Population ageing and the employment surge among older Australian workers.

Author:Healy, Ernest
 
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Over the past ten years labour-force participation rates and employment rates for people aged 55 and over have increased. During the last year from March 2008 to March 2009 employment rates for young people fell but those of the 55 and over group continued to rise. The data show that older people's growing participation in the labour force is a long-term trend and one that runs counter to alarmist talk about the effects of an ageing population on the size and skills of the labour force.

INTRODUCTION

The Australian potential labour force (or persons aged 15 plus) grew by approximately 21 per cent in the ten-year period 1998 to 2008. The growth in the number of employed persons was nearly 2.2 million, or 25 per cent (see Table 1). On average, the number of employed persons grew annually by approximately 216 thousand during that decade and the labour force grew in the order of 191 thousand annually. The difference between these two figures is due to a reduction in the unemployment rate and an increase in the participation rate between 1998 and 2008.

Table 1: Labour-force status 1998 and 2008, (1) persons aged 15 years and over and per cent change 1998 to 2008 Employed Total Unemployed Labour Force '000 Total '000 '000 1998 8618 721 9339 2008 10,777 477 11,254 Change 1998 to 2159 -244 1915 2008 (number) Change 1998 to 25.0 -34.0 21.0 2008 (per cent) Not in labour Civilian Participation force '000 population rate aged 15+ '000 1998 5432 14,771 63 2008 5954 17,208 65 Change 1998 to 521 2436 - 2008 (number) Change 1998 to 10.0 16.0 - 2008 (per cent) Source: Australian Bureau of Statistics, Labour Force Survey, monthly data for years 1998 and 2008 Notes: (1) Annual data presented is the average of each respective years monthly count. (2) Data includes persons 15 years and over. During 2008, this extended period of rapid employment growth abruptly ended. Australian Bureau of Statistics (ABS) monthly Labour Force Survey data show that, although the labour force continued to grow strongly between March 2008 and March 2009, employment did not. While the labour force increased by 237 thousand persons, a much larger number than the annual average for 1998 to 2008, the number of employed persons grew by only 23 thousand. By contrast, the number of unemployed persons grew by 214 thousand, a sharp reversal of the long-term trend.

A close examination of labour-force change from March 2008 to March 2009 shows that, within this overall pattern of slowed employment growth, outcomes varied markedly between age groups and by sex. Table 2 shows the change in the numbers of persons aged 15 plus who were employed, unemployed, not in the labour force and who were in the civilian population from March 2008 to March 2009, by five-year age groups and sex.

Table 2: Change in labour-force status for persons aged 15 years and over, by age and sex, Australia, March 2008 to March 2009 Employed Unemployed Labour Not in Civilian total '000 Total '000 force labour population '000 force aged 15+ '000 years '000 Males 15-19 -36 24 -12 20 8 20-24 -1 22 21 -8 13 25-34 -30 34 4 28 33 35-44 -22 19 -3 14 11 45-54 -10 21 11 12 23 55-59 11 -1 10 -3 8 60-64 32 5 37 -15 23 65 and over 19 3 22 19 41 Total 15 years -35 127 91 67 159 and over 15-24 -36 46 10 11 21 25-54 -62 74 12 55 67 55 plus 63 7 70 1 71 Females 15-19 -4 13 9 0 9 20-24 -28 22 -6 16 10 25-34 -1 21 20 7 27 35-44 20 11 31 23 8 45-54 12 13 25 -2 23 55-59 30 8 38 -27 11 60-64 30 0 30 -6 24 65 and over 0 0 1 37 38 Total 15 years 58 88 146 3 149 and over 15-24 -32 35 2 16 18 25-54 30 45 75 -18 58 55 plus 60 8 68 5 73 Persons 15-19 -40 37 -3 20 17 20-24 -29 44 15 8 23 25-34 -31 55 24 35 60 35-44 -3 30 27 -8 19 45-54 3 34 36 10 46 55-59 41 7 48 -30 18 60-64 62 5 67 -20 47 65 and over 20 3 23 56 79 Total 15 years 23 214 237 70 308 and over 15-24 -68 80 12 27 39 25-54 -31 119 88 37 125 55 plus 122 15 137 6 144 Source: Australian Bureau of Statistics (ABS), Labour Force Survey, monthly data for March 2008 and March 2009 Note: (1) Data include persons 15 years and over. The number of employed women increased by 58 thousand, but the number of employed men declined by 35 thousand. Nevertheless, there is a common underlying pattern in employment change when the data for men and women are disaggregated by age.

There was an increase in employment among older men and women (those aged 55 years and over) and a decline in the number of employed persons among the young, those aged 15 to 24 years. For those aged 25 to 54 years, the employment outcomes differed for men and women. Employment among women increased by 30 thousand and among men there was a 62 thousand decline.

As a consequence, the economic contraction since late 2008 has led to the remarkable outcome that employment continued to grow for older men and women (55 years plus), but largely at the expense of younger persons (15 to 24-years-olds). Over the period March 2008 to March 2009, all of the net growth in the employed workforce was among persons aged 55 years and over and most of the increase in the ranks of the unemployed occurred among those aged 15 to 24 years.

The employment success of older persons over the past year or more needs to be put in the context of a longer-term increase in the labour-force participation rates of older persons. This increase in employment among older persons is not aberrational, as the labour-force participation rates of older men and women have been increasing markedly over the past decade. The implications of this trend are discussed below.

These observations challenge some widely accepted assumptions concerning the relationship between population ageing, labour-force participation and labour-force growth. For instance, as recently as May this year, an analysis of labour force demographics by the Australian Financial Review concluded that: '... it is unlikely that delayed retirements would make it difficult for young people to gain a foothold in the workforce'. (1)

The overriding assumption of the Australian government has been that sustained and unprecedented high levels of immigration are required to avoid debilitating supply constraints on labour supply and national economic growth. (2) In part, the rationale for this position is that population ageing in Australia is leading to an imminent contraction of the Australian labour force as older persons enter retirement.

This...

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