"Beyond 1st February - Managing An Aging Workforce" Conference

Good morning ladies and gentlemen, members of the Canterbury Employers' Chamber of Commerce, chief executive Peter Townsend, and fellow speakers.

I've been asked today to speak on the big population picture.

What can you and I expect from our population as employers and employees, taxpayers and future retirees, over the next twenty to thirty years?

In particular I'm aware that most of you are keenly interested in the projections for workforce participation by older people.

You are not alone.

Obviously the Government has a vested interest in forecasting future workforce trends, and as Associate Minister of Revenue and Minister for Senior Citizens, it's an area I have become familiar with since my appointment two months ago.

We all need to know what our workforce is doing, so we can budget for the future.

Employers need this information to fill vacancies, town planners need the information for regional development, developers of retirement facilities need it for projections of demand and the Government needs the information to forecast future trends in employment and revenue.

In New Zealand one significant factor will influence the make-up of our workforce, more than any other in the future.

New Zealand, like many other developed countries, has an ageing population.

Ageing is New Zealand's biggest challenge -yet it is also one of our most exciting issues.

As a result of declining birth rates and improvements in life expectancy in recent decades, a greying of our population has taken place, and is expected to continue at a faster rate.

Currently New Zealanders have an average life expectancy of 77 years, with males living to an average 74 years and females to an average 80 years.

Older people now make up a growing proportion of the population.

In March this year, the over 65s composed 12 percent of the population, up from 11 percent in 1991.

This proportion is expected to increase steadily, after a lull of a decade.

In the year 2011, when the post-war baby boomer generation enters retirement, the over 65s will make up 13 percent of the population.

In 2021 they will make up 17 percent of the population, and in 2031, when I expect to be in retirement, the over 65s will make up more than 21 percent of the population.

This is a large proportion of our population- effectively in 30 years we can expect the number of people aged 65 and over to double. (1 in 5)

I don't need to tell you that this has enormous ramifications for our working age population.

Over the next two decades the age structure of the working age population will alter substantially.

The trends mean that, over time, proportionally fewer people of working age will be available to generate the resources required to support the increasing numbers of retired people.

A scenario I quote frequently is that currently for every superannuiant, we have four people in our workforce paying taxes.

By the time I retire, in another 20 to 30 years, we will have two people in our workforce paying taxes for every superannuiant.

It's fairly obvious how this has the potential to impact on Government expenditure in the areas of health, welfare and superannuation.

Sustainability of superannuation is essential to New Zealand.

But as we have seen recently there are a lot of vested interests tied up in maintaining the status quo, despite the fact that these forecasts cast doubt on our ability as a country to do that.

The recent changes to superannuation aim to ensure that we have a superannuation scheme that is sustainable, both now, and for future generations.

It obviously wasn't an easy call for the Government to make, and its reception was predictably mixed.

But it was a decision that needed to be made, especially given the forecasts of increasing numbers of superannuiants.

However these predictions don't take into account the possible changes in labour force participation from older people, as a result of the removal of compulsory retirement from February next year.

The predictions also don't take into account the Government's new immigration policy, which looks set to encourage a boost in immigrant numbers to New Zealand.

We've abolished the English language bond, and replaced it with pre-purchased English language training.

The bond was a barrier to many migrants and we're already seeing renewed interest since we announced this change in October.

The immigration package also saw the introduction of a more realistic view of what qualifications we will accept.

And streamlining the investor category will help speed up the approval process for people willing to financially assist New Zealand.

Returning to the removal of compulsory retirement, this is a change that is positive for older people, and also positive for society itself.

Why should we force older people out of the workforce before they choose to retire, if they are still productively contributing to their employer and wish to remain in work?

From 1 February 1999, it will become unlawful under the Human Rights Act 1993 to make someone retire from their employment simply because they reach 65.

As you will hear from the next speaker, Human Rights Commissioner, Ross Bereton, from February 1 1999, there will be no compulsory retirement on the basis of age.

The rationale underlying this change is that compulsory retirement is a form of age discrimination.

Decisions on a person's ongoing employment should be based on performance, and not on age.

Many argue that by retiring older people you create employment opportunities for school leavers, but this is not so.

The skills and experience of an older person are quite different and can't be easily replaced by a younger, less experienced person.

British studies have shown that older employees are as productive as younger ones, while Australian data indicates older workers have better work attitudes, contribute less to staff turnover and are more punctual as employees.

While many people hold the perception that older people have difficulty adjusting to change in the workplace, the reality is, provided with the right training opportunities, older people are as able as any other group adjusting to change in the workplace.

Employers who discriminate on the basis of age are simply wasting the talents of older workers.

However I do accept and acknowledge that as employers you have reservations and indeed concerns about the removal of your right to require employees to retire at a certain age.

This is indeed a challenging amendment we are making, and it won't work without support from the community and employers such as yourselves.

This conference is addressing some of the issues, and I'm heartened to see you take a positive approach to the subject.

I expect that over the next few months more organisations will address the issues in a similar fashion, looking at the challenges contained in this legislation.

The Human Rights Commission will also assist in the process with a series of seminars on employment issues for older people, to coincide with the enactment of this legislation.

In conclusion I'd like to leave you with a few challenging thoughts.

From 1 February next year:

Employers will need to recognise that they can no longer expect, or compel, people to retire at the age of entitlement to New Zealand superannuation.
Employees will be able to continue working, irrespective of their age, if their performance is satisfactory.
Employers will also have to start developing appropriate evaluation systems for all employees, regardless of age.
Employers will not be able to impose more onerous evaluation procedures or succession plans on older employees to move on, in order to make room for younger people.
For jobs that require peak physical fitness, a process for utilizing the skills and experience of older employees in areas which do not require such a high level of physical fitness will need to be developed.
A retirement package, or employment contract, that includes a retirement gratuity will still be able to be offered, provided there is no age criterion, and;
Employees will still be able to be required to leave a supernnuation scheme once they reach the qualifying age for New Zealand superannuation.
However employees will be able to defer collecting their superannuation, until after they have stopped working.
In essence the implementation of the Human Rights Act provisions will require a change in the practices of employers in the employment of older workers.

The removal of the mandatory retirement age is not, in itself, likely to result in significant growth in labour force participation by older workers, unless attitudes change.

Negative attitudes will continue to pose the biggest barriers to older employment, and as a society we must confront these and move towards including more older people in our work plans for the future.