Industry restructuring and job loss: helping older workers get back into employment

Globalisation and increased competition bring with them many benefits for business, consumers and the economy. But they can also result in the restructuring of industries not able to compete with changing economic markets. In the past, Australia has witnessed restructuring in many high-profile businesses, especially those in its manufacturing sector, for example, BHP Steel and Mitsubishi Motors and, more recently, General Motors Holden, Ford and Toyota. The human cost of this restructuring is a displaced worker group, currently a growing segment of the Australian workforce.

But what might help displaced workers to find new jobs following restructuring? In this research Victor Callan and Kaye Bowman reviewed past research and undertook four case studies to identify evidence-based practices that lead to successful skills transfer, reskilling, training and the attainment of new jobs for older workers displaced from often lower-skilled jobs in Australian manufacturing industries.

The case studies were undertaken in areas of Australia where there has been a significant impact on the local community with a large employer undergoing major restructuring, resulting in a large number of displaced workers. The regions of interest were the Hunter region of New South Wales, the Geelong region in Victoria, the outer metropolitan area of Adelaide in South Australia and various locations in Tasmania. The case studies show that, while displacement impacts on all affected workers, there are significant challenges for older workers facing unemployment from industries where larger proportions of the workforce have lower skills, few formal qualifications and poorer literacy and numeracy skills. Gaining employment after restructuring is difficult for many displaced workers, particularly if they are older and lower-skilled. This research highlights that early engagement of workers with support and training services, before displacement occurs, is crucial.

Key messages

• While training is important, it is just one component in any package or program designed to reduce the impacts of industry restructuring on individuals.
• A coordinated approach to the provision of training and support is critical. Training is more likely to be effective when training providers and support agencies partner to ensure displaced workers access upfront career counselling, training for in-demand skills and follow-up assistance with job search and attainment.
• Access to training resources for small numbers of displaced employees in small-to-medium-sized enterprises (SME) companies is more challenging than for displaced older workers from large firms, who are more likely to be recognised and supported by government interventions. How this impacts on employment outcomes for displaced older workers from SME firms in the longer-term needs further investigation.

Craig Fowler
Managing Director, NCVER

In the past Australia has witnessed restructuring in many high-profile international businesses, especially those in its manufacturing sector (for example, BHP Steel, Mitsubishi Motors), and again more recently (for example, Qantas, General Motors Holden [GMH], Ford, and Toyota). This restructuring has resulted in many workers being displaced from their jobs, including many older workers (Australian Bureau of Statistics [ABS] 2014). In addition, these closures have impacted unevenly and notably upon regional Australia, including the Hunter region, the Geelong region and various locations in Tasmania and in pockets of outer metropolitan Adelaide in South Australia (see support document 2 to this research report, available at <http://www.ncver.edu.au/publications/2839.html>).  

The focus of this report is on initiatives that assist displaced workers to find a new job, particularly older workers (generally acknowledged as those 45 years and older) displaced from lower-skilled jobs due to industry restructuring in Australia’s manufacturing sector. This sector has high numbers of mature-age workers, predominantly males, many of whom have low language, numeracy and digital literacy skills, do not hold post-school qualifications, and who have been in their jobs for a long time, with strong ties to their local communities (Manufacturing Skills Australia 2014b). These older workers have been shown to have a much lower probability of being re-employed than other retrenched workers (Murtough & Waite 2000). They run the risk of becoming unemployed or retiring by default, when they fail to find new employment (Spoehr, Barnett & Parnis 2009).

The report identifies several practices whose aim was to promote more effective skills transfer, reskilling and training for job outcomes for these displaced older workers. It was assumed that skills transfer, reskilling and training initiatives would be central. The authors found that while they are, they need to be embedded in a wider package of strategies to ensure the best new job outcomes for displaced older workers.

The practices emerge from the two accompanying support documents:

• support document 1: a review of the literature on interventions locally and internationally that assist displaced older workers to find future employment after industry closure
• support document 2: 52 interviews across four states to develop four in-depth Australian case studies in those sites with experience, both past and current, of substantial restructuring in their manufacturing industries. The sites of the case studies were: the Hunter region of New South Wales; the Greater Adelaide region of South Australia; the Greater Geelong region of Victoria and the state of Tasmania.

The initial review of national and international studies revealed that older workers displaced through industry restructuring are best assisted through the following broad practices:

• Engage in early intervention: intervention needs to occur well before the workers reach their retrenchment dates, with ongoing monitoring after they are retrenched. 
• Provide holistic programs: these interventions cover the full range of displaced workers’ needs and are tailored to their backgrounds and requirements.
• Seek regional responses: many retrenched older workers want to stay in their region to maintain local ties and family commitments. There is a need for regional job-creation initiatives to assist them to find new jobs locally, together with initiatives focused on displaced workers to assist them to secure these jobs.
• Recognise and manage age-related stereotyping: older workers require supportive workplace environments associated with access to training and jobs and policies and practices that value the continuous training of older employees.
• Offer upfront screening: a key factor in the success of displaced workers’ retraining programs is the use of screening or assessment processes prior to the commencement of any training to ensure that the program is appropriate for the individual.
• Design age-inclusive training: training needs to be highly experiential and practical and fill gaps in existing knowledge and skills, identified through recognition processes upfront.
• Provide foundation skills training: the focus must be on a combination of core skills (learning, reading, writing, oral communication and numeracy), employability skills and digital literacy skills to help older second-chance workers who are reskilling after job loss.
• Provide accelerated training: displaced older workers face financial pressures to complete their training as rapidly as possible.
• Provide job search and self-promotion services after training: these are cost-effective programs for displaced workers when tailored to the worker and well targeted to the local job market.
• Seek effective partnering throughout: the most successful training programs are realised when institutions partner to ensure displaced workers receive upfront career counselling, training for in-demand skills and follow-up assistance with job search and attainment.

The four case studies reinforced all of the above messages, as well as identifying three forms of interventions. The first category of interventions is targeted to employees affected by the restructuring or closure of large firms and their supplier businesses. These well-funded and often high-profile programs are generally jointly funded by state and federal governments and the firms themselves. The programs commonly include pre-training, training and post-training steps and processes and are coordinated by specially hired worker transition officers. Typically, the programs assist the workers through the stages of: deciding where they will transition to; undertaking skills development and the activities that will get them there; and securing a new job for them. While there is some empirical evidence that supports the effectiveness of these various steps and processes, there is a surprising lack of well-organised formal and longer-term evaluations of these major steps and processes. An evaluation such as this requires assembling the data on these individuals from across the multiple service providers with which they engage.

The second category of interventions is open access programs. These have assisted workers in larger industries, but also any retrenched or soon-to-be-retrenched workers in small to medium-sized enterprises. These programs, which also include pre-training, training and post-training steps and processes, are often undertaken by inter-agency rapid response teams or ‘one stop’ workforce development centres. The programs generally include specialised websites containing local workforce information, which workers can access whenever necessary. The case study regions were also undertaking complementary job-creation projects to increase the jobs available locally to displaced workers; for example, the introduction of local services procurement requirements into contracts issued to outside agencies for work in the region as a means of supporting local businesses and their local suppliers.

A third category of interventions includes customised initiatives, that is, those specifically focusing on the individual. In some cases these specialise in supporting the older displaced worker. These customised practices are open to workers from small and medium to large businesses and include: industry taster programs to showcase occupations where there are job opportunities and which are new to the worker; local workshops to showcase local employers with job opportunities; job information exchange clubs; men’s sheds; and the use of volunteering as a step to winning a job. These customised initiatives augment the initiatives identified under the large firm and general access approaches. The workers involved in these programs found them useful in facilitating decision-making on their future life pathways and for taking appropriate steps to get there.

The three forms of interventions complement each other. All are required if a region is to mount an effective response to major levels of job loss due to industry restructuring, which impacts especially on mature-aged lower-skilled workers.

In conclusion, and with the aim of informing the design of future interventions, we propose a preliminary framework that encompasses a number of the good practice approaches to assisting displaced workers to find re-employment. The framework adopts the three key stages identified in the research: pre-training, training and post-training. Within this framework, skills transfer, reskilling and training are embedded in a broad range of actions to ensure the best job outcomes for this group of workers. Each of the discrete initiatives within the framework focuses on a specific aspect of assistance. However, it is not anticipated that any one worker would access every specific intervention.

Although the framework is a comprehensive list of initiatives that can be used to design future interventions, the top-priority actions, where funds are tight, are:

• early engagement before retrenchment to connect older workers to support services
• one-on-one planning sessions to ensure the workers’ needs drive the assistance provided
• age-appropriate, customised and time-effective training
• job resumé and job interview preparation assistance
• activities that facilitate direct contact with potential new employers.