Covid-19 digital push raises risk of older workers being displaced: observers

RAPID digital transformation during Covid-19 has accelerated job automation and made securing employment harder for older workers, whose unemployment rates stopped improving in the first quarter of 2022, said labour market watchers.

Specifically, older workers with lower education levels have fewer opportunities amid “skill-biased technological change”, said National University of Singapore (NUS) senior lecturer Kelvin Seah.

“If you look at which industries are the ones growing and which are the ones declining, you can see that the growth sectors tend to be those that are technology-oriented,” noted Seah.

While this is good news for those with the requisite skills, “it is bad news for individuals with lower levels of education – which a higher proportion of the older workers are – as those jobs which they were once well-suited for are now fast disappearing”, he added, citing low-skilled manufacturing as an example of a declining industry.

While much has been done to encourage older workers to upgrade their skills, young workers are still viewed as “digital native talent” that can be readily patched onto business transformation programmes, noted Aon’s head of human capital solutions for South-east Asia Rahul Chawla.

Furthermore, pandemic-induced labour shortages have pushed more employers towards automation in settings such as restaurants and hotels, said Seah. “So these jobs, which could have been done by older workers with relatively low levels of education, are now fast being displaced by such technologies.”

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Compared to December, resident unemployment rates improved in March for most age and education groups, with the exceptions being those in their 50s, those aged 60 and over, and those on either end of the educational spectrum: with below secondary or degree qualifications.

In particular, unemployment rates for those 2 oldest age groups were higher than their pre-Covid averages, said the Ministry of Manpower (MOM) in its latest Labour Market Report.

Flagging this as a concern, MOM said: “There is impetus to place older residents quickly into jobs, given their susceptibility to long job searches.”

While cautioning against reading too much into a single quarter’s data, Lee Kuan Yew School of Public Policy associate professor Terence Ho pointed out that older workers tend to face structural unemployment arising from a mismatch of skills and experience, while younger workers’ unemployment levels are generally cyclical.

“With the resumption of travel and economic activity as the pandemic recedes, cyclical unemployment is likely to ease while structural unemployment may persist,” he added.

Exacerbating the issue is the long-standing bias against hiring older workers. Prateek Hegde, chief executive officer for global employment non-profit Generation Singapore, notes that while senior leaders are committed to removing age biases, this is taking longer to trickle down to hiring managers and recruiters.

Industries with a predominantly younger workforce have also shown resistance to hiring older workers: “When an older worker needs to report to a much younger manager, we have seen companies express their hesitancy in hiring older workers.”

While Seah and Hegde expect this problem to persist as digitalisation continues, economist Walter Theseira said it was hard to read anything meaningful in short-term fluctuations in the unemployment rate.

“The difference in improvement rates between the various groups is small and there is no evidence of a longer-term trend,” he said. The unemployment rates for residents in their 50s, and those aged 60 and over, were 3.0 per cent and 3.2 per cent respectively, comparable to the overall resident rate of 3.0 per cent.

He pointed to longer-term trends: older workers’ labour participation rates have grown substantially in the last 2 decades and their unemployment rates generally have remained low.

“What is going on is that older workers do not necessarily find jobs that they want. Thus, it is simultaneously easy for older workers to find jobs… (and) difficult for displaced older PMETs (professionals, managers, executives and technicians) to find comparable jobs where they can continue their careers,” said Theseira, who is an associate professor at the Singapore University of Social Sciences.

Unlike younger workers, the latter can choose to leave the labour force if they can afford to retire, he noted.

“You can also have people saying that they can’t find a job, while unemployment remains low, simply because they consider themselves involuntarily retired and hence out of the labour force,” he added. Unemployment is calculated as a share of the labour force, not the population, and thus does not include discouraged individuals who stop looking for work.

Economists noted that there are multiple government schemes incentivising employers to hire mature workers, such as the Senior Worker Support Package, the Jobs Growth Incentive and the SGUnited Mid-Career Pathways Programme.

While these should continue, “there is a limit to what the government can do”, said NUS’s Seah.

“Of course, many might argue that we could offer even greater funding support to companies to hire and retain older workers. However, we have to be careful about increasing these subsidies too much because they ultimately have to be financed through higher taxes, and so may distort other sectors of the economy,” he added.

Hegde suggested creating a system in which older workers’ transferable skills can be certified and highlighted to employers.

More training programmes should offer direct employment opportunities, and training providers should screen applicants to ensure that they are applying for a programme that suits their career aspirations, strengths and work history, he added.

“Often, the trainees might only apply for jobs because of the attractiveness of the job title, rather than matching their real strengths and transferable skills,” said Hegde.

Employers themselves must prize diverse workplaces, said Randstad Singapore and Malaysia managing director Jaya Dass: “It is necessary for business leaders and HR professionals to first understand that the company would be better equipped to meet its business goals if there is enough skilled talent from all generations.”

She added that employers can enforce stricter non-discriminatory HR policies and intervene early when there are potential cases of workplace discrimination.