System Thinking And Its Applicability In Addressing Sustainable Challenges: A Case Study Of Australia’s Aging Workforce

Introduction to System Thinking

Sustainable problems are becoming a challenge for the traditional thinking, which cannot be addressed. Problems like aging workforce and obesity are so big that the challenge to solve them is very difficult (Seager, Selinger and Wiek, 2012). In this research, the discussion is about the nature of system thinking, its applicability to solve the issue related to sustainability and to critically analyse the reason behind the supporting system thinking. Australia aging workforce as a wicked problem and the approaches of system thinking will be used to find the appropriate solution.

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System thinking is an approach, which focuses on single components by finding the interrelation and connection between them so that one can reach to an important solution. This approach can be applied to any situation. In 1956, the approach of system thinking was found by Jay forrester. In the application of system thinking, the only issue, which can be raised, is its difficulty and time-consumer area (Assaraf and Orion, 2010). Sometimes, system thinking is also regarded as overly adhering to fundamentalism.

In addition, system-thinking application is focusing on bigger things like finding the solution to the interrelation relationships with various events relating to the problem and thus it belongs to macro nature of the environment. Regarding this issue, any other approaches applied in these recent years cannot able to bring any result. In past, problems were solved with the traditional system and so as they gave results and benefits in the few fields only. In addition, they majorly failed in critical and complex fields of study (Keyan, Assaraf and Goldman, 2014). They were limited to narrow field as well as based on subject and study matter and that is why they belong to micro nature. Therefore, the whole system will be stuck if the result is being based on one part of study. In addition, finding a relevant solution will become much easier if the studies were based on the interrelation between various aspect and events related to the range of the study. The approach of system thinking tests the built in process where one individual wants to find a relevant solution.

The wicked problems are difficult or impossible to solve due to its diversity in many fields i.e. economic, social and ecological (Ferlie et al, 2011). Australia aging workforces are one of the wicked problems. The major characteristic of a wicked problem are that it is hard to define as due to its shifting nature, can never be completely resolved and there were always be different perspectives of conflicting views by stakeholders. This problem was first analysed by Ritterl and Webber.

Understanding Wicked Problems

In the year 1970-1971, only the 8 per cent of the Australian population were aged above 65 years and this making Australia a fairly youthful nation contributing to the economy (Atkinson and Leigh, 2007). Lately, this amount had been grown to 13 per cent in the year 2001-2002. The 2015 Intergenerational Report states that in next the 40 years, percentage of Australian population aged above 65 years will be double to 25 per cent. In today scenario, for every person aged 65 and above, there are five working aged people equal to them. It can be analysed that this proportion will be fall to 2.7 people by 2050 (Bach et al, 2011). The support of low age Australian population is very high against the older Australians; therefore, aging and increasing health costs are projected to result in expenditure above income by around 23/4 % of GDP in 2049-50.

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Based on all the above projections, in fifty year time, one-quarter of the population i.e. 6.6 million people, could be aged 65 years and over. As it can be analysed, the proportion will be much large as the people will age 80 years and above. In the future, no realistic increase in immigration can modify the array of population ageing.

The people in Australia will now have to face longest life expectancies in the world, however; life expectancy will not uniform across population groups with some groups, i.e. Torres Strait and Aboriginal Islander people are having lesser life expectancy than the countrywide average (Asquith, 2009).

This increasing aged population will lead to the shortage of capable workers, dependence on the spending of the government and finally a decline in the capital investment. It can be seen, as the Australian workforce will show a face of challenges in both economic and social sector. All these factors make slow down the economic growth and this force the government to increase taxes as due to dependency ratio.

As the Australian population is continuously increasing, this attribute can be divided in to two factors – Increasing life expectancy of Australians, from an average male life expectancy of 68 years in 1960 to 80 years in 2013 and the diminishing in the birth rates deteriorating below the rate of replacement above the last 20 years (Whitehouse, 2009). As per various news and report, there are a various explicit changes made by the Australian government in the field of taxes and welfare benefits with the schemes like superannuation and ‘baby boom’ so that the above mentioned factors can be counter acted.

Australia’s Aging Workforce and its Implications

Australia’s aged population will have a direct impact in slowing down the economic growth in the next 40 years. This will not only increase government spending but also have a significant effect on the living standards and federal budget. For example, they have to give support to IFA (International Federation on Ageing), an international NGO protecting and respecting the health, rights and choice of older people (Barratt & Acton, 2018).

Some implicit changes accompanying ageing population of Australia and their impact will be significant for the research. The continued flow of funds to the retired will be impacted whereas the decision on the future level and amount of pension to retire will be closed linked with the acceptance by the taxpayers.

This leads to a thinking for a critical and strategic plan for the future, which included investment in productivity with the participation, maintaining disciple in every aspect and thus face the severity of climate change. Making all proactive can help in avoiding the need for agonising modification in the future.

Addressing significant matters regarding the ageing population of Australian workforce, it will be useful and necessary to analyse the great work of economists such as Frederic Bastiat and Stuart Mill for the purpose of getting some inspirations (Vargo, 2007). Both economist past works can be explicitly examined and compare so that to reach to some conclusion and the suggestions over current issues in the economy. The steps of analysing can start by exploring the principles and beliefs of both economists to form both similar and different keys for the concern of ageing workforce.

As the population ages, there are many broad areas of change which need to be accompanied while addressing various issues. Despite the negative effects of the ageing workforce, certain industries will be benefited like health insurance sales will be grown as more people buy insurance policies (Hall and Jones, 2007). This is because of the people tendency to increase their insurance coverage. This all will prove as an advantage to private health care industry and soon there will be a rise in the demand for the Aged Care services (Private healthcare Australia, 2018). Therefore, this sector will be work towards the growth as the baby boomers bulge enters retirement age.

There will be a change in the macroeconomic policies of the country, which has two hands in the economic policy i.e. Monetary and Fiscal. It can be analysed that an Aging population will reduce taxation receipts in the health and social security whereas the expense on social welfare will be an increase (Bloom et al, 2015). The income tax receipt will be reduced as the more people leave the workforce and these receipts are a major portion of the government revenue. This will generate the needs for the compensation and the government have to rise their taxes.

Impact on Macroeconomic and Microeconomic Policies

On the expenditure side, there will be spending on various areas by the government like health care service, expansion and renovation of health care services, aged care facilities and transport facilities to provide accessibility  to significant services to the elderly people. This increased expenditure budget will lead to the problem of financing the budget deficits and thus create challenges for the fiscal policy in the future.

Considering microeconomic policies, there will be more force to the boost in the production by increasing output. The increasing need for the skilled labour will become a priority for the government micro economic policies (Bloom et al, 2015). As the population comes in to retirement age, there will be more demand for the pensions. This can make government build polices like funding their self-retirement plans which can make leave Australians to fund their own retirement. This will be the extreme case but highly unlikely.

The relation of education and ageing people are also important to understand. This effect of ageing on education expenditure can be analysed in three ways i.e. population age structure changing, participation rates in education from each sector and the people of different age groups, changes in the average costs per student in each sector. In other areas, the Australian government provides support to the student via financial measures like youth allowances, rent assistance and Austudy (Higgins, 2011).

Aged people have a high level of ownership at home. It is just a reflection of life-cycle patterns. The youth of Australia is mostly lived on rent while couples buy home at an early stage. After the time, most of the mortgage was paid off and therefore, more than 80 per cent of households were backed by the group have aged above 65 years (Agarwal et al, 2009). However, those who are above 65 years and do now own a rent can face serious difficulties in renting accommodation in the private market.

Considering all this, there is a requirement of National Strategy with the sound principles not made specifically for older people but of removing various barriers and providing opportunities.

The concern of ageing of the Australian population is a very important element, which needs to be addressed by the government, business and the community. According to the national strategy, all the people in Australia regardless of age should give proper education, training, employment, housing, transport and other opportunities, which can optimise their quality of life. Before gaining the impact of the ageing population, it is required to analyse the four themes in the global area including – Self-provision and independence, life-style and attitude, healthy ageing and world class care.

Education Expenditure and Ownership of Homes

The national Strategy document gives a descriptive information through evaluation of trends and issues majorly related to the relevant areas (Lui et al, 2009). This descriptive analysis was supported by statement of goals, and list of methods. These actions mentioned in the National Strategy are broad and intended for specific activities taken by society, businesses, government and others. This strategic framework given in the guideline of the National Strategy will help in framing future programs and policies in the wide range of areas. In addition, a structured review and monitoring process was also established to ensure that National Strategy remains a dynamic document.

Conclusion:

Crucial imperatives that are currently driving the economic system make it difficult to deal with the wicked problem of sustainability. The premise of the Australian workforce aging problem is a major impact on the country. Generating greater system resilience means shifting these seeming imperatives expressively — an exceedingly tough task.

The challenge for the growth and economic policy about of Australia’s aging population is very high. The effect on the overall productivity can never be neglected nor be whitelisted as the effect of an aging population is directly on the side of a decline in economic growth. To manage these factors and risks, the Australian government need to use the help of both micro and macroeconomic policies. In addition, the substantial increase in the expected expenditure and the constraint on the tax revenue will lead to frequent deficits in budgets. This need to be priory address by the government else it can be converted into huge dramatic issue bounded by the economic problem. System thinking has been solving these types of issues from last 50 years but this time there is a requirement of a long process for the solution.

References:

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