Issue No.16 SINGLE, ACTIVE, POST-MATERIALISTIC, AND GREY? Future Demographic and Social Changes - The implications for companies in the packaging supply chain KEY POINTS: We are living longer and having fewer children so the proportion of older people is increasing and there are correspondingly fewer younger people. We are living in smaller families, increasingly as single, separate individuals in the family, and often choosing to live completely alone. We are beginning to prefer spending our money not on material goods but on 'experience' type products - a golf training course rather than new golf clubs. We increasingly expect to, and are succeeding in, remaining active and healthy further into our old age. The implications of these trends for companies in the packaging supply chain include the following: Pensions will become as important as salaries. More capital will be spent on mechanisation and more operational expenditure on IT and electronic communication. Retaining and re-training older staff will provide the main source of manpower. Flexible employment packages will help to keep staff loyal. Creativity and innovation may need to be brought in from outside. Success will come from seeking out customers who serve the emerging post-materialist, single, active, and grey niche markets. The proportion of the elderly (over 65) in Australia is expected to increase to 22% of the population early in the next century compared with the current 12%. This "greying" of the Australian population has significant implications for companies in the packaging supply chain. The implications are addressed in this Issues paper which was written by Averil Horton whose company, "Alpha to Omega Ltd ... and beyond", specialises in "futures issues" and can be contacted at 120 St Margarets Road, Twickenham TW1 2AA UK, Tel: +44 181 580 0730, Fax: +44 181 580 0731, Email: Averil@alphaomega.demon.co.uk. Picture This... A packaging business where everyone, even the new starter, is over 50. A business that uses large print documents for all its transactions. A business where no-one really retires. Where there are no new young people to bring new skills, creativity or enthusiasm into the company. Where pensions are more important than pay. And where many have no family to go home to. An exaggeration? Well, maybe, but not that much of one. So as we live longer and have fewer children and benefit from improvements in health our population is getting significantly older. By contrast the number of young people will fall steadily. We are also choosing to live increasingly alone, either literally, or 'virtually', as isolated individuals within a family or other social group. This older population is also set to spend its money not on new or replacement goods, but on services and in particular on experience products and services. What might all this mean for companies in the packaging supply chain? Financial Implications Companies' operational expenditure and capital expenditure will change. Pensions will become a far more important part of staff remuneration and will be the most important factor in recruiting and keeping staff. In fact a great deal of effort will be spent by the accountants working out what is the most beneficial salary/pension balance for both employee and employer. A professional understanding of all the ins and outs of pensions and, perhaps even more importantly, of other ways of remunerating and saving for retirement, will be essential for a successful company. On the cost reduction side, older staff will tend to stay longer with an employer, so reduced recruitment costs could be expected. However, if there are few new people coming into the business, especially younger ones with new skills, more will need to be spent on updating skills and adding new skill sets to employees' current range. Older staff may be less inclined to travel than younger ones, and certainly less inclined to carry out heavy physical work. Packaging companies will find themselves investing more in equipment to reduce both physical work and travel - mechanised lifting trolleys and desk top video cameras for example. This may also require production processes that are more automated or rely on mechanised equipment for moving stock at all stages of the process, which may in turn require different floor layouts or workflow. Sales force expenditure will shift from hotels and air fares to computer and telecommunication time. Similarly those who have company cars will want to choose them with a view to retention for retirement, so that there may be a preference for smaller, reliable, cheap-to-run, easy-to-get-into cars. Human Resources Implications An older workforce, one where many are approaching retirement or are perhaps already in part time retirement, will need to be managed and motivated differently to a young, energetic one. Career progression is much less likely to be of major importance. There may be other, more unusual ways to motivate and reward staff. Thinking laterally for a moment, perhaps if many of the staff are older and living alone, then an after-work social club which provides a meal may be much appreciated. Or perhaps the provision of good canteen facilities, before, during and after work will be the key. Similarly, the ability to offer flexible working arrangements, to allow staff to spend their time enjoying their experience products, rather than higher salaries to allow them to purchase yet more material goods, may provide an alternative way of rewarding staff and retaining their loyalty. Older staff will be less mobile geographically so it would be harder to relocate them if this were needed. It would be more difficult to move staff between different locations, or start up new locations using the expertise gained elsewhere. However, older staff are also less likely to leave so that retaining skills and expertise should become simpler and easier. Also, older staff by definition, will have more lifetime experience, and it will become important to use this as a base to build on for further training. Older staff may do things a little more slowly, and take longer to learn new ways of doing things, but they have the advantage of being better placed, as a result of their lifetime experience, to offer real customer service, and this could be a real benefit. Customer relationships will be the key to successful business in the future, so older staff may bring a real financial benefit. One major problem may be that a lack of younger, especially new younger people coming into the business is likely to reduce the innovative and creative nature of the organisation. This will not be easy to replace, and it may be that there will be a need for external creative consultancy to help feed new ideas, and even a bit of energy into the company. There will also be fewer and fewer young people available for, or interested in, apprentice-type, introductory schemes. Employers will be fighting a losing battle for cheap young labour. It may be wise instead to think laterally and seek older staff. Such staff may be seeking a change of career, perhaps because they currently work in a shrinking industry. Such staff will not, however, be employable at the lower wage of a young new starter, but they will bring with them other skills which could easily offset their higher cost. The message is to stop looking for young new starters, but to look for re-trainable, career change staff instead. Build on the expertise and experience of current staff, a policy which will automatically produce multi-skilled and flexible staff. How about re-training the CEO's secretary (who probably knows the business better than even her boss) as a machine operator, sales manager or production manager? Or teaching the receptionist the finer points of variable date coding? In general, it will be important to realise that all future employees can be male or female. So how about a single grandmother sales director? It will also make sense to make great efforts to keep what younger staff you have. They will not appreciate a pay package based on pensions and other retirement savings options. Flexible and variable remuneration arrangements will be required. Most capable young people are extremely aware of the need to acquire, update, and add to their skills, so that offering opportunities to do this as part of the employment package you offer would be an excellent start. Such arrangements will, of course, need to change as staff change their lifestage - single to couple to parent to couple and perhaps to single again somewhere within that spectrum. Product and Marketing Implications Product innovations suitable for the emerging 'grey' market, such as easy-opening packages and containers as well as single portion instant cook foods, will become common place. But those companies which steal a march over their competitors will be those putting together products which combine all the emerging niches - older yet still active, still spending but not on more material goods, and the newly 'single'. For example, older populations, especially those determined to stay active, demand more healthcare, which is itself an 'experience' based product. This increasing demand will require that more self administered, home based treatments are developed (primarily to keep rising costs in check). So there will be a huge rise in the use of technically complex, yet simple in practice, home based, self-administered (as there is no-one else around to do it) medical treatments. Such products will require complex, high value packaging, which will often be a part of the product itself. Other areas may need a little more thinking. How can you pack an experience-only product? Packaging for a new kitchen gadget - easy. But for a cookery course? Or a cruise? Or a flying lesson? Some lateral and creative thinking will be required. And now is the time to do it, before others get there and while you still have a young enough workforce to think creatively and differently. SUMMARY No-one can truly predict the future, but demographic and social changes are one of the more predictable future trends. In order to exploit (rather than suffer from) these newly emerging 'single', 'active', 'post-materialist' 'greys', you will need to: hang on to the skilled staff you already have and invest in retraining and updating their skills. investigate alternative ways of doing the jobs normally done by the young and fit, whether it means buying a coffee making machine, lifting equipment or a desk top video camera. offer real skills training to younger staff. devise alternative, lifestage-variable remuneration packages that permit a focus on pension type benefits to attract and retain career-change staff. search for products which serve more than one emerging niche market. think pro-actively about staying creative and innovative. Read other Issues Papers: No.01 - "Combustion with Energy Recovery" No.02 - "Life Cycle Analysis" No.03 - "Managing Packaging Waste in Europe - Lessons for Australia" No.04 - "Waste Management " No.05 - "Litter" No.06 - "Mandatory Deposits" No.07 - "Excessive Packaging" No.08 - "Recycling" No.09 - "Australian Packaging - How Competitive?" No.10 - "The Packaging Council of Australia" No.11 - "Mandatory Minimum Recycled Content" No.12 - "Eco-Labelling" No.13 - "Packaging - Ten Trends for The Next Ten Years" No.14 - "Packaging - It's Essential Role" No.15 - "The Internet - What it Means for Australian Packaging" No.17 - "Digitisation in Printing - Implications for Packaging" No.18 - "Australian Packaging: Issues and Trends"