Are incentives for employing older workers ageist?

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9 August 2010

Will incentives for employers help older workers back into the workforce, ask Philip Taylor, Linda Peach and Tia Di Biase



LAST WEEK Tony Abbott announced that if elected to government, the Coalition would offer a financial incentive to employers who recruit and retain older workers for a minimum of six months. Under the scheme, an employer taking on a worker aged over 50 who is on a pension or other government benefit will receive a lump-sum payment of $3250 at the end of six months’ employment. On the surface, this seems like a good deal for mature age workers having difficulty finding jobs. But what does the evidence tell us?

Many industrialised countries, worried about the cost of rapidly ageing populations, are introducing schemes aimed at supporting the labour market reintegration of older workers. These recognise that older workers face a range of barriers such as a lack of skills currency and low self-esteem, particularly the many who have been out of work for extended periods. Studies over several decades have pointed to rampant age discrimination in labour markets.

But do we help older workers by devising specific schemes for them? The answer is probably not. Chronological age is of limited value in determining the employment-related needs of an individual, and public programs that use age as a selection criterion may send the wrong message to both employers and older workers. Such an approach is clearly simplistic, definitions such as “older worker” being almost entirely arbitrary. Campaign groups have frequently argued for special schemes for unemployed older workers, but it is usually difficult to see much in these that would not be equally applicable to people of all ages.

Offering a cash incentive to employers who recruit older workers is not a new idea. Similar programs have been tried, with limited success in a number of countries. Employers have not taken up the incentives offered to any substantial degree. Unfortunately the signal sent is that mature age workers have such work-limiting issues that the only way they can be employed is if the government pays someone to do it. The evidence is that finding willing employers is often difficult, except in the case of “younger” older workers and those who are most qualified, who would be more likely to have found a job anyway. Often, jobs do not last after an incentive scheme ends. On the other hand, there is some evidence that incentives that are paid directly to the worker may encourage job take-up. However, such jobs are often at the lower pay and skill ends of the spectrum and seem not to help jobless older workers back on to the career ladder in the long term.

Incentive schemes as proposed by the Coalition risk deepening age prejudice and institutionalising age discrimination. The particular problems confronting older workers should be acknowledged in terms of service provision, but attention should be paid to the delivery of such services in order to avoid problems of stigmatisation. Targets might be set for the recruitment of older workers on to particular initiatives, but there is no requirement for the establishment of specific schemes. These are, by their very nature, ageist, and can further erode self-confidence by categorising people as “difficult to employ”. The Australian workforce would benefit from a government that offers evidence-based labour market policy. The scheme proposed by the Coalition, while rightly focusing on the issue of mature age employment, would benefit few. •

Philip Taylor, Linda Peach and Tia Di Biase are researching issues of mature age employment at Monash University.

Photo: iStockphoto

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