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Are older Australians re-assessing the job market?

Before Covid-19, a major reason that Aussies weren’t employed or looking for jobs was because they had retired. That is, they were out of the job market. In fact, in April 2018, 38.7% of people said that they were “Permanently not intending to work (aged 65 and over)”, up from 33% just four years prior (September 2014). Then there was a reassessment. The proportion of those not in the workforce because they were retired fell from 38.7% to a 3-year low of 35.3% in July 2019.

Record numbers, but are they accurate?

And in the period since, due to Covid, it is not possible to determine firmly whether the trend has changed because more people exited the job market over the lockdown period. They weren’t employed as such – they didn’t work for one hour or more in the past week - but neither were they looking for work because they were likely to return to their employer after the lockdown.

The lockdowns have effectively scrambled the data. The proportion of those not in the workforce because they were retired hit a record 39.9% of the total in June 2021 and this has since fallen to a low of 36.4% per cent in September 2021.

So let's check two other data points at different ages.

First, a record proportion of people aged 60 to 64 years are in work.

Second, the 65 years plus age group participation rate shows more Aussies are working longer.

Impact on overall job market

Working out why people are not in the job market will be important in coming months. If more people are electing to retire then there are fewer potential workers to fill positions. That may mean the job market tightens more than generally expected, putting upward pressure on wages and prices. And that is especially the case if foreign borders stay closed.

In other words, The Great Retirement could lead to a tighter job market. Older Aussies may see greater health risks in being in the job market in the Covid era. And still others may elect to live large given the experience of the past 18 months.

At this stage data still shows that older Aussies are active in the job market with record participation levels. However peak levels may not be far away.

In other countries, notably the US, there are similar concerns about the future state of job markets with more businesses saying they can’t find the workers to fill positions.

The great reopening has led to supply-chain breakdowns and higher prices for goods. The great reopening may lead to similar worker-job breakdowns, with labour shortages driving up wages. With thousands of Aussies reaching retirement age every week, their decisions about work could have broader, long-term inflationary implications.

 

Craig James is Chief Economist at Commonwealth Securities Limited (CommSec). This article provides general market-related commentary only and has been prepared without taking into account your objectives, financial situation or needs.

 

7 Comments
john
November 08, 2021

J
Yep, made redundant by NSW Govt in 2020. Called "voluntary redundancy" by the HR dept. but certainly wasn't from my perspective. Take redundancy payout and accept voluntary classification or struggle financially.
So job market can get stuffed at this point, will sit on sidelines for as long as possible.
HR gatekeepers and departments are the driving force in the great switch off for many workers.

C
November 07, 2021

People better be careful what they wish for. If their job can be done remotely from home, then maybe the company can save a lot of money using people in the Phillipines instead. And as mortgage rates go up in coming years with rising interest rates , people will still need jobs. For every person who retires there is a young person leaving school or finishing university needing a job.

Jerome Lander
November 06, 2021

Evidence of change means we need to think about how we build portfolios differently for the future, particularly for those who have accumulated substantial wealth and want to protect it from a changing economic environment. Inflation is certainly one of the big concerns that most aren't ready for.

Graham W
November 04, 2021

Centrelink now allows Age pensioners to each work and earn $320 per fortnight without affecting the Income Test.
This means an extra $8,320 pa, double that for a couple. Certainly a no-brainer for those with limited financial assets.
And it accumulated so that you can earn your $8,000 or so in one burst and have the rest of the year off.

Robin
November 04, 2021

Lockdowns and WFH have allowed many to experience the greener grass on the other side. I'm not surprised we're seeing 'The Great Retirement' playing out.

C
November 07, 2021

For every person retiring there is a young person leaving school or university in need of a job. As for WFH, people should be careful what they wish for. If their job can be done remotely from home, then maybe the company can save a lot of money using people in the Phillipines as has already happened in some IT sectors.

Geoff
November 08, 2021

A lot of companies started in-sourcing again when countries providing off-shore services just shut up shop with no notice during the pandemic (usually mandated by government, not the choice of the companies). A lot of businesses have learnt from that. And IT and processing sort of work, but you need capable people on shore to control them - I doubt there will be a significant outflux of jobs as a result of the pandemic.

 

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