While the global financial crisis took the spotlight off the impact of changing demographics in western economies, potential economic recovery is now refocusing attention.
17.8 percent of the Australian adult population is now 65 years or over which is up from 16.7 per cent three years ago. The impact of this 7 percent increase will no doubt be a challenge for employers, and without changes in labour market conditions may also place upward pressure on inflation and interest rates. This is combined with an increase in asset values since the GFC which translates into improved confidence of those approaching retirement and therefore a reduced desire to remain in the labour market and a reduced participation rate.
This ageing of the population is expected to continue. According to treasury predictions the proportion of working-age people is projected to fall, with only 2.7 people of working age to support each Australian aged 65 years and over by 2050 (compared with five working aged people per aged person today and 7.5 in 1970).
A recent survey by Manpower Group suggested that many Australian employers are having difficulty filling key positions within their organisations as a result of the above. Indeed, on a global basis Australia ranks 4th out of 41 countries for talent shortages. In areas such as engineering, finance and some health and education skills demand appears to be outstripping supply. Sectors such as health and those related to ageing such as aged care, medical specialities and pharmaceuticals are expected to face further shortages of talent in the future as the ageing of the population sees increased demand for such services and products.
The re-emergence of a talent shortage will refocus organisational leaders on issues of succession planning and retention (see January blog). With the increasing global nature of talent and ease of movement, particularly at the highly skilled end of the market, the risk of talent shortage caused not only by ageing of the population but also by talent migration is high.
As a small, open economy, the optimisation of Australia’s human resource capacity will be essential to manage the challenges ahead including maintaining and increasing our international competitiveness. Our competitiveness will be linked inextricably to our capacity to be leaders in the knowledge economy. We cannot afford to lose our existing talent to other countries or to waste it through discriminatory employment practices, poor succession planning and lack of attention to lifelong learning.
Organisations that maintain a longer term view and realise that their talent will differentiate them from their competitors will likely gain a major competitor advantage over those who chose to put talent management on the back burner.
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