Employer Strategies for Responding to an Aging Workforce

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Table of Contents Executive Summary1 Introduction2 Part A2 Demographics2 Impact and challenges in service industry for assigned HR trend (aging workforce). 4 Challenges of an aging workforce:5 Solutions to Challenges of an Aging workforce7 Part B - Fairprice Xtra @ Ang Mo Kio HUB8 Challenges Faced9 Relevant Solutions10 Feedback12 Referencing14 Appendices15 Executive Summary This report is commissioned to provide our readers with more information on aging workforce. Firstly in Part A of our report, we will be discussing about the demographic changes in Singapore. These include life expectancy; income distribution and how household sizes have evolved throughout the years for instance. This will in turn give us more insights as to why Singapore is currently facing with the challenge of an aging workforce. Next, impact and challenges of aging workforce in the service industry will be further elaborated. Some of the impact of an aging workforce will be lower labour productivity rate and greater healthcare services for the elderly. One challenge face by HR companies will be how they can retain the knowledge and skills of these older workers. Solutions for HR companies on how to overcome such challenges are also suggested. One such solution is to implement a flexible retirement age program for the older workers. Moving on to Part B of this report, our group visited the Fairprice located at Ang Mo Kio and made an evident observation. Observations of the workers were made. We have identified a few problems associated with having too many aging staff further explained below. This is followed by our recommended solutions with one of the problems illustrated through a skit which can be found under Appendices. Introduction Singapore faces the problem of an ageing workforce which brings about new opportunities and challenges faced by employers and government and how they respond to an aging population. Today, Singaporeans have a longer life expectancy and will need to work longer, so that we lead healthy and productive lives and have sufficient reserves for retirement. For employers, it means that there will be less young people entering the workforce each year in the future. Singapore’s workforce is aging rapidly and companies and the government faces the challenge to positively shape the mindsets of employers and employees towards employing older workers and to facilitate the re-design of jobs to make them more suited for older workers. Part A Demographics Age is one of the major demographic changes in Singapore. People are living much longer than they used to. Compared to year 2000, life expectancy has increased from 78 years to 79. 9 years in year 2006. The population has also increased from 4,027,900 to 4,483,900 in the same period. Life expectancy at birth has increased from 71 males and 76 females to 77 males and 81 females. Life expectancy at retirement age 62 is now over 20 years for both males and females. From year 2000 to 2006, the number of males per 1000 females is falling from 998 to 982. If this continues, there is bound to have more females than males. In year 2007 alone, the statistics has fallen to 979. Income distribution has improved tremendously from $3,458 to $4,867 from year 1993 to 2003 per household. There is an annual growth of 6. 9% sales in services industry. Services ranges from health services, food and beverage services, transport and storage services, retail trade, information and communication services, wholesale trade, education services and all other services. The services sector comprised 138,700 establishments and employed a total of 1,047,400 workers in 2005, or an average of 8 workers per establishment. The biggest employment size in the services industry though falls to accommodation and food and beverage services with average of 20 workers per establishment. This is followed by transport and storage with an average of 12 workers per establishment. Employment rate for those aged 25 to 64 edged up to a new record of 76. 5% from 75. 5% a year ago. Supported by efforts to improve employability of older workers, the employment rate of older residents aged 55 to 64 rose by 2. 5% over the year to 56. 2% in June 2007. Most of the new jobs taken up by residents were in occupations paying more than the median income. Nine out of ten jobs gained by residents from 1997 to 2007 went to Professionals, Managers, Executives and Technicians (PMET), mostly in the services sector. Over the past three years, the gains were more spread out across the occupational groups, with more residents employed in sales & services jobs than before. Nevertheless, the majority of 71% of the jobs created for residents from 2004 to 2007 still went to PMETs. Consequently, PMETs now form 49% of the resident workforce, up from 40% a decade ago, while the share of production & related workers correspondingly declined from 31% to 26% and clerical, sales & service workers from 29% to 25%. The workforce is also rapidly aging with slightly over half, 53%, of the economically active residents aged 40 years or older, including 25% aged at least 50 years, up from 33% and 13% respectively in 1991. While the strong labour market performance in 2007 has lifted prospects even for the older and less educated, these workers nevertheless remain more vulnerable to losing their jobs and less likely to be re-employed during a downturn. The challenge remains in enhancing their long term employability amid a volatile economic environment. Household size had become smaller due mainly to the increasing proportion of one person households. 9. 4% males and 15. 5% females aged 35 to 39 years remained single compared to less than 11% in the 1970s. Family life cycle has declined also by other factors such as lower fertility rate and delay in child bearing. Impact and challenges in service industry for assigned HR trend (aging workforce). Impact of an aging workforce: 1) Lower Labour Productivity Rate The impact that resulted from an aging workforce would be lower productivity and efficiency rate when it comes to the accomplishment of a certain task. Their movements and mobility will be slower than the younger staff. As compared to a teenager, an elderly will definitely take a longer time complete his job and hence, affecting the productivity of the work performance which might in turn slow down the business process. 2) High Turnover Rate As the workforce ages, more and more baby-boomers will become eligible to retire, creating a competition for the experience and skill of mature workers and turnover is expected to accelerate. With a huge turnover rate, companies will face problems in replacing those who retire thus, resulting in low unemployment rate thereafter. In addition, just because they cannot replace the elderly who retired adequately, economic growth will be slowed down, affecting the business outlook. 3) Greater Health Care needs for older workers Due to an aging workforce, more health care centers for elderly workers have to be set up in ensuring the health of these workers as elderly will have a tendency to fall sick more easily. In addition, generally speaking, elderly are more prone to injuries such as backaches and leg pains for instance. Only with good health then will they be able to perform their job well. Furthermore, companies will have to anticipate the labour shortages frequently since there are more elderly staff working these days. 4) A competitive economy Singapore’s aging workforce has crucial implications for its economy as we are one that experience rapid structural changes. In such an economy, the depreciation rate of human capital in terms of technology specified skills is expected to be high as new jobs created may require skills that are different from those that have been lost. This will be vividly reflected in older people as they will experience difficulties in acquiring new skills. Therefore, the decrease in the rate of depreciation of the technology specified human capital of older workers could dampen overall economic growth. Challenges of an aging workforce: 1) Communication Barriers Elderly workers’ education qualifications are low as majority of them do not have the privilege to go through formal education back then. Due to the lack of education, they might not be able to understand English as effectively in their respective workplace. In addition, there is a high probability that these elderly workers are not able to converse properly in English much less, fluently. Hence, there is a tendency that their English will be misunderstood by customers and maybe amongst colleagues as well. This in turn creates a communication barrier between the older staff and the younger ones. 2) Unable to catch up with advanced technology The older staff might not be able to understand how various latest machineries work within the company due to its complexity which is difficult for them to comprehend and apply thereafter. In addition, often or not, the instructions of machineries are written in English which might be a problem to them as well for they might not be able to understand the instructions completely. Furthermore, older staff will take a longer time to pick up new skills as compared to the younger staff. 3) Resilience to changes The aging workforce will be accustomed to how their company functions and operates as they could have been working at their various companies for a long time. It will be difficult to make them accept and learn new skills as effectively as compared the younger workforce who will be more adaptable to changes. Thus, they will be resilience to the upcoming changes involving the advancement in technology, job rotations and maybe even the changing in business operations as well. ) Retaining knowledge or experience of the older worker The older workers are normally the ones who possess most knowledge on their job scopes as they have been doing and repeating the same processes almost everyday other day. In addition, the experiences they have gained throughout the years of working at the company are invaluable and these experiences are an asset to the company. Thus, the company will now face with the challenge of whether or not the experiences that the aging workforce possess can in turn to applicable or even transferred to the upcoming younger workers. ) Flexible Retirement Age Minister Mentor Mr Lee Kuan Yew recently made some comments on the need to work longer. In 1999, the retirement age was raised from 60 to 62. There are 3 reasons for the implementation of the extended retirement age. Firstly, Singaporeans now live longer. The average life expectancy is about 80 years old. This has risen due to advances in medical science and also better living conditions. This also means that if one were to retire at age of 62, there is another 18 to 20 more years of living. Secondly, not every worker will be as fortunate. Some will have to work because they lack sufficient funds for retirement, furthermore, people will live longer these days hence, they will require a bigger sum of savings. Therefore, if savings are insufficient to these workers, companies will expect many more people to work after the age of 62. Lastly, there is a trend of shrinking family size going on nowadays. Shrinking family size means that there are now fewer young people to support the elderly. In addition, values have changed over the years, elderly are now increasingly expected to be self-sufficient after retirement. In conclusion for this challenge, companies have to anticipate such a change in which the older staff will still want to work after their retirement and come out with a flexible retirement age plan for the aging workforce. An important point apart from just blind employment, companies have to ensure that these workers stay relevant and employable by equipping with the necessary skills or even arrange them to work at places that are less strenuous. Solutions to Challenges of an Aging workforce 1) Communication Barriers In order to overcome communication barriers, it is possible that the company provides subsidized language classes for elderly workers. In addition, perhaps incentives can be given for workers who get pass each level. Further rewards like an extra day off can be given to motivate fast learners who are spotted making good use of their English learnt from classes at work. 2) Unable to catch up with advanced technology For the elderly workers to keep up with the changing trends in technology, one particular staff can be assigned to oversee the workers who are using the machineries daily. They can then explain to those who are not aware of the proper usage of the machineries, and show them step by step how to use them. A set of instructions can also be printed in a suitable language for elderly workers, to read through when they are free. Simplified instructions can be placed somewhere noticeable near the machineries as well. 3) Resilience to changes It is comprehensible that elderly people are more rigid and less adaptable to changes. However, they can be encouraged to be more flexible if we are more patient with them. What they need is the care and respect, and they are actually willing to learn as long as they have someone to guide them along the way. One suggestion would be to pair up elderly workers, so that they can help each other when learning new skills, and at the same time feel comfortable that they are not the only ones taking a longer time to learn. The younger employees should be trained as well, to motivate the older workers, and boost staff morale, should the older workers find it hard to adapt to new company policies. 4) Retaining knowledge or experience of the older worker To ensure that knowledge and experiences are retained, the company can recreate job designs, like creating advisor positions within departments, whereby workers who have stayed for more than 10-15years in the company can train others who are less experienced. They can be given rewards like an amount of money or products, if the employee under them is promoted within a given period. Not only will they feel appreciated, they will also feel that their loyalty to the company has not gone to waste. Focus groups can also be scheduled, to find out more about how they feel about the company, and share their experiences with others. ) Flexible Retirement Age One way could be to allow corporations and unions to find ways and means to allow workers to work beyond retirement age since there will be lesser young workers filling the vacancies of the jobs. More flexible work arrangements can be made to make it easier for workers to work after retirement. Management, unions and workers can work together to create windows of opportunity for workers to continue working in the same company after a certain age, though not necessarily in the same department and salary. Older workers can also work on flexi-hours arrangements, or part-time and contract arrangements. Alternatively, these older workers are also free to move out of their current jobs after retirement and take up other jobs that will suit them more. Part B - Fairprice Xtra @ Ang Mo Kio HUB We visited the Fairprice located at Ang Mo Kio and made an evident observation. We noticed that their employees mainly consisted of aging staff. We have identified a few problems associated with having too many aging staff further explained below. This is followed by our recommended solutions with one of the problems illustrated through a skit which can be found in our appendices. Challenges Faced 1) Aging Workforce Plenty flock the mall almost everyday and with the Fairprice at NTUC spacious with a huge floor area of 77,000 square feet. While NTUC is trying to keep up with the high traffic of patrons shopping at NTUC, they are facing an inevitable problem; aging staff. The problem of aging staff is the level of efficiency and effectiveness that will affect customer’s satisfaction. Customers are likely to be unhappy if they are made to wait long. As aging staff are unlikely to have a high level of energy and tend to be slower by nature, the high traffic may very simply cause them to suffer from periodic stress and affect their temperament. In some cases, it will affect the level of productivity and the way they relate to customers. However, while it would be unfair to say that all aged staff are liabilities and don’t perform well, there are some aged staff who perform better and that is only through experience in which accumulated from serving NTUC for a considerable period of time. In the long run, another issue that could arise is when the aging staff reaches the retired age or the decision to retire. This may cause NTUC operational problems as they may not have sufficient staff to tend the cashier and back room operations. With increasingly high traffic from NTUC customers, manpower remains an important fundamental in the daily running of their business. Moreover, aging staff are also more prone to illness as given their age, they to have a less strong immune system and hence more medical leave can be expected to be taken which results again in decreased fficiency. 2) Employee Retention We realize that Fairprice lacks the manpower to manage the huge store with many departments to keep an eye of given their large floor space. Furthermore, we noticed that they are very few supervisors monitoring the operations within the store and this serves as a difficult task for them should a product be running low on the shelves and requires replenishing. Back room employees have the task to run these jobs and with the size of the outlet, it can be an exhausting job for them especially so if they were to experience labour shortage, Another problem we observed is the lack of younger talents working at NTUC. The staff mainly consists of older workers. We conclude that this is probably due to their inability to retain or rather attract younger workers. As a result of this customers could expect a growing lack of efficiency in their overall NTUC shopping experience. The managers need to promote job enrichment or job re-design to motivate the employees to avoid them from engaging a similar job. This mundane activity does not allow the employees to experience new task that will give them the opportunity to learn and acquire new skills and knowledge on other areas. While this may have an impact on younger workers who are active and needs job experience, the aged staff will need other forms of motivation and benefits so as to keep them as loyal employees. The needs of the aged workers are different and they need to have better working environment and working hours for their health concern and well-being. Relevant Solutions Older people take a longer time to adapt to their surroundings. Hence one solution NTUC could adopt is to tailor a training programme to specially cater to the needs of the aging staff. This would include training them thoroughly and over an extended period of time. This is so that they are better equipped with the necessary skills to satisfy the demands of their job scope which would lead to improved efficiency. NTUC would do best by achieving a balance in the number of older and younger staff they employ. Younger staff would offset the lack of efficiency that is associated with aging staff who on the other hand make up for it through numbers by ensuring that NTUC do not face manpower shortages with more interested applicants applying for job vacancy at Fairprice compared to their younger counterparts. NTUC should also look towards recruitment in hiring and retaining younger staff. Perhaps they could outsource their HR recruitment function as NTUC would then be able to take advantage of their expertise which would then ensure competent and qualified workers. Additionally, these 3rd party service providers possess with them a wide and comprehensive database which ensures a wider pool of talent to choose from at the same time ensuring also that there are always sufficient workers to run their operations. NTUC could also encourage a friendlier working environment by calling for employees to help one another. For instance, if a staff is not doing his work correctly or is slow, fellow staff could teach or help out. Or if you notice a colleague struggling with a customer enquiry, a fellow staff should take the initiative to step in and not wait to be approached. This would foster good relationships among staff and also create a more customer oriented environment. Another thing that is difficult to control is the taking of medical leave that can NTUC short of human labour should any of their employees suddenly call in sick. This is a common problem among the aging staff as given their age, they can be more susceptible to falling sick. This problem can easily be remedied by having part-time staff on stand-by and by offering them slightly above market-rate wages or special benefits to entice them to be back-up staff. Below are solutions towards increasing the welfare benefits of the staff to retain them Solution: * Hold annual NTUC workfare to attract younger generations to choose NTUC as a part-time job of choice. * Increase benefit of aged staff if they work longer. * Provide monetary incentives for staff who introduced potential employee to management. * Yearly pay increment after 5 years of working with NTUC * Introduce better staff lounge to ensure that the staff’s welfare is well taken care of by the management to satisfy and delight employees. Introduce job rotation and split shifts to allow flexible timing for aged employees who needs a more relax working hours to avoid long and mundane working hours. * Allow flexible leaves for employees. During busy periods, operational hiccups may occur if any employee wishes to take emergency leave for important matters. * On-the-job training to upgrade the employees’ knowledge on other aspects of NTUC’s operations to give them opportunity to perform in other areas and discover hidden capabilities. Feedback In part A ,we learnt mainly of how the aging workforce is really a cause for concern, considering human labour is Singapore’s most powerful and only resource. We have further learnt that the maturing workforce is often seen as an issue to be dealt with instead of a great opportunity to be leveraged. Our group also gained certain insights in making a trip down to Fairprice. For one, we noticed an express queue specifically for those with 5 items of purchase or less. While it cuts down on queuing time and better facilitates the purchasing process we noticed that this condition was not observed many. We spotted many with a handful of items proceeding to the express queue and what was appalling about that was how the cashiers didn’t look at all surprised and didn’t even bother to impose the condition of 5 items or less. Another thing we noticed was how it was difficult it was to get assistance when we wanted, there was hardly a single staff in sight save for the cashiers and even they were obviously too preoccupied serving other customers. Our group were there on two separate occasions and both times we took notice of how there was almost little or no supervision of the staff. This could perhaps be attributed to the large store area which makes the governing of staff more difficult. Perhaps NTUC could do better in taking action for instance install more cameras to ensure staff are not skiving but dutifully doing their work and right for that matter. Otherwise, they could increase the number of supervisors on shift. Overall, in doing Part B, it had benefited us by letting us know the various challenges faced by the Human Resource Department in a company in the real business world. We are able to analyse the problem in depth and come out with creative solutions for this challenges. Referencing * Shandre Thangavelu. Aging and Economic growth. 1st February 2008 <http://nt2. fas. nus. edu. sg/ecs/pub/wp-scape/0613. pdf> * Judith L. Diversity in the workplace. 1st February 2008 <http://www. streetdirectory. com/travel_guide/1322/business_and_finance/diversity_in_the_workplace. html> * Deputy Secretary-General NTUC, Heng Chee How. Speech. 31st January 2008 <http://www. ntuc. com. sg/ntucunions/speeches/speeches_240507. asp> Ministry of Manpower, Gan Kim Yong. Committee of supply speech. 1st February 2008 <http://www. mom. gov. sg/publish/momportal/en/press_room/mom_speeches/2007/20070308-committee0. html> * Enterprise one insights. 1st February 2008 <http://www. business. gov. sg/NR/rdonlyres/22E806B0-C152-48A9-B91E-5A1E6E9BBFDF/16529/EnterpriseOneInsightsIssue0507. pdf> * News release. Challenges in HR. Enterprise one insights. 2st February 2008 <http://www. ntu. edu. sg/corpcomms2/releases/17%20Feb%2006%20NBS%20prof%20outlines%20challenges%20ahead%20in%20HR%20management%20NR. df> * Ministry of Manpower, Gan Kim Yong. Approach to effective employment. 1st February 2008 <http://www. wda. gov. sg/PressRoom/Speech/2007/20071114. htm> * S. Ramesh. Helping older workers stay employed. 1st February 2008 <http://www. channelnewsasia. com/stories/singaporelocalnews/view/276748/1/. html> * Secretary General, Lim Boon Heng. Speech. 28th January 2008 <http://www. ntuc. org. sg/ntucunions/speeches/speeches_171204. asp> * MOM website. 1st February 2008 <www. mom. gov. sg> * Statistics Singapore. 28th Febuary 2008 www. singstat. gov. sg
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