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OLDER PEOPLE AND THE LABOUR MARKET

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INTRODUCTION

While older workers have always been an important part of the Australian work force, in recent years the importance of this contribution has become increasingly apparent. The 2010 Intergenerational Report highlighted the fiscal pressures associated with the ageing population. Demand for health and aged care services as well as pensions is projected to increase over coming decades while at the same time the proportion of people participating in the labour force is projected to fall. (Endnote 1)

Increasing the labour force participation rate of older people is seen as one way to help soften the economic impacts of an ageing population. Over the past decade, successive Australian governments have recognised this and developed policies aimed at lifting participation among older workers by encouraging them to stay in the workforce longer or re-enter the workforce.

PARTICIPATION TRENDS OF PEOPLE AGED 55 YEARS AND OVER

In 2009-10, there were around 5.5 million Australians aged 55 years and over, making up one quarter of the population. Around one third of them (or 1.9 million) were participating in the labour force. People aged 55 years and over made up 16% of the total labour force, up from around 10% three decades earlier. The participation rate of Australians aged 55 and over has increased from 25% to 34% over the past 30 years, with most of the increase occurring in the past decade.

At the start of the 1980s, the labour force participation rate among older women was roughly one quarter that of older men. However, the trend of increasing labour force participation by women has seen this gap narrow. As with men, trends in the labour force participation of older women over the past three decades can also be broken down into three periods, although the characteristics of each period are slightly different to men. During the period from 1980 to 1993, the labour force participation of women aged 55 years and over was reasonably stable at around 11-12%. There was moderate growth in both full-time and part-time work in the years following, with the participation rate climbing to 16% in 2001. Since 2001, growth in both full and part-time employment among older women has accelerated, with the participation rate increasing 11 percentage points to 27% by 2010.

The marked increase in labour force participation among older men and women over the past decade is likely due to strong economic growth over the period leading to an increase in demand for employees of all ages. Increased flexibility in employment arrangements in recent years may have enabled older workers to switch to part-time work as a transition to retirement. However, there have also been legislative changes designed to encourage older workers to continue in the workforce. These include tax concessions for workers aged 55 years and over, for women, and an increase in the age at which they are eligible for the age pension. (Endnote 2)(Endnote 3)

OLDER MALE(a) LABOUR FORCE PARTICIPATION		OLDER FEMALE(a) LABOUR FORCE PARTICIPATION

LABOUR FORCE PARTICIPATION, BY AGE - 1980-2010(a)


(a) Year to June.
Source: ABS 1980-2010 Labour Force Survey

LABOUR FORCE STATUS, BY AGE AND SEX - 2010(a)

In the year to June 2010, around two in five employed men aged 55 years and over worked as Managers (23%) or Professionals (20%). Older men were more likely to be employed in these higher skilled occupations than their younger counterparts and less likely to be employed in more physically demanding occupations such as Technicians and Trade Workers (18%) and Labourers (11%). However, there were 113,000 men aged 55 years and over working as Labourers. Half of these worked as either Construction and Mining Workers (16%), Factory Workers (16%) or Farm, Forestry and Garden Workers (13%).

The most common occupations among women aged 55 years and over were Clerical and Administrative Workers (28%), followed by Professionals (25%). While these were also the most common occupation groups among younger women, those aged 55 years and over were more likely to be employed as Managers and Clerical and Administrative Workers than their younger counterparts, and less likely to be employed as Sales Workers. There were 72,800 women aged 55 years and over employed as Labourers, more than half (54%) of whom worked as Cleaners and Laundry Workers.

The industry profile of older workers largely resembled that of younger workers, with a couple of notable exceptions. Employed men aged 55 years and over were twice as likely to work in Agriculture, Forestry, and Fishing (7.8% compared with 3.4%). Among older women who worked, around 39% were either in the Health Care and Social Assistance or Education and Training industries, compared with 29% of younger employed women. On the other hand, older women were less likely than their younger counterparts to be employed in Retail Trade (10% compared with 14%), while 5% of older females worked in the Agriculture, Forestry and Fisheries industry compared with 2% of younger females.

	Males			Females
	15-54 years	55 years and over		15-54 years	55 years and over
Occupation	%	%		%	%
Managers	14.7	22.9		9.6	12.3
Professionals	18.7	20.3		24.4	24.9
Technicians and Trades Workers	24.0	18.3		4.6	3.3
Community and Personal Service Workers	5.5	3.7		14.3	12.0
Clerical and Administrative Workers	6.7	6.8		24.3	28.0
Sales Workers	6.9	4.9		13.8	8.1
Machinery Operators And Drivers	10.4	12.2		1.1	1.7
Labourers	13.1	10.9		8.0	9.7
Total	100.0	100.0		100.0	100.0
	'000	'000		'000	'000
Total	4,901.9	1,036.4		4,198.0	753.9

Older women were less likely to be self-employed (15%) than older men. However, they were twice as likely to be self-employed than younger women (7%). The proportion of older women employed as Managers who were self- employed (39%) was similar to that of their male counterparts.

While older workers are less likely to be underemployed than younger workers, on average older workers tend to remain underemployed for longer. In September 2009, 41% of older underemployed workers had been underemployed for more than a year, compared with 30% of younger underemployed workers. Among older underemployed workers, women were more likely to have been underemployed for more than a year (50%) than men (33%).

In general, older underemployed workers preferred to work fewer extra hours than their younger counterparts. Around a third of older underemployed workers wanted to work less than 10 additional hours per week, while 46% would prefer to work between 10 and 19 extra hours. Around 18% of underemployed workers aged 55 years and over wanted to work 20 or more additional hours a week, compared with 26% of those aged under 55 years.

In general, older men who were underemployed wanted to work more extra hours than older women. Around one in four (27%) older underemployed men wanted to work less than 10 additional hours a week, compared with almost half of underemployed older women (45%). Around a quarter (26%) of older men who were underemployed preferred to work 20 or more additional hours, compared with only 11% of older underemployed women.

Many older underemployed workers cited their age as one of the key factors preventing them from increasing the hours they work. Of those older underemployed workers who had actively looked for work with more hours in September 2009, 20% cited 'being considered too old by employers' as their main difficulty. However, a lack of vacancies or too many applicants was the most common difficulty, with around half (51%) reporting this as their main difficulty in finding work with more hours.

UNDEREMPLOYED OLDER WORKERS(a), PREFERRED NUMBER OF EXTRA HOURS - SEPTEMBER 2009


(a) Aged 55 years and over.
Source: ABS Underemployed Workers, Australia, September 2009 (cat. no. 6265.0)

PROPORTION OF PERSONS EMPLOYED, BY HIGHEST NON-SCHOOL QUALIFICATION - 2009


Source: ABS 2009 Survey of Education and Training

Although the unemployment rate among older people was around half that of people aged less than 55 years (5.9% in the year to June 2010), those older people who do become unemployed tend to be unemployed for longer. In the year to June 2010, 46% of unemployed older people had been looking for work for six months or more, compared with 32% of those aged less than 55 years. However, the numbers of people involved were relatively few - 26,600 people aged 55 years and over were unemployed for six months or more, compared with 185,000 people who were aged less than 55 years.

The main difficulty in finding work reported by around a third of older unemployed people was that they are considered too old by employers (36% of men and 28% of women). Other reasons included that there were no job vacancies in the locality or in their line of work (19%) and that there were too many applicants for the available jobs (15%).

RETIREMENT PLANS

In looking ahead to future trends in the labour force participation of older people, one of the key factors will be people's plans as they get older, including when and how they intend to retire and what factors will influence their decisions.

In 2008-09 there were 4.3 million Australians in the labour force who were aged 45 years and over. Of these, 575,000 (13%) said they never intended to retire. Of those who did plan to retire, the average intended retirement age was 64.2 years for men and 62.5 years for women. This is slightly older than the average retirement age for people who retired in the previous five years (61.1 years for men and 59.2 years for women), and is in keeping with a trend towards later retirement. (Endnote 6)

Of those who intend to retire, around two in five (39%) said that financial security would be the main factor in deciding when to retire. A further 11% said that reaching the eligibility age for the age (or service) pension was the main factor for them. Health was also a key consideration with 23% reporting that 'personal health or physical abilities' would be the main factor in their decision on when to retire.

There were around 3 million people aged 45 years and over who were working full time in 2008-09. Around 30% of these intended to shift to part-time work before eventually retiring, while a further 5% intended to take up part-time work but not necessarily retire.

The transition to retirement is not a one-way street, and many people who retire end up re-entering the labour force. Over the course of 2008-09 there were 144,000 people 55 years and over (59% of them women) who came out of retirement and returned to the workforce. Around one third of these said the reason they came back into the labour force was because they were bored (34%), or because an interesting opportunity came up (13%). A further 37% returned to the labour force for financial reasons. This may reflect the impact of the Global Financial Crisis (GFC) on retirement savings, although it should be noted that the survey was partly conducted prior to the onset of the GFC.

	Males	Females	Persons
	%	%	%
Retired/voluntarily inactive	49.8	33.0	39.8
Home duties	7.9	39.0	26.3
Own long-term health disability	21.8	10.5	15.1
Travel, holiday, leisure	7.8	5.0	6.1
Looking after ill/disabled person	4.6	5.3	5.0
Working unpaid voluntary job	4.0	3.0	3.4
Other(a)	*4.1	*4.2	*4.1
Total	100.0	100.0	100.0

Of particular interest to policy makers are a group of people known as discouraged job seekers. These are people who stated that they wanted a job and were available to work, but were not looking because they didn't think they would be able to find a job for reasons related to the labour market. Of all the people outside the labour market, discouraged job seekers are seen as most likely to enter the labour market if conditions were to change. In September 2009 there were almost 58,200 older people classified as discouraged job seekers. Around two-thirds of older people in this situation felt that employers considered them too old (64%), while a further 15% said that there were no jobs in their locality or line of work.

Working arrangements and financial considerations are among the key factors that could encourage older people to join the labour force. Of those older people (aged 55-69 years) who wanted and were available to work, but were not actively looking for a job in 2008-09, more than three-quarters (76%) said that the ability to work part time hours would be important in determining whether they joined the labour force. Similarly, being able to work a set number of hours on set days was an important factor for 68% of older people. The majority also said being able to sit down (68%) and take breaks (61%) would be important factors.

	%
Being able to work part-time hours	76.1
Being able to sit down some of the time while at work	68.0
Being able to work a set number of hours on set days	67.7
Being able to take breaks	61.1
Being able to keep more of welfare benefits or allowances	43.9
	'000
Total	176.1

1. The Treasury, The 2010 Intergenerational Report, chapter 4.