The dangers of losing accumulated skills and knowledge

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In countries with ageing labour forces, diminishing tacit-knowledge is a very real risk to economic sustenance.

Re Generation co-founder, Noel Jones, examines the implications and possible solutions to the issue.

We live and work in a knowledge society within a global knowledge economy.

The business of managing one of the two classifications of knowledge – explicit knowledge – has become a trillion dollar industry. Explicit knowledge relates to any form of intellectual, creative, or information assets, that can be stored, retrieved, manipulated, and disseminated. IT and Search Engine giants Microsoft, IBM, Oracle, Google, Yahoo, combine with others in the top 200 software companies in 2005, to generate $(US)380 billion in global revenues alone.

The crisis, however, facing countries with ageing labour forces such as, Australia, US, Japan, Canada, and NZ, is the declining availability of tacit knowledge – know-how, talent and skills - assets that can only be stored, retrieved, and activated, by the human brain.

In Australia, there are multiple indications that our ageing population and associated loss of tacit knowledge are cause for potential negative economic effects. Consider these signs:

"The federal Government would collect a revenue windfall of more than $10 billion a year by 2015 under a Victorian plan to lure mothers back to work with extra childcare places, remove the incentives for older workers to retire early and slash red tape for business." (Australian Jan 23, 2006)
"...we've got to first of all encourage as many people as possible to participate in the workforce...people who are mature workers, those over 55... People who drop out of the workforce perhaps because they have an injury at work....Parents whose children are of schooling age should be encouraged to participate in the workforce. And those people that are able to participate in the workforce, we've got to have an industrial relations system which rewards them for effort and gives them better wages for higher output." (Treasurer Costello, on ABC's AM, April 12, 2005, 8:08:00)
"Tasmania's virtuous circle of strengthening population growth, rising house prices and strong retail spending is already starting to come a cropper," the report said. The report said a lack of resource strengths, the inability to manufacture on a large-scale basis and an ageing population could take the wind out of Tasmania's sails. (The Examiner on Access Economics' report on Tasmania's economy, Jan 23, 2006)
"...but the high proportion of qualified workers in 'unrelated occupations' is of concern. For those aged in their 40s, only one third are working in their 'home (original vocational) occupation', falling to less than one in five (50 to 70 years)." (Occupational and Skill Requirement Trends, DEWR, Nov, 2005)
If the workforce participation of Australians aged 55 to 70 increased by 10 percentage points, this would largely cancel out any negative effects of an ageing population (Access Economics, Population Ageing and the Economy, January 2001, p36).

"Increasing opportunities for mature age workers to participate in the workforce more fully is necessary because of the need to consider retirement financial security, health and wellbeing. This is the proportion of the population that will increase most with the demographic changes. Therefore, efforts to support, encourage and increase mature age participation are essential to improve standards of living and economic growth. Mature age people often provide a valuable voluntary contribution to society and this needs to be balanced with paid part-time opportunities." (Conclusion 6.10 of The Standing Committee inquiry into increasing paid participation in employment, tabled March 14, 2005)