The changing labour force
Australia is facing a decline in labour force growth in the next 50 years. This decline is related to two factors including:
- projected decline in population growth, specifically in the working-age population
- projected decline in the labour force participation rate
The most important contributing factor in the decline in population growth is the long-term decline in the fertility rate. This means the proportion of younger age groups in the population decreases, which leads to a higher concentration of the population in the older age groups. This effect is intensified by increased life expectancy which has led to an increase in the average age of the population.
According to the (federal) Budget Paper No. 5 (non-Queensland Government link) released by the Commonwealth Treasury in May 2002, the participation rate for all persons aged 15 and over (including those 65 and over) is expected to remain steady until 2007-08.
There will be a decline in the labour force participation rate by the second half of the 2030s. This decline reflects the increase in the proportion of persons 65 and over and their low historical participation rates.
The shift in the population age distribution towards older ages has significant economic implications. Public expenditure on services for older people (e.g. health and aged care) can be expected to increase, while the size of the working age population supporting these services will decrease.
The ageing of the population means an increase in the dependency ratio, which is the number of children aged 0 - 14 years and persons aged 65 and over per 100 persons of working age (15 - 64). An increasing dependency ratio indicates that the proportion of people of working age relative to the population of non-working age is decreasing.
While Australia’s dependency ratio has fallen from 53.5 to 49.1 over the past 20 years, in the next 50 years the dependency ratio is predicted to increase and reach 69.8 by 2051. Between 2001 and 2051, the dependency ratio in Queensland is projected to rise from 48.8 to 69.7, although it will remain slightly below the national average over the entire period.
In Australia, the number of persons aged 65 years and over per 100 persons of working age (referred to as the aged dependency ratio) is projected to more than double over the next 50 years, from 18.9 to 46.0. In Queensland, the aged dependency ratio is projected to increase from 17.5 to 45.5 over the same period. This increase implies, among other things, an increase in the number of Queensland workers providing care for elderly family members aged 65 and over, which will impact on their labour force participation.
Last updated 21 July 2009
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