Ozdowski, Sev --- "Addressing Age Discrimination" [2002] ALRCRefJl 15; (2002) 81 Australian Law Reform Commission Reform Journal 11

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Reform Issue 81 Spring 2002

This article appeared on pages 11 - 15 & 88 of the original journal.

Addressing age discrimination

By Dr Sev Ozdowski OAM *

Australia has one of the world's most rapidly ageing populations. We are living longer and having fewer children than ever before.

In 1976, 9% of Australia’s population was over the age of 65. Today, the figure is 12%. By 2051, over 25% of our population – or one in four people in Australia – will be over the age of 65.¹ There are presently around 170,000 new entrants to the labour force each year. A recent report by Access Economics suggests that for the entire decade of 2020-2030, there will be a mere 125,000 new entrants.²

In spite of the ageing population, it has been widely acknowledged that older workers, especially men in their 50s, form a disproportionately high percentage of the long-term unemployed. In fact, since 1978, the average period of unemployment for men over 55 has climbed steadily to about two years – double the national average. According to official OECD figures, Australia has the highest rate of unemployment of 55-59 year old men of any OECD country. Forty-six per cent of people in the 50-64 age group do not have paid employment, and 33% rely on some form of social security payment.³ This is simply an unsustainable situation.

One of the main factors forcing older people out of the work force is age discrimination.

What is age discrimination?

Age discrimination occurs where an opportunity is denied to a person solely because of his or her chronological age where age is irrelevant to the person’s ability to take advantage of that opportunity. Within employment, age discrimination commonly takes place in the context of recruitment, promotion, training, retirement and redundancy decisions. Stereotypes and negative attitudes towards mature workers often consciously and sub-consciously affect decision-making choices in employment.

Age is commonly used as a proxy for desired characteristics such as ability, fitness, skill and adaptability. This is also true of arbitrary age limits within immigration, social security and superannuation contexts.

The occurrence of age discrimination

Over the past few years there has been a raft of official and unofficial reports and academic research that have documented the difficulties faced by older workers.

A 1999 survey by Drake Personnel of the top 500 employers revealed that none would choose to employ managers and executives in their 50s, and 65% of employers said this group would be the first to go in the event of retrenchments.⁴ Research has similarly demonstrated that older workers often receive unequal treatment on a range of work practices such as lower levels of training and retraining⁵, and lower promotion rates.

In the 1999-2000 reporting year the Human Rights and Equal Opportunity Commission (HREOC) received ten complaints under the Human Rights and Equal Opportunity Commission Act 1986 (HREOC Act) alleging age discrimination in employment. In the 2000-2001 reporting year 34 such complaints were received, a threefold increase over the previous year. During this period the HREOC Complaints Infoline received 207 telephone enquiries about age issues in employment.

In June 2000, HREOC released a report entitled Age Matters?: A Report on Age Discrimination. The submissions received in response to the 1999 discussion paper on the topic highlighted the disturbing extent to which mature workers are presently being discriminated against in the employment context in Australia, especially in the context of recruitment.

Why does discrimination occur?

Discrimination against older people is generally based on stereotypes and assumptions about their fitness and ability. Many studies in the area have revealed similar negative attitudes towards older workers. Common stereotypes among employers include perceptions that the skills of mature-age job seekers are outdated and that older people are harder to train. Many employers also assume that mature-age people are technologically illiterate and are either unable or unwilling to adapt to new technology or the ongoing changes that are inherent in the current work environment. Several surveys have revealed that a common reason for discrimination against mature age workers is the perception that they will not fit into the ‘young and dynamic’ image that the company wishes to project.⁶

Unfortunately, encounters of age discrimination create and reinforce perceptions among mature workers that employers find them too old, that their skills are outdated, and that they are unwanted in the workforce. In addition to the personal emotional consequences that such a perception has for an individual, it discourages many older people from attempting to remain in or re-enter the workforce, and becomes another means by which mature workers are arbitrarily denied employment opportunities.

The economic imperative for maintaining older people in the workforce

Market forces will no doubt become a persuasive factor in convincing companies that getting rid of mature workers is bad for business. The supply of mature workers is set to grow rapidly in the coming years, while the supply of younger workers will diminish in relative terms. A government-commissioned report released in 2001 by Access Economics predicts a catastrophic fall in the number of young people entering the workforce, and stresses the need to retain older workers in employment.

Many stereotypes that form the basis of age discrimination are firmly contradicted by empirical evidence. For example, research has shown that about 70% of Australian firms would retrench executives over 50 ahead of others because they see them as inflexible and unwilling to change.⁷ The same survey found, however, that 86% of senior workers surveyed were more than happy to take up training opportunities offered to them.

International and local research suggests that, with the exception of work involving intense physical effort, there is little measurable difference in capacity as an employee ages.⁸ In many activities, especially work involving intellectual skills, productivity may actually rise with age.

Mature workers have often built up valuable institutional knowledge, including familiarity with an organisation’s clients, services, products and systems. Older workers are generally reliable, stable and loyal to an organisation, and they commonly have a strong work ethic. Training a mature-age worker may actually be a better investment than training a young worker. A trained young person becomes far more mobile, and less likely to stay with the company that trained them, whereas older workers are generally more concerned about the prospect of finding new jobs, and are more likely to remain loyal to the company that trained them. In fact, research suggests that a worker aged 45 or over is 2.4 times more likely to remain in his or her current employment than the rest of the workforce.⁹ Older workers can act as mentors for younger workers. They can establish a stable work force and can provide an example of good work habits.

Access Economics found that ensuring that mature age workers are not encouraged out of the workforce simply as a result of their age – as opposed to their competence – has the potential to raise the income of all Australians. Experts suggest that the average per capita income of Australians would be lifted if as few as 10% of people between the age of 55 and 70 years remain in the workforce instead of leaving.¹⁰

Legislative impediments & disincentives to staying in the workforce

In addition to employer attitudes, age discrimination also results from inappropriate age limits within federal legislation in several areas.

Superannuation

The current superannuation rules do not work well for those who want to phase into retirement or continue working and adding to their superannuation after age 70. This is especially problematic in light of the abolition of compulsory retirement, and the increased number of post-retirement living years for which people must save during their working years.

Individuals may not make personal contributions to a superannuation fund after they turn 70. After the age of 70, if an employee is working full-time, contributions may still be made by the employer (although the employer does not have a legal obligation to do so), but only where the employer is mandated to pay under an industrial or workplace agreement.

In order to withdraw money from a superannuation fund where the employer is contributing to the fund, the employee must terminate employment with that employer. Where an individual has only one superannuation fund with one employer, the only way that he or she may access money held in that fund is to stop working. This effectively prohibits any form of phased retirement, where people over the age of 55 may wish to slowly decrease their number of working hours with their current employer, and supplement the loss in income with money held in a superannuation fund.

Once a fund member reaches 70 the fund is required to pay out his or her benefits unless the member is still in full-time paid work. This all-or-nothing approach creates barriers to continuing employment on a part-time basis for workers over 70. Furthermore, forcing people to accept all of their superannuation before they need or want it seriously jeopardises their retirement income. The Australian Superannuation Fund Association has stated that the compulsory cashing of benefits is “complex, inequitable, difficult to apply and not suitable for the modern workforce.”¹¹

Workers with broken patterns of employment, for example older women or self-employed people, may not have had time to accumulate superannuation sufficient for retirement needs, and may wish to continue working for as long as possible. The superannuation restrictions make this extremely difficult.

Workers Compensation

Under the Safety, Rehabilitation and Compensation Act 1988, a federal employee may claim weekly incapacity benefits for a work-related injury or disease. Until recently, current and former federal public servants aged 65 and over were unable to receive weekly benefits for loss of income. Recent amendments to the Act entitle employees to receive incapacity benefits for a maximum of two years at any age after 63. This is certainly a positive change, in that it allows employees injured after age 65 to receive some compensation. However the provision still discriminates between those under 63 and those aged 63 or older.

The rationale behind the provision is based on the presumption that most employees would retire at the age of 65, at which point they become entitled to a weekly pension. For many employees, the amount that they would receive on the pension would be significantly lower than incapacity benefits, which are calculated at up to 75% of the employee’s salary. A person injured at the age of 63 who had intended to work for at least another decade would be significantly disadvantaged compared to an injured younger worker.

The current status of anti-discrimination protection

State protection

Age discrimination is unlawful in all States and Territories in the areas of employment, education, training, accommodation, goods and services and clubs. There are, however, significant variations between the States and Territories in the extent of protection. All States and Territories except the Northern Territory have removed compulsory age retirement provisions from their public service legislation.

Federal protection

Federal employees are not protected in any way by the State and Territory Acts. However, there have been several positive legislative developments in relation to age discrimination at the federal level. In particular:

• The Industrial Relations Reform Act 1993 established minimum national standards in relation to the termination of employment, including prohibiting termination of employment of the grounds of age.

• The federal Workplace Relations Act 1996 provides some coverage in relation to termination in employment but it does not cover other terms of employment such as redundancy provisions or recruitment or promotion.

• The Public Service Act 1999 abolished compulsory retirement for public service employees.

The recently enacted Abolition of Compulsory Age Retirement (Statutory Officeholders) Act 2001 abolishes compulsory retirement age limits for statutory office holders. However the Act does not alter age-based restrictions in relation to Australian Defence Force personnel; High Court and other federal court judges; or company directors – section 201C of the Corporations Act 2001 continues to provide that directors of public companies and their subsidiaries may only hold office until the next annual general meeting following the day they turn 72.

How should Australia address age discrimination?

Federal age discrimination legislation

The Commonwealth bears the ultimate responsibility in relation to the protection of human rights in Australia. It is therefore appropriate that it is now addressing the issue of age discrimination through legislation. Amongst other things, it will bring order to the various pieces of state legislation which, although commendable, are often at variance with one another. Aside from the obvious confusion created by the different pieces of legislation, legislative uniformity is important at a practical level.

One area in which uniformity is particularly important is the superannuation industry, in which arbitrary age-based restrictions are prevalent. Variations in anti-discrimination laws among the States and Territories are problematic for funds which operate Australia-wide and are multi-jurisdictional, making compliance complex and difficult, and potentially yielding unfair results for fund members and employees.

The effects of legislation would be ongoing and long-lasting, as distinct from a stand-alone education campaign. This is particularly important in light of demographic trends suggesting that Australia is set to become an increasingly aging population over the next few decades.

Legislation could provide an avenue of complaint and redress for individuals affected by age discrimination, and could form the foundation for ongoing public and employer education campaigns concerning the negative effects of age discrimination.

Accompaniments to age discrimination legislation

Codes of Conduct and Best Practice Models: The government should produce a code of conduct, or best practice model, to assist employers in avoiding age discrimination in all areas of employment, including recruitment, selection, promotion, training, redundancy and retirement. Experience with this model in the UK suggests that the impact of such a code would be limited unless it is accompanied by an effective education and awareness campaign focussing on the benefits of retaining older workers in the workforce.

Education and awareness campaigns: Education and awareness campaigns are vital in changing employer and community attitudes to older workers. In particular, such campaigns should:

• address negative stereotypes in the media;

• educate employers, employees and the community regarding the benefits of employing older workers;

• provide employers with support in the management of age-diversity in the workplace – this may include the development of part-time work, job-sharing and changes of duties.

If legislation is enacted, it must be accompanied by an education campaign concerning the effect of the legislation and complaints mechanisms on the one hand, and the positive aspects of removing age bias on the other.

Amend legislative impediments and disincentives to staying in the workforce: All age-based requirements for recruitment, training, promotional opportunities and retirement in the defence forces should be abolished and substituted with non-discriminatory tests of applicant suitability in relation to the inherent requirements of the position. Legislation should also be amended to remove arbitrary discriminatory age limits in the areas of superannuation, migration (removal of age as an eligibility criterion for work-related visas) and workers compensation.

Compulsory retirement for judges, defence force personnel and company directors should be abolished (although Constitutional tenure for High Court judges raises additional issues that would need to be addressed).

Training and support for older workers: Government assistance should be provided for re-skilling and job search facilities and programs for older workers who have been made redundant. These could be based on successful state programs such as the Mature Workers Program in New South Wales.

Government should enable older workers to maintain the currency and relevance of their skills. In particular, education and training (especially IT training) are vital in the current environment of workplace mobility and rapid technological change.

Finally, Government programs should address the negative attitudes of mature age job-seekers, especially the perception that they are not wanted by employers (particularly among the long-term unemployed).

Conclusion

In a sense, one would expect age discrimination to be one of the easier forms of discrimination to address. Unlike race, sex and disability, most people in Australian society are likely to become mature-aged at some stage in the next few decades. Age discrimination is therefore a peculiar form of discrimination in that, unless it is addressed at systemic and practical levels, in time the discriminators will soon become the discriminated against.

Forward-thinking, “dynamic” organisations cannot afford to wait and see the economic detriment of their current practices and policies in the new demographic landscape before considering change. The wisdom, experience and knowledge of mature age workers represent a valuable and growing resource. We must establish a culture of learning and re-skilling in order to harness the full potential of the resources that mature age workers bring with them.

Support for the presence of older people in the work force should not occur at the expense of young people. The most sensible approach employers can take is to adopt a policy of age diversity. Recruitment, selection, training and promotion decisions should be based on securing the person with the most appropriate skills and experience for a particular job, regardless of age. Introducing the arbitrary criterion of age merely obscures the human resources decision-making process, making it more difficult for employers to identify the most appropriate person for a job. It unnecessarily and arbitrarily limits the pool of prospective employees, and violates fundamental principles of human rights.

* Dr Ozdowski is Australia’s Human Rights Commissioner. This paper was researched by Ms Bassina Farbenblum.

Endnotes

1. Australian Bureau of Statistics, Population Projections 1997 to 2051, Cat No. 3222, Series II, 1998.

2. Access Economics, Population Aging and the Economy, (2001), Commonwealth Department of Health and Aged Care.

3. Department of Family and Community Services, Submission to the House of Representatives Inquiry into Issues Specific to Workers Over 45 Years, (1999).

4. Drake Consulting Group, 1999.

5. S Encel, H Studencki, & M Trenerry, “Older Workers, Flexible Retirement and Age Discrimination”, Report for the NSW Office on Ageing, (1992), UNSW Social Policy Research Centre.

6. For example, Office of Ageing and Anti-Discrimination Commission (Qld), Age Discrimination Phone-in, (1999), Anti-Discrimination Commission, Brisbane, 25.

7. Drake Personnel Limited, Age Discrimination is Alive and Well, Submission to the House of Representatives Standing Committee on Employment, Education and Workplace Relations Inquiry into Issues Specific to Workers Over 45 Years (1999).

8. Australian Centre for Industrial Relations Research and Teaching, Productivity of Mature and Older Workers: Employers’ Attitudes and Experience, Monograph No. 13, 8.

9. Australian Bureau of Statistics, Labour mobility, Cat No. 6209.0, February 1998, cited in Australian Employers Convention The Human Resource Costs and Benefits of Maintaining an Age-Balanced Workforce, (2001), Mitcham, Australia.

10. Access Economics, Population Aging and the Economy, (2001), Commonwealth Department of Health and Aged Care.

11. Australian Superannuation Fund Association submission to Human Rights and Equal Opportunity Commission, Age Matters?: A Report on Age Discrimination, (2000), Sydney, 4.