Systems thinking is critical in developing solutions to sustainability challenges-Australia’s aging workforce
According to the 2016 Census of Population and Housing, the portion of older people in Australia workforce has risen in the past decade and in 2016, 14% of the population aged above 65 were part of the workforce (ABS, 2017). While aging population is not a new problem, research finds that it has accelerate its speed over the next 20 years. People who were born in the high fertility ear of baby boom after WWII will turn 65 between 2011 and 2031. Aging workforce has resulted in both challenges and opportunities for Australia in terms of average productivity, capital growth, and the economic growth. The complexity of the aging population issue is its twofold impact. The increased proportion of aging population reduces the average productivity, but the impact is less significant if the technology can be improved. Aging population will also restrict investment and capital growth, since older people tend to draw down their savings and reduce tax payment. However, the impact is twofold since the rate of capital depending. Besides, an ageing population can depress the economic growth as order people consume less and lead to less workforce (Lattimore, 2005). Aging population is closely related to sustainability of human since it has impact on the sustainability of families, the ability of countries to provide supports to older people, the economic growth, and others (Wang, 2010). Thus, the aim of this essay is to follow a system thinking approach to develop solutions to the aging population issues.
In their paper, Rittel and Webber point out five characteristics of a wicked issue.
(Rittel and Webber, 1973). Currently, there is no definitive statement of the problem. Aging workforce was once defined as working people who are at or above 40 year old or some other definition will set the age as 45 or above 45 years old. Besides, other research might define it based on chronology and knowledge currency (Bockman and Sirotnik, 2008). As a result, there is no universal and definite definition of aging workforce.
In addition, the solutions to aging workforce is a problem of better or worse rather than true of false and it is based on the stakeholders. For example, increase retirement age helps increase supply of labor but will limit the types of work for aging people. Additionally, by encouraging aged workers to continue to work, it might crowd out younger employees in terms of promotion or even getting the position. As a result, there is no right or wrong solution but only solutions that will balance the interest of different types of stakeholders and prioritize the interest of the most important shareholders.
Moreover, attempts to address the problem will change the situation which cannot be undone. Once the policy is in place, it will change the status quo and the future of the generation and state. Policy changes will have great impact on the whole society. For example, if the government decides to delay the retirement for older employers, it should consider how the policy will affect these older people and the next generation. If the policy works for this moment, it should also consider whether the effect will be sustainable.
Aging workforce is also a unique problem that cannot be classified and the situation varies from country to country and also depends on the time. As a result, a solution suitable and effective during a specific period of time or for a specific company country might not work in other period of time or for another company or country. For example, a technology company might be able to retain the older employees for their experience and expertise. However, it might not be possible for a labor or construction company where more labor work is demanded to retain their older employees.
The problem is also linked with another problem, such as social welfare, pensions, employment, taxation, health are and others, so the solutions might affect another problem. For example, to address the problem of aging population, the government might delay the retirement so that the country will not run out pension and public funds. However, people might not be willing to work longer and require better employment benefits or life-work balance (Nilsson et al., 2016). When implementing policies, the entwisted issues should also be taken into consideration.
Aging has complex impact on environment. While older people generally consume less resources than other groups, they consume more heat, gaps, and other fuels (COWI, 2008). However, the impact of aging workforce on environment is less significant. On the other hand, environment problem, such as climate change has implications for aging workforce. Aging people are more likely in poor health condition and are vunerable if the workplace is in poor condition. As a result, they are more likely to be negatively impacted by adverse working environment. While climate change will affect everyone, older people are more likely to be vulnerable under extreme conditions due to increased susceptibility to disease and reduced mobility (HelpAge, 2015). Consequently, it is necessary to ensure the safety and healthy of aging works by changing and improving the work environment.
As the population of aging workforce increases, it is expected that the health care costs as part of the public expenditure will also increase. Under the Australia universal healthcare system, which most of the cost is supported by the government, it will be a pressure of the government budget (Duckett and Willcox, 2015). In addition, it is worrying that the aging workforce will crowd out young workers and leads to higher employment rate for young workers (Oyaro Gekara et al., 2015).
Aging Population also puts pressure on the society. Increased number of aging workforce might narrow out positions for young people in certain field since elder people cannot participate in labor work and they are more experienced in certain field. The Australian government has identified it as a major problem faced by the economy and concludes that industry will face difficulties if no effective workforce replacement and knowledge transfer strategy in place. In addition, aging workforce might be less productive due to health condition and are less adaptive to change or new technology, which further reduces productivity. However, aging workforce, on the other hand, ensures the supply for labor (COWI, 2008).
To deal with the probable fiscal deficit resulting from population aging, one solution is to remain older people in workforce longer. For example, government might delay the eligible age for pension funds and thus motivate older people to work for longer time. In addition, it is also possible for government to provide monetary incentives to employers for recruiting older people. However, the policy might affect people who are reluctant work longer. In addition, employers tend to avoid recruiting older people generally and the integration tension in the workforce will also be intensified. Australia has passed the Age Discrimination Act in 2004. The act prohibits any discrimination regarding ages in many public aspects, such as employments, education, and the receipt of goods and services. It also protects people who are above 40 from the discrimination on promotion, compensation, terms, or hiring decisions. However, while the act has been in place in 2004, it is still questionable whether the implementation and enforcement has made it an effective and efficient solution (MacDermott, 2011).
Beside government policies, there are other uncommon solutions for employers. One solution is that employers can allow older workers to work part time while they can draw part of their retirement funds but earn salaries at the same time (North and Hershfield, 2014). For example, the Age Pension Work Bonus schemes allow older workers to take up part time job but still retain their pensions if they are under the age of 75. However, the limit of 75 is arbitrary and is unpleasant to people who still want to work beyond their 75 (HumanRightsCommission, 2012). In addition, instead of delaying the retirement age, companies can retain only loyalty and competent older works, as does by Vodafone. This strategy will help to retain experienced and skilled worker while maintaining the productivity and efficiency of the whole workforce (Silverstein, 2008). According to the report, older works tend to have higher respective and networking ability, companies can priorities the qualities when deciding whom they would retain. Another solution is to create new positions for older works or help them to adapt to the work. By teaching and training the aged works with new skills, they can be equipped with knowledge and skills to work in the position (North and Hershfield, 2014). These solutions, however, are not as prevalent as government policies and the effect largely depends on the organization and varies case by case.
Besides encouraging older people to work, another solution is to encourage immigration in order to boost the labor supply . However, increased immigration will also cause new problems such as the inclusion of new immigrants and the security of the society.
Iceberg model is a useful system thinking model that helps to understand and analyze a global issue. In an iceberg model, the piece above the surface is the event. In this case, the event is that the workforce in Australia is aging. Additionally, aging workforce has impact on the environment, the society, and the economy of Australia in a variety of aspects. While aging workforce has brought some opportunities, it also brings along challenges for Australia. Aging population allows for more labor supply and experience, but the lower productivity and lack of adaption to new technology might hinder the progress of the economy.
Below the surface, it is the pattern of the events. The pattern is that the workforce is aging and the speed will accelerate in accordance with the aging population if no action is taken to address the problem. Similar aging workforce problem has been taken place in other parts of the world and other developed countries.
The next level is the structure. The cause of aging workforce is primarily related to the aging population, which is caused by the earlier baby boom after WWII, longer life expectancy, and lower birth rate. Since aging workforce brings both opportunities and challenges, the solutions should grasp the opportunities and address the problems. Currently Australians are free to choose their time of retirement within a certain range, the government should put certain policies in place to provide incentives. People might not be willing to retire due to several reasons, for example, income. Government or companies might provide part time positions for them. Besides, since older workers are generally more experienced, policies and companies should provide support to establish friendly work environment for them.
The last level is the mental model. In this case, lack of friendly work environment, skill trainings and adaption trainings, lack of health care and special support for older people, and age decimations are major factors that lead to aged people who are talented and experienced become unwilling to work and become less productive. Instead of forcing all older people to work to enjoy the benefit of aging workforce or simply cutting all the aged workforce from work, the solution should be targeted to different groups of aging workforce based on their willingness to work and competency of working.
It is not as easy to apply the system thinking model into practice due to the complexity of the problems. The iceberg model used in this paper can identify the keep cause and effects and help to guide the thinking process. However, as mentioned in the beginning of this essay, since this wicked issue is complex and it is entwisted with other problems, it is hard to present the full aspects of thinking with just one iceberg model.
Aging workforce brings both challenges and opportunities for Australia in terms of average productivity, capital growth, and the economic growth, environment, and the society. It is necessary to come up with tailored solutions based on the target, namely, the older works. Based on their willingness to work and competency of working, policies and solutions can provide necessary supports for people who are willing and competent of working and help those who want to retire or lack productivity to retire earlier.
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