As our ageing population threatens to stifle economic growth, baby boomers are helping to keep us afloat.
It’s easy to be critical of baby boomers. In the US they’ve been called “the worst generation ever”, and closer to home they are regularly accused of arrogance and selfishness by younger Australians. When it comes to inaction on climate change or housing affordability, the criticism can seem fairly aimed.
But here is the rub: baby boomers are also the hardest working generation of older Australians that we have ever seen. And thank heavens for that because otherwise the economy would be in a fine mess.
It’s no surprise that Australia’s population is getting older. We’re living longer and having fewer children. And, when we do have kids, we’re having them at an older age. The ageing of Australia’s population puts downward pressure on economic growth and labour force participation – that is, the proportion of adults holding down jobs or looking for work.
However, a recent report from job search site Indeed finds that the drag on growth, while still noticeable, has been tempered by the fact that older Australians have remained in the workforce longer than previous generations.
Politicians have long sounded the alarm about our ageing population and the ensuing economic drain, thus preparing the public for the inevitable fact that we will need to stay in the workforce longer than our parents. And it seems that the Boomers have been listening. In fact, labour force participation by people 55 and older has never been higher. From grey-haired consultants to mature labourers, older workers are found in management and professional roles, as well as traditional blue-collar occupations.
Baby boomers are making a massive contribution to the Australian economy, with the labour force participation rate of 55-64 year olds leaping from 47 per cent in early 2000 to 67 per cent today. And it will surely rise further in the coming decades as the retirement age lifts from the current 65.5 years to 67 by 2023. The beauty of this is that greater economic participation by older Australians partly offsets the economic impact of an ageing population.
There are numerous reasons why older Australians are staying on the job – as a nation we are living healthier and longer lives, there are more jobs in the less physically demanding service sector, favourable tax treatment of superannuation contributions, and a rise in flexible work options.
But of course, not every employed older Australian is rejoicing about putting off retirement. The enduring impact of the global financial crisis on superannuation has forced some older employees to work longer than they originally planned.
Furthermore, a recent report from the Benevolent Society found age-related discrimination remains widespread in the workplace. This bias against older workers creates obstacles to hiring or retaining older workers that could, according to the Regional Australian Institute, prove costly for businesses and the broader economy.
Nevertheless, employment among older Australians is still greatly outpacing employment growth among other age groups. Although there is still progress to be made, workplaces appear to be adapting to the realities of an older workforce. Perhaps we can adapt further by following the example of our Kiwi cousins – the participation rate among 55-64 year olds in the New Zealand workforce has reached an extraordinary 79 per cent.
However, greater numbers of older Australians in the workforce doesn’t solve the economic challenge that is an ageing population. Australia, as with every advanced economy, faces a future where economic growth will be lower than we have become accustomed to. But for now, we should be grateful that baby boomers are so actively contributing to the Australian economy and perhaps, just this once, we can stop giving them so much grief.
Callam Pickering is an APAC economist at Indeed.