Treasurer Joe Hockey has plenty to do if he wants more Australians to work beyond retirement age.
One of the big policy issues drummed out by Federal Government’s Intergenerational Report was the apparent need to increase workforce participation to boost national productivity as the Australian population ages.
However, apart from a few general comments about introducing tax incentives to encourage employers to hire older workers, the report offers only a flimsy economic analysis about the costs of keeping more people in the labour force for longer.
The rhetoric of the Intergenerational Report is honed to highlight only the benefits of extending the working lives of Australians and shirks at dealing with the real challenges for making it happen.
Among the barriers to keeping seniors in the workforce are the state-based workers’ compensation schemes, which generally provide employees aged over 65 with little or no protection against work injuries.
To portray raising the retirement age as a good thing for the country, taxpayers, workers and employers – as the Federal Treasurer does – is to ignore the real financial costs and risks that older workers take on when they decide to work beyond 65.
While workers’ compensation entitlements vary in each of the states, workers in most jurisdictions are discriminated against if they decide to stay in the workforce beyond retirement age.
Workers’ compensation laws in NSW are particularly harsh on senior employees, who cannot get weekly compensation after they reach the retirement age.
Injured workers aged under 61 are eligible for up to five years of benefits.
Stuart Barnett, the general manager of Slater & Gordon’s workers’ compensation practice in Sydney, says the system is not set up to accommodate older workers.
“You’ve got a state government in New South Wales pushing people from the workers’ compensation scheme on to Centrelink benefits,” he says.
“And the Federal Government is trying to push people off those benefits.
“It seems that the goal of increasing the participation of older people in the workforce is at cross purposes and is not being addressed properly.”
Staying in the workforce after you reach 67 is a potentially hazardous choice in NSW.
Mr Barnett observes that older workers are effectively prevented from launching claims against negligent employers in the courts.
That’s because people over 67 cannot sue for loss of wages.
“You’re simply trapped,” says Mr Barnett.
Government should get ‘fair dinkum’
Michael O’Neill, the chief executive of National Seniors Australia, believes the government is avoiding the hard reforms needed to attract retirees back to the workforce.
“For all of the talk about wanting to shift participation rates among people of retirement age not much has been achieved,” he says.
“This is about leadership and putting in place laws and entitlements that would put workers aged over 65 on an equal footing with younger employees.
“Federal and state governments are not being fair dinkum about this.”
Mr O’Neill said the failure of the Commonwealth and most state governments to address workers’ compensation entitlements would continue to act as an impediment for people to stay in their jobs or electing to re-enter the labour market.
“The Commonwealth Government simply hasn’t dealt with the problem for the schemes it manages,” he says.
“If there is not a will to change theses laws then the disincentives for retirees re-entering the workplace will remain.”
Mr O’Neill said the issue of income security for mature workers went beyond the eligibility requirements of workers’ compensation schemes.
Self-employed workers approaching retirement age were also exposed to higher levels of risk than younger counterparts because of the reluctance of providers of income protection insurance to cover workers over 65 at reasonable rates.
“Income protection is a big problem for older people who are self-employed,” he says.
“The coverage is available but the premiums are truly prohibitive.”
Can everyone keep working?
The Federal Government’s expectation that people can hustle a working wage or salary into their 70s appears to ignore the discrimination that older workers experience in the job market.
Mr O’Neill points to research that shows Australian workers who lose their jobs at age 55 require 72 weeks to find alternative employment. In NSW it takes 92 weeks.
“Many job applicants are being judged by their birth certificates,” says Mr O’Neill.
But it is also a fact that hundreds of thousands of Australians – particularly blue-collar workers – risk ruining their health and financial welfare by continuing to work beyond 65.
Experts in the workers’ compensation field question the government’s motives for wanting to raise the pension age.
Is it about opening opportunities to older Australians or just a cynical device to cut the government’s spending on retirement pensions?
Liberty Sanger, co-manager of Maurice Blackburn’s workers’ compensation practice in Victoria, says that it would be inappropriate for most blue-collar workers to continue working beyond 65.
“Clearly, there is a group of workers who have been doing manual work all of their lives and wouldn’t stand a chance of working after they were 65,” she says.
“If the government expects people to work longer it really needs to invest in retraining.”
Shine Lawyers partner Maria Skordou says her firm does not support raising the retirement age.
“While there have been general increases in life expectancies, this does not necessarily equate to increases in fitness for work,” she says.
“A general increase in the age requirement for the Age Pension entitlement does not make any allowance for workers engaged in laborious occupations, such as bricklayers, who could not reasonably be expected to work to age 75.”
Ms Skordou suggests that if the Federal Government decides to impose a higher retirement age, it would need to force the states to amend laws that limit the workers’ compensation and litigation rights of older workers.