Labour Force Projections: Projections of the labour force
Australia's labour force is projected to grow from 8.6 million people in 1993 to 10.6 million in 2011, largely because of increased participation by women.
The labour force is a fundamental input to domestic production. Its size and composition are therefore crucial factors in economic growth. From the viewpoint of social development, earnings from paid work are a major influence on levels of economic well-being. The labour force thus has implications for government policies and programs in areas such as employment, child care, superannuation and income support. Social concerns about the size and composition of the future labour force therefore tend to revolve about these issues.
Australia's labour force is projected to grow from 8.6 million persons in 1993 to 10.6 million persons in the year 2011. This represents an average annual growth rate of 1.2% over the period. However, the annual growth rates are projected to decline gradually from 1.3% in 1996 to 0.6% in 2011.
| Labour force projections The labour force comprises all persons aged 15 years and over who are employed or unemployed. The labour force participation rate for any group is the number in that group who are in the labour force expressed as a percentage of the population in that group. For more details of labour force definitions see Work - definitions and references. Labour force projections are based on projected labour force participation rates for each age-sex group which are applied to population projections. The population projections series used in this review is Series A because the assumptions (medium fertility, low overseas migration and high interstate migration) most closely reflect prevailing trends (see Projections of the Populations of Australia, States and Territories 1993 to 2041 (cat. no. 3222.0)). The projected labour force participation rates were determined by fitting a linear time trend to seasonally adjusted monthly data for each age-sex group for the period 1978-93 and extrapolating. Each trend was then assessed against a number of criteria to ensure the resulting projections were meaningful. The criteria included female participation rates not exceeding male participation rates and relative stability between consecutive age-sex groups. Labour force projections are not predictions or forecasts. They are illustrations of the growth and change in the composition of the labour force that would occur if the assumptions were realised. |
Labour force participation
Projections of male labour force participation rates differ markedly across age groups. For men aged 15-19, the participation rate is projected to fall from 55% in 1993 to 52% in 2011. For men aged 45-54, the participation rate is projected to fall slightly from 89% in 1993 to 88% in 2011. The most significant projected decrease is for men in the 55-59 years age group, a fall from 72% in 1993 to 66% in 2011. These projections have been based on the prevailing trends of 1978-93, a period when the labour force was expanding and early retirement became increasingly common (see Australian Social Trends 1994, Early retirement among men). If new factors enter the picture, such as raising, or dispensing with, compulsory retirement ages, labour force participation rates in older age groups may not drop so significantly.
In contrast, female labour force participation rates are projected to increase for all age groups except those aged 15-19. In the past, female labour force participation rates have shown an M-shaped pattern with the peaks occurring in the 20-24 and 35-44 years age groups. The trough in the 25-34 years age group largely reflects prime child-rearing ages. Increasingly, women are continuing to participate in the labour force after having children and this trend is expected to continue. The labour force participation rate for women aged 25-34 is projected to increase from 66% in 1993 to 79% in 2011 and the rate for women aged 35-44 from 70% to 84% over the same period.
The combination of these projected changes in labour force participation and the projected changes in the size and structure of the population (see Projections of the working age population) results in a projected labour force in 2011 quite different in structure from the labour force of 1993. Overall, male labour force participation is projected to decrease from 74% in 1993 to 69% in 2011 while female labour force participation is projected to increase from 52% to 57%.
By 2011 the number of men in the labour force is projected to be 5.8 million compared to 5.0 million in 1993. This represents an average annual growth rate of 0.8% over the period. In comparison, the number of women is projected to increase from 3.6 million in 1993 to 4.9 million in 2011, an average annual growth rate of 1.7%. In 1993, women made up 42% of the labour force; by 2011 the proportion is projected to increase to 46%.
LABOUR FORCE PARTICIPATION RATES, 1993 AND 2011
Men
Men
Women
Source: Labour Force Projections
Age structure
Both the male and female components of the labour force are projected to age in the next 18 years. In 1993 the median age of the labour force was 36.0 years (36.6 years for men and 35.1 years for women). By 2011 the median age is projected to have increased to 39.0 years (39.4 years for men and 38.5 years for women).
In 1993 there were 1.87 million people aged 15-24 in the labour force. By 2011 this is projected to have increased slightly to 1.89 million. The number of men aged 15-24 in the labour force is projected to decrease by 7,300 while the number of women is projected to increase by 26,500. People aged 15-24 will be a declining proportion of the total labour force. In 1993, those aged 15-24 represented 22% of the labour force but this is projected to have fallen to 18% by 2011.
In contrast, people in older age groups are projected to contribute a larger share of the labour force. In 1993 there were 641,900 people aged 55-64 in the labour force. This is projected to grow by 507,500 to 1.15 million by 2011, increasing the overall representation of the 55-64 years age group from 7% to 11%.
The biggest increase in the labour force is projected to occur in the 45-54 years age group. Between 1993 and 2011, this group's share of the labour force is projected to increase from 19% to 23%. In this period, the male labour force aged 45-54 is projected to rise by 0.3 million to 1.3 million and the female labour force by 0.5 million to 1.2 million.
PROJECTED GAINS IN THE LABOUR FORCE, 1993-2011
Source: Labour Force Projections
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