Thursday, May 22, 2014

Workforce Ageing – Myth and Reality

We regularly hear expressions of concern about workforce ageing and the accompanying idea that a diminishing number of workers is going to be left with the burden of carrying a population grown old and grey. This kind of thinking and rhetoric lies behind proposals to increase the retirement age and/or reduce the incomes and support being received by pensioners and retirees.

It is true that the workforce is ageing. What is not true is that this is a problem. Figures about the number of retirees compared with workers fail to state the full workforce participation picture, which needs to take into account how many children there are, and the proportion of women who are working. If present rates of labour force ageing and participation continue, the proportion of the total population in the labour force will fall from the present level of 53 per cent to around 44 per cent by 2061. But this level of participation is nevertheless higher than the 42 per cent we had back in 1966. Back in 1966 the nation was thriving, and yet even 50 years from now we will have a higher participation rate than we had back then, when there was no talk of a small workforce carrying a large out of work burden.

Moreover although there are more baby boomers (born in the 16 years between 1946 and 1961) than there are people born in the 16 years earlier, between 1930 and 1945, ALL of the 16 year age groups younger than the baby boomers are more numerous than they are. Baby boomers do NOT form a unique bulge in the population python.

Third, given that we have hundreds of thousands of people who are out of work, workforce ageing and retirement means that the unemployed get a chance to get a job. If we didn't have, or don't have, older workers retiring, then the chances of young people or long term unemployed getting a job fall accordingly. Workforce ageing will solve unemployment, and if you genuinely want to solve unemployment - not everybody does - this is a good thing.

Finally, talk about population and workforce ageing devalues older people and their ongoing contribution, financially and as carers and mentors and role models, to society. For a more detailed and evidence based account of the demographic forces at work in the Australian workplace, see the link below: The ageing of the Australian population: triumph or disaster?, a report prepared for the Monash Centre for Population and Urban Research by Dr Katherine Betts, released 28 April 2014.

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