain in the workforce to support Australia’s society and economy.
Even more importantly, Australian society should pursue and embrace equal rights for older workers because in doing so we respect human dignity and fundamental human rights.
 Frederic B. M. Hollyday, Bismarck (1970) p. 65
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