It’s even worse than we thought. Two reports from the Parliamentary Budget Office and Treasury have shed more light on the extent of the structural budget deficit. While this has led to inevitable commentary about increases in taxes and reductions in expenditure, a notable absence has been the subject of how long Australians are living.
Australia is undergoing a period of substantial demographic change. For the first time, our society seeks to support two older generations — the baby boomers in their 60s and their parents in their 80s and 90s. An Australian boy born in 2010 can expect to live to 80. A girl born in the same year can expect to reach 84. Of those who make it to 65, men can expect to live to 84 years and women to 87 years.
By contrast, in 1901 only 4% of Australians were aged 65 years or older. By June 2010, this proportion had risen to 13.5%. According to ABS projections, this proportion will increase to between 21% and 23% by 2041.
That’s one in four of us over the age of 65 in 28 years’ time.
In April the Grattan Institute’s report Budget Pressures on Australian Society told us deficits were here to stay, largely due to a blowout in health expenditure that is not attributable to an ageing society. The other story contained in the report is that ageing and aged-care services represent the fastest-growing area of public expenditure. Rather than health costs, it is ageing itself that is the big challenge.
“We need to stop dancing around the edges of the longevity debate and fully engage with it at all levels of the policy process.”
The demographic change Australia is undergoing is hurting our old-age dependency ratio — that’s the ratio of people over 65 years relative to the working age population (15-64). In 2007 there were five working-age people for every older person. According to ABS projections, in 2056 this number is forecast to drop to three. That is, unless we change what it means to be “working age”. As the RBA reported in February, ageing of the population has, by itself, subtracted from the participation rate over the past decade as baby boomers move into retirement.
We need to stop dancing around the edges of the longevity debate and fully engage with it at all levels of the policy process. This is an economic and social issue of profound importance that has not received enough consideration in the public debate.
To develop a system that supports people to be active and productive members of society for longer, we need to talk about longevity. People need to be informed about their likely life expectancy and the importance of managing their superannuation to cover longer life spans.
There is a paucity of information about employer attitudes to retaining and employing older people. About two-thirds (64%) of older Australians surveyed by the ABS cited perceived employer attitudes towards them as the most significant reason they could not re-enter the workforce. An in-depth public survey of employers would assist in working out what impediments exist from the employer’s perspective when retaining and employing older workers.
Employers must allow older workers flexibility in terms of working hours and working from home and where possible, the government must enable workers to do so.
The government’s proposed amendments to the Fair Work Amendment Bill, currently before the House of Representatives, broaden the category of workers who can apply for flexible working conditions to include mature workers and those caring for elderly relatives. What effect this change would have on workforce practices remains to be seen. The conferral of this right needs to be matched with a media campaign by the government and employer groups so older Australians know that they can request a flexible working arrangement.
Without prompt action, the decade of deficits may be upon us. But there is action we can take to harness the economic power of our longer-living society. We can increase the participation rate of older Australians — the silver generations might just be Australia’s silver lining to the gathering economic clouds.
“Employers must allow older workers flexibility in terms of working hours and working from home…” ??
First older workers have to get/ keep a job, let alone obtain fancy conditions. Speak to anyone over 45 – they will tell you all about age discrimination.
A relative who is in her 70s used to volunteer in the local primary school (with the ‘little ones)where her daughter teaches. They seem to be very short of teacher aide time, and parent volunteers in the classroom nowadays are fewer due to parents work commitments. Why not try to create jobs in schools which appeal to retirees? Our relative really enjoyed being with the kids and pored lots of extra time into making things for the class. Only thing is, she is a person on a very low income, and it seems a shame that some recompense is not available given her efforts.
The issue is being addressed to a small degree at the moment with the gradual rise in the official retirement age to 67 that’s now underway, but as Salamander says, age discrimination is currently rampant.
My wife and I are both 53 and plan to at least semi-retire at 59/60. In the absence of increased immigration, the economy will have little alternative in the next 10-20 years to employing older people in some capacity in order to keep things ticking over, and I think you’ll find that age discrimination will ease and that part-time/casual workers in their 60s and 70s will be much more common by that time, especially if the tax tables are adjusted to give them more incentive to do that work.
As Salamander has stated, getting a job when you are over the age of 45 is near impossible.
Having been made redundant last Xmas myself, I can state that all employers pay lip service to having no age discrimination, but when applying for jobs (always online, as it is easier to ignore older applicants) the second question after your name is almost always your date of birth.
I cannot even get a job at the local well known pizza shop.
You can have all the studies in the world, raise the retirement age to 85, raise the age access to superannuation to 79…… Nothing will change while employers will not take on older employees. I also find it a bit rich when superannuation policy is set by politicians whose own super conditions are so much different to those of us whom they govern.
I was recently dining with an early 60ish tax lawyer in Washington DC who was making plans to work based on calculations of how long he might live and how much he would need to live on in retirement. In doing so he as being careful to factor in the rate of increase in longevity that we have already seen and what might be its course in future.
The part of the problem which is employers reluctance to employ old people cannot sensibly be tackled by anti-discrimination law. Employers need to be relieved of the concersns they may have about the real cost of employing older people by the government making hard-headed calculations about occupational health costs and making sure that employer, employee and taxpayer can all come out on the right side of the calculation of the cost to the employer and the income earned by the employee.