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    Municipal Association of Victoria

    Characteristics of the Victorian

    Local Government Workforce

    Date: September 2011

     ? Copyright Municipal Association of Victoria, 2011.

    The Municipal Association of Victoria is the owner of the copyright in the publication Characteristics of the Local Government Workforce.

    No part of this publication may be reproduced, stored or transmitted in any form or by any means without the prior permission in writing from the Municipal Association of Victoria.

    All requests to reproduce, store or transmit material contained in the publication should be addressed Owen Harvey-Beavis at email oharvey-beavis@mav.asn.au

    The MAV can provide this publication in an alternative format upon request, including large print, Braille and audio.

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    Table of Contents

    1. Introduction .................................................................................................................... 3

    2. Data sources.................................................................................................................. 3

    3. Employee numbers ........................................................................................................ 4

    4. Employee age ................................................................................................................ 5

    5. Retirement age and trends............................................................................................. 9

     ABS Estimates of Retirement Age ..................................................................................... 9 Evidence from superannuation data ................................................................................ 10

     Local government estimates ............................................................................................ 11 Further research opportunities ..................................................................................... 11 6.

    7. Conclusions ................................................................................................................. 11

    8. References .................................................................................................................. 13

    2

1. Introduction

    The MAV previously provided analysis in 2005 on the age profile of the workforce of Victorias local government. That research identified potential future issues in workforce retention, with a significant portion of its staff expected to reach the economy-wide retirement age by 2011.

    This paper uses updated data to identify the current age profile of the Victorian workforce to better inform councils in the development of their workforce strategies. It also provides some analysis of the age, gender and salary ranges in the sector, although there are significant data issues which limit this analysis.

    The recent data suggest that overall, councils face significant risks of large-scale retirement from a relatively old workforce. However, some caution should be exercised in this finding, since the data are derived from superannuation membership information. Under the current legislative arrangements, individuals can exercise choice in the membership of the superannuation scheme for their statutory contributions.

    The paper also examines trends in total employee numbers in local government. This shows that employment numbers have grown quicker than population. Based on these limited data, further analysis is required to identify the drivers for the apparent growth in staff numbers, over and above that expected to be required due to population growth.

    The purpose of this analysis is to better identify the underlying trends in a major area of council expenditure.

2. Data sources

    The analysis uses two major data sources on councils workforce. The first is a database

    from Vision Super, which provides superannuation services predominantly from the Victorian local government sector. The largest limitation for this data source is issues related to the introduction of superannuation choice means that not all local government employees will be members of Vision Super.

    This means that data derived from this database will not completely reflect the employee characteristics of local government. However, these reforms are relatively contemporary, and recent estimates of the take up of superannuation choice suggest that most employees continue to use the employer selected superannuation fund, with only about two per cent of individuals exercising their right to choose their superannuation fund (Cooper Review 2010).

    The second data source is the Victorian Grants Commission (VGC) returns, which provide detailed employment figures by gender and employment status across council functions. Time series data are available from the VGC.

    When the superannuation data are compared against the VGC data, the superannuation data have slightly fewer employees, which is consistent with the expected result.

    For the purposes of this analysis, the MAV believes the Vision Super data are sufficiently robust to undertake an analysis. However, some caution should be exercised when examining these data due to the exclusion of employees not captured in this database who

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are employed in local government. The data also do not capture or assess the exposure of

councils to the retirement of contractors.

3. Employee numbers

The following tables provide an overview of the numbers of staff, disaggregated by gender

and employment type at 30 June 2010. This indicates that local government in Victoria had

42 544 staff, of which 61.7 per cent (26 267) were female and 38.3 per cent (16 277) were

male.

Figure 1: Council employee numbers, by Gender and employment type, 30 June 2011

20000

18000

16000

14000

12000

10000

8000

6000

4000

2000

0 Full time male full time female Part time male Part time female

Council employees Council employee EFTs

Source: VGC data

These data show a workforce with two major groups - part-time female employees and male

full-time employees. This is consistent with the functions of local government expanding in

areas of human services, such as aged care, along with its traditional infrastructure and

professional services functions. The former area is expected to be dominated by part-time

and female employees, while the latter is likely to be dominated by full-time employees.

Staff numbers over time have increased, with aggregate growth between 2001 and 2010 of

28.2 per cent for employee numbers and 34.67 per cent for EFTs. While these figures reflect

employment growth in excess of the rate of population growth, it is difficult to comment on a

reasonable level of employment growth, given the early years of data reflect the abolition of

Compulsory Competitive Tendering, which is likely to have increased in house staff, at the

expense of contractors or private providers.

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Figure 2: Index of change in employee numbers, EFTs and Victorian population, 30 June 2000 to 30 June 2010

1.4

1.35

1.3

1.25

1.2

1.15

1.1

1.05

1

0.95

0.9 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total employees Total EFT employees Population

Source: VGC data

All things equal, a reasonable expectation of employee growth is an expansion at or slightly

below the rate of population growth. As councils predominantly provide human based

services, the MAV would expect that population growth will require a proportionate increase

in services delivered, and hence, a change in employee numbers. While it is possible that

economies of scale are available in some organisations, given the general move away from

the relative importance of infrastructure provision in the sector towards human-based

services, it is unlikely that many councils would experience this phenomenon.

An assumption of a proportionate growth in employee numbers against population also

assumes that council responsibilities have remained static. The MAV has argued in the past

that councils responsibilities have broadened, as the Victorian and Commonwealth

governments have devolved functions to the sector.

While the trends in employee numbers prima facie exceed a reasonable estimation of the

growth, factors such as the end of CCT and councils moving back to in house service

provision means that a an overall conclusion of the reasonableness of the employment

growth in the sector difficult to make.

4. Employee age

Only limited demographic data are available for the Victorian local government workforce.

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    Local government employees, as defined by the Vision Super data, have a majority of its employees under the age of 50.

    Despite this, there is a significant minority of the workforce aged over 50 years (40.6 per cent).

    This suggests there has been no major improvement to the age profile of the local government sector since the previous analysis was undertaken.

     Figure 3: Number of employees by age group

    12000

    10000

    8000

    6000

    4000

    2000 Number of employees

    0

    0-19 20-29 30-39 40-49 50-54 55-59 60-64 65+

    Age Bands

     Source: Vision Super data

    The female workforce is generally younger, with a slightly higher proportion of the workforce aged below 50 and a smaller proportion aged above 55.

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Figure 4: Percentage of employee by age group, by gender

30%

25%

20%

15%

Per cent of employees 10%

5%

0% 0-19 20-29 30-39 40-49 50-54 55-59 60-64 65+

Age band

Female employees Male employees Source: Vision Super data

These data can be disaggregated by gender and salary band, which better exposes the risk

to councils of an ageing workforce, where salary is used as a proxy for seniority. Some

caution should be exercised when examining these data, as they relate to actual wages and

salaries, not EFT salary levels.

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Figure 5: Age and salary profile of female employees

5000

4500

4000

3500

3000

2500

2000 Number of employees Number of employees 1500

1000

500

0 $0-50k $50-70k $70-100k $100k+

Salary range

0-19 20-29 30-39 40-49 50-54 55-59 60-64 65+ Source: Vision Super data

Figure 6: Age profile of male employees by salary range

2000

1800

1600

1400

1200

1000

800

600

400

200

0 $0-50k $50-70k $70-100k $100k+

Salary range

0-19 20-29 30-39 40-49 50-54 55-59 60-64 65+ Source: Vision Super data

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    Higher paid females have a younger age profile than their male counterparts. However, over twice as many males are paid in excess of $100 000 than females, so despite having a younger age profile, total employees in this salary range have the oldest age profile of any salary range.

    Despite this, the highest paid employees do not appear to have a substantially different age profile than the lower salary ranges for both males and females.

5. Retirement age and trends

ABS Estimates of Retirement Age

    Research by the Australian Bureau of Statistics (ABS) indicates that in 2008-09, the average age of retirement for retirees for males was 58 and for females, 49 (ABS 2009). These data have some limitations for this paper:

    ;;These figures use a sample of people aged over 45 rather than new retirees in the

     study year. As such, these figures have a systematic bias towards a younger retirement age, since those who retire younger are likely to remain alive as a retiree

     for a longer period of time. That is, those who retire young will stay within the

    potential sample population for a longer period of time.

    The retirement age data are a random sample across a cohort of retired workers. ;;

    The local government workforce is likely to be composed of different occupations to

    the broader economy and therefore is unlikely to exhibit the same retirement

    patterns. It is generally expected that blue collar and other manual workers have a

    younger retirement age while white collar and professional workers retire at an older

    age. If the local government workforce has a different occupational composition to

    the broader workforce, the general retirement experience may not be relevant to local

    government.

    As such, some caution should be exercised in using these figures as the basis for determining the proportion of workers that are likely to retire over time, since they necessarily do not relate to local government specific retirement data.

    The ABS research also indicates that about half of workers who intend to retire also intend to transition to retirement through part-time work. This may mean that the consequences for workforce retention and recruitment are more limited as opportunities to draw on an experienced, part-time workforce increase.

    Further, it is interesting that the ABS analysis suggests that many females have no independent income after retirement. This suggests that the decision to retire has been made, at least in part, due to the access of a partners superannuation income. With

    demographic changes such as a higher rate of divorce, compulsory superannuation accumulation and higher workforce participation in the female cohorts over time, there is a possibility that the pattern observed in the latest ABS retirement data is not replicated in the future.

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