Need to Rethink Employment Policy

22 October 2007

The Age

By Charlie Lenegan  
Managing Director, Rio Tinto – Australia

Australia approaches the federal election in an enviable position. Instead of our energies being directed towards the sorts of economic challenges facing many of our competitors – and indeed challenges Australia itself grappled with for many years – we now have record high employment and opportunity underpinned by over 15 years of unbroken growth.  

But, while most Australians have benefited from the country’s remarkable growth, there remain a significant number on the margins or outside this prosperity.  

This, combined with Australia’s ageing population and increasing labour shortages, makes a rethink on employment policy imperative.  

It’s clear that Australia will need to find new ways to maximise the potential of its working age population and lift the nation’s workforce participation rate.  

In short, Australia needs all willing hands on deck if we are to overcome the real possibility of lower growth and falls in living standards as increasing numbers of older Australians depart the workforce, and governments have to rely on fewer taxpayers to fund expanded aged care, health and welfare obligations.  

In fact, these trends, if unaddressed, will see average gross domestic product growth fall by a third from its current growth rate by 2040, according to the federal Treasury’s Intergenerational Report 2007.  

As the Business Council of Australia highlights in its paper, Engaging our Potential: The Economic and Social Necessity of Increasing Workforce Participation, the solution lies in Australia shifting its current focus to more inclusive and targeted measures of workforce participation and employment.  

Current policy means many individuals who fall outside the standard employment definitions, but have the willingness and/or capacity to work, slip under the radar of policy makers and the community.  

This is borne out by figures that show, while Australia ranks well on overall participation rates, there are people of working-age groups for which participation rates are markedly lower than other Organisation for Economic Co-operation and Development countries or Australia’s aggregate rate.  

These include peak working age men, women of child-bearing age, older Australians, indigenous Australians and people with a disability.  

Lifting participation rates among these and other important groups is not just a matter for governments.  

Solutions require support and co-operation across government, business and the community. For business especially, maximising participation goes to the core of future growth and competitiveness for Australia’s employers.  

To attract the workers they need, businesses will need to rethink how they source and retain new employees from a workforce with declining growth rates.  

Migration will assist to some degree, but Australian businesses will increasingly be in competition for employees with other countries who are undergoing similar demographic challenges.  

The BCA is currently examining methods of increasing participation, particularly in areas where business experience and knowledge can make a contribution and where collaborative approaches can support more effective participation outcomes.  

The economic case for action is clear – but so is the social equity imperative.  

The best way to ensure that as many people as possible are not left out of society, is through employment and greater economic opportunity.  

Limiting opportunities for individuals to work restricts living standards and an individual’s capacity to provide for their families.  

There are significant barriers to entry in the Australian labour market, particularly for the disadvantaged, those with caring responsibilities and those who lack appropriate skills and education. With these barriers comes the cycle of the ‘discouraged worker’, reduced employment options, both real and perceived, which can result in further lack of participation.  

Despite Australia’s wealth, we still have unacceptably high levels of unemployment and low participation rates within specific groups:  

One in seven Australian children live in jobless households (households in which no residing parent is employed).  

The participation rate for adult indigenous Australians is about three-quarters that of non-indigenous Australians.  

Recent work by the Dusseldorf Skills forum highlighted that approximately 45,000 to 55,000 early school leavers are not taking up full-time work, education or a combination of both.  

Nearly 40 per cent of sole parents are not in the labour force.  

Immigrants from non-English speaking backgrounds have significantly lower participation rates than those from English-speaking backgrounds (52.6 per cent and 65.9 per cent, respectively).  

Australia’s current economic advantage provides the best environment to find ways to better engage the most disadvantaged and disenfranchised individuals and groups in our community.  

And at a time of such prosperity, our commitment and actions to lift participation need to be framed around one simple question – if not now, then when? 



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