Downturn won't release labour force squeeze
THURSDAY NOVEMBER 27, 2008
Economic downturn won't release labour force squeeze:
Mercer research reveals
The current global economic crisis will give New Zealand employers only limited relief from the squeeze of an ageing workforce, skills shortage and continuing brain drain according to a report released today by consulting, outsourcing, and investments firm, Mercer.
Research findings in the report - Workplace 2012 New Zealand - What does it mean for employers? - reveals that by 2012, one in five workers will be aged 55 or older and employers will have to shift their focus from young to old to maintain a viable workforce between now and then.
Mercer commissioned economic consultancy, Econtech, to model the profile of New Zealand's workforce in 2012 to help employers identify where the future workforce will grow, and potentially shrink, the most. The research looks at changing demographics in the New Zealand labour force; the impact of economic drivers such as interest rates; and the severity of New Zealand's brain drain.
By 2012 there will be a 24 per cent increase in the amount of workers aged 55 or older in the New Zealand labour force, which is an additional 100,000 more individuals, while the number of workers aged 25-54 will only increase by 28,000, or a 2.5 per cent increase.
Mercer's Business Leader in New Zealand, Mr Bernie O'Brien, said the skills shortage in New Zealand is far from over and respite for employers, from a tightening labour market, will be short lived.
"The recent global economic crisis, and recession in our own backyard, does not make ongoing demographic changes to New Zealand's workforce irrelevant - it actually brings them into sharper focus.
"Employers who react to the current economic crisis with no long-term view are at risk of destroying a viable and productive workforce. Workplace 2012 will be dominated by the race to keep skilled workers - employers who only focus on fixing today's problems and ignore tomorrow's, are at risk.
"In the next four years more and more skilled and experienced workers will retire, and employers will be left without the resources they need when the economy rebounds," he said.
Mercer's report highlights the need for employers to shift their focus from how to attract and retain Generation Y to how they can capitalise on workers aged 55 or older, because workers aged 55 or older have to become the productivity drivers for New Zealand businesses in the immediate and longer term future.
"The fact that the workforce is ageing is not new, the twin issues of the skills shortage and the pending wave of retiring Baby Boomers seems to have been debated perennially," said Mr. O'Brien.
"But this research clarifies and cements the fact that one of the biggest business risks in New Zealand in the immediate future is not just economic factors - it is the significant demographic shifts occurring that will threaten the sustainability of many New Zealand businesses.
"New Zealanders aged 55 and older are, and will continue to be, the answer to the current skills shortage - not Gen Y.
"This is not about changing a few HR policies. There needs to be a shift in the mindset of how, and for how long, New Zealanders work," he said.
Mercer's report also looked at New Zealand's brain drain with slowing migration inflows expected to continue to add to New Zealand's labour force pressures. In the year to June 2008, net migration for New Zealand was only 5,000 and these trends are expected to continue.
"New Zealand employers have to compete not only in a limited domestic labour force, but also in a global market for skilled workers - and again, this challenge won't disappear in the longer term or as a result of the global financial crisis.
"Successful New Zealand employers will have to turn a brain drain into a brain exchange. This means sharing and leveraging existing skills and knowledge of New Zealand employees and immigrants.
According to Mr O'Brien the research poses a number of questions to employers such as; How many jobs really need to be full-time, all of the time? How many part-time workers are needed to deliver current and future productivity requirements? Do we offer a phased retirement plan? Do I have a workforce plan to see me through the economic tough times of today whilst ensuring a sustainable workforce for tomorrow?
"If businesses remain complacent in changing their focus and approach to the workplace, thinking the economic slowdown will completely ease labour force pressures, they won't have the necessary workforce to remain viable into the future and an economic up-turn." Mr O'Brien concluded.
Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer's investment services include investment consulting and multi-manager investment management. Mercer's 18,000 employees are based in more than 40 countries.
For more information visit: www.mercer.co.nz