Work-Life Balance Accounts, Strategic Human Resource Management and Demographic Change-The Case of the German Chemical Industry

By Mitlacher, Lars W. | International Journal of Employment Studies, April 2011 | Go to article overview

Work-Life Balance Accounts, Strategic Human Resource Management and Demographic Change-The Case of the German Chemical Industry


Mitlacher, Lars W., International Journal of Employment Studies


DEMOGRAPHIC CHANGE AND ITS IMPLICATION FOR HUMAN RESOURCE MANAGEMENT

The demographic development in Germany is characterized by two major trends: the population is getting older and it starts to decrease (Fuchs & Dorfler, 2005; Fuchs, Sohnlein & Weber, 2011), as the total fertility rate in Germany is currently around 1.4 children per woman, well below the 2.1 total fertility rate needed to keep the population stable (Bundesregierung, 2011). Today the workforce in Germany consists of around 50 million people, but this number will be reduced by 8 million until 2030 (Bundesregierung, 2011). The aging of the population will also be reflected in the age structure of the workforce. In the next decades the increase of workers beyond 50 years of age will be one of the central topics in industrialized countries like Germany (Ng & Feldman, 2010; Stamov-RoBnagel & Hertel, 2010). The aging population has several consequences for organisations and countries alike. As significantly fewer young workers will be available due to low birth rates, the retention of older workers will become a major issue for companies (Bundesregierung, 2011; Fuchs et al, 2011). Additionally, in many countries governments and companies are looking for ways to keep older workers in the workforce and delay retirement (Flynn, 2010). Especially in Germany, there have been very generous models for early retirement with companies being heavily subsidized when workers retired early. Besides the costs associated for society with models like "Vorruhestand" (early retirement) and "Altersteilzeit" (part-time work before retirement) which have been heavily subsidized until 2009 (Kluger & Schmidt-Narischkin, 2011), companies have begun to realize that they can no longer afford a waste of human capital and outflow of knowledge, with regard to a decline in the availability of younger workers. This decline and shortage of labour (Fuchs et al, 2011) will be a major challenge for organisations. As aging populations create pressures on state funded as well as on pension schemes funded by private sector companies (Adami & Gough, 2008), the topic of a smooth transition and a delayed retirement is now also on the agenda of social partners (Flynn, 2010), looking for new instruments that can be implemented to smoothen the transition into retirement. It is thus not surprising that work-life balance accounts have been in the focus of unions and employee representatives lately as one possibility for a smooth transition into retirement.

Summarizing, there is a growing awareness that the challenges of the demographic development will increasingly be important for Human Resource Management as fewer younger workers will be available on the labour market and workers will stay longer in the workforce (Ashworth, 2006; Fuchs, 2009). This will force companies to develop more sophisticated HR instruments to cope with these labour market developments. Besides increasing the participation rate of older workers (Fuchs, 2006) and tapping into their talent pool through a targeted approach to the training of these employees (Koc-Menard, 2009), companies can also try to increase the supply of labour through other instruments. One example would be the increased use of temporary agency workers. As the number of agency workers has increased steadily over the last decade (Mitlacher & Burgess, 2007), this is a possible way of securing the supply of labour. Other strategies would be to focus on women (Fuchs & Dorfler, 2005) or ethnic minorities as their participation rate in the German labour force is lower than in other countries. Another less frequently used way until today, is the continuous employment or call-back of retired workers who then act, for example, as consultants on a freelance basis. So, besides the recruitment and retention of employees, important HR challenges with regard to an aging workforce are training strategies and questions concerning motivational aspects and the design of pay systems. …

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