Past, present and future of mature age labour force participation

How do regions differ in Australia?

The need to plan and prepare for the population ageing in Australia is well acknowledged among policy makers, business leaders and the broader community at large. A less recognised fact is that the rate and speed of ageing within Australia differs considerably.

When the rate of ageing is combined with the uniqueness of local labour markets, the impact of population ageing on sub-national labour markets and local economies can be expected to differ considerably.

The purpose of this report is to shed light on the national and sub-national features of mature age participation in the labour force, in the past, present and future.

Key findings

Historical

Most of the increase in participation by mature age males in the labour force over the past 30 years has occurred in the last 10 years. This strongly contrasts with the situation for mature age females. For females, the story of increased labour force participation is one of a longterm trend and growth across the past 30 years, although there was also strong growth in participation in the last 10 years. This general pattern for males and females was replicated at the state level, with some interesting state differences for males. For example, the increase in participation by mature age males in the Western Australian labour force started about 10 years earlier than in other states.

Current

Currently, participation by mature age people in the New South Wales, Victoria, Queensland and South Australian labour forces is broadly consistent with the national pattern. Tasmania under performs when the number of mature age people participating in the labour force is examined.

The Australian Capital Territory performs quite well for people of all mature ages under 60. Western Australia, there is relatively high labour force participation for males of all ages over 45 years but female levels are broadly consistent with the national level.

Analysis of the composition of mature age employment (that is, by industry/occupation/sector) all point to a high prevalence of mature age self-employment, particularly in the older age groups. Although there were differences between states, strong differences within states were also prevalent. A strong industry effect between regions was at play and explained differences in mature age employment. Industries with a significant focus on self-employment are likely to exhibit high patterns of mature age employment. Analysis also revealed a strong decline in the propensity for mature age employees to be involved in the public sector. This decline was particularly strong for people over 60 years and the decline held true across states and territories as well as regions.

Future

In Australia, the percentage of the population aged 65 years and over is projected to increase from about 14% in 2012 to over 20% in 2042 and 25% in 2062. Over the initial 30-year period, the proportion of the labour supply made up of people over 65 is set to increase. At the same time, the proportion of people of traditional working age (15–64 years) is set to decline. There are a number of states with trends that are different to the national level. The level of population ageing is higher in Tasmania and South Australia when compared to other states and all of Australia. At the sub-state level, with the exception of Western Australia, every capital city is currently younger than the non-metropolitan counterpart. The capital city populations are also projected to age at a slower rate when compared to their non-metropolitan counterparts.

Because of differences in population growth, non-metropolitan populations have been shown to be structurally older and ageing at a faster rate than capital cities, whereas numerically the growth in ageing populations is much faster in cities. When labour supply projections are conducted, growth is particularly low for Tasmania. There is a strong increase in the age of labour supply and a declining proportion in the working-age (15–64 years) population. South Australia and Tasmania have declining labour supply growth and lower levels of mature age participation. For each capital city, the labour supply growth is currently, and projected to be, higher than the non-metropolitan counter parts. Moreover, all non-metropolitan labour supplies are currently older and ageing at a faster rate when compared to their capital city counterparts.

Of particular note, non-metropolitan South Australia and the metropolitan and non-metropolitan areas of Tasmania have low levels of labour supply growth and the fastest rates of ageing.

Conclusion

The numerical, structural and timing aspects of population ageing will significantly impact on Australia’s labour supply in coming decades. Labour markets across and within Australia’s states and territories will react to this differently, given differences in labour demand and in local economies more generally.

Results from this study show that there are already considerable differences in: (1) the level and historical development of mature age participation; (2) mature age employment across Australia’s regions; and (3) the speed with which the population ages and grows in the states and territories. These differences feed through to the growth of labour supply and ageing of labour markets. This implies that the policy, industry and community reactions to population and labour supply ageing will occur at different points in time within Australia.

While this decline in the growth of labour supply is projected, at the same time there are many reasons to believe that labour demand will be stronger in the future. There are repercussions when the labour demand is not met, including the potential for wage inflation and risks to future productivity.1 More generally, declining growth in labour supply underscores the need for governments, industry and employers to recognise the importance of ongoing mature age participation. In particular, previous National Seniors Productive Ageing Centre (NSPAC) research has identified numerous ways to support ongoing participation increases by:

Addressing the barriers to mature age participation including re-entry barriers for the long-term unemployed, retraining and up-skilling barriers, as well as tax transfer and workplace barriers Encouraging detailed retirement planning early in life Stamping out the pervasive effects of age-based discrimination in the labour market.

These strategies represent a blueprint to create an environment so that mature age workers who want to work will be able to do so. The fact that many non-metropolitan areas are ageing faster than Australia as a whole, place further impetus on governments, industry and the community at large to hasten these strategies.

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