Use spare older workers to overcome ‘labour shortages’

By Leith van Onselen

A few weeks back, the Benevolent Society released a report which found that age-related discrimination is particularly rife in the workplace, with over a quarter (29%) of survey respondents stating they had been turned down for a job because of their old age, whereas 14% claimed they had been denied a promotion because of their old age.

Today, the Regional Australia Institute (RAI) has warned that Australia is facing a pension crisis unless employers stop their “discrimination” against older workers. From The ABC:

[RAI] has warned the Federal Government’s pension bill would rise from $45 billion to $51 billion within three years, unless efforts were made to help more mature workers gain employment, particularly in regional communities.

Chief executive Jack Archer said continued unemployment of people older than 55 would cut economic growth and put a greater strain on public resources.

“We hear that there is a lot of people who would like to work, who would love to stay in the workforce either part-time or full-time even though they’re in their late 50s, 60s and even into their 70s,” he said.

“But we’re not doing a very good job of giving them the training, giving them the incentives around the pension, and working with employers to stop the discrimination around employing older workers”…

“It basically means you’ve got a lot of talent on the bench, a lot of people who could be involved and contributing who are sitting around homes and wishing they were doing something else,” he said…

Mr Archer said as the population aged the workforce shrank, and that risked future economic growth.

But he said that could be reversed provided employers embraced an older workforce…

“[When] those people are earning [an income], their pension bills will either disappear or be much lower and the government will get a benefit from that.”

For years the growth lobby and the government has told us that Australia needs to run high levels of immigration in order to alleviate so-called ‘skills shortages’ and to mitigate an ageing population. This has come despite the Department of Employment showing that Australia’s skills shortage “remains low by historical standards” and Australia’s labour underutilisation rate tracking at high levels:

Economic models are often cited as proof that a strong immigration program is ‘good’ for the economy because they show that real GDP per capita is moderately increased via immigration, based on several dubious assumptions.

The most dubious of these assumptions is that population ageing will necessarily result in fewer people working, which will subtract from per capita GDP (due to the ratio of workers to dependents falling).

Leaving aside the fact that the assumed benefit to GDP per capita from immigration is only transitory, since migrants also age (thereby requiring an ever-bigger immigration intake to keep the population age profile from rising), it is just as likely that age-specific workforce participation will respond to labour demand, resulting in fewer people being unemployed. This is exactly what has transpired in Japan where an ageing population has driven the unemployment rate down to only 2.8% – the lowest level since the early-1990s:

The ABS last month revealed that more Australians are working past traditional retirement age, thereby mitigating concerns that population ageing will necessarily reduce the employment-to-population ratio:

Clearly, however, there is much further scope to boost workforce participation among older workers.

Rather than relying on mass immigration to fill phantom ‘labour shortages’ – in turn displacing both young and older workers alike – the more sensible policy option is to moderate immigration and instead better utilise the existing workforce as well as use automation to overcome any loss of workers as the population ages – as has been utilised in Japan.

It’s worth once again highlighting that economists at MIT recently found that there is absolutely no relationship between population ageing and economic decline. To the contrary, population ageing seems to have been associated with improvements in GDP per capita, thanks to increased automation:

ScreenHunter_18202 Mar. 26 13.24

If anything, countries experiencing more rapid aging have grown more in recent decades… we show that since the early 1990s or 2000s, the periods commonly viewed as the beginning of the adverse effects of aging in much of the advanced world, there is no negative association between aging and lower GDP per capita… on the contrary, the relationship is significantly positive in many specifications.

The last thing that Australia should be doing is running a mass immigration program which, as noted many times by the Productivity Commission cannot provide a long-term solution to ageing, and places increasing strains on infrastructure, housing and the natural environment.

The sustainable ‘solution’ to population ageing is to better utilise the existing workforce, where significant spare capacity exists.

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Unconventional Economist


  1. THis report is hard on the heels of a recent report showing the funds to maintain a pension are not there
    So this all leads to indexing of pensons or means testing.
    Maybe time for wealthy pensioners to get rid of some housing and start squirreling away the funds.
    Cos if the pensions run out, there will be mayhem.
    The proportion of Australians who pay income tax is falling as the population retires compared to those claiming benefits. The dependency ratio — the proportion of Australians of working age compared to those old enough to receive a pension — is shrinking rapidly.
    In 1975 there were 7.3 working-age Australians for every pensioner; in 2017 there are 4.5; and by 2050 is it forecast to be2.7.

    • Again….Make it that to get a job as a Stop n Go ‘person’you have to be over, say 60? (AND an Australian citizen)?. That let’s all those younger people go get real jobs somewhere. The shifts could be say four hours and four of five days a week just to spread the work around.
      Pension problem – not solves but a fair dent in it
      Aged problem solved in that you have a job, money and feel like you are doing SOMETHING for your entitlements. Psychological well-being looked after.
      Flawse for dictator!

      • Fl mate, working out doors would require a fitness medical whihc many towns folk would fail
        Mind you, I saw a young overweight couple in surfers the other day. come out of the pizza shop wiht 4 pizzas, probably an hours snack, when a down pour came and they couldn’t run to make cover.
        Just had to amble duck like in the rain.
        there is no doubt the nation is definitely rooted. this NDIS is the scam of the ages.
        All this talk about what is after housing collapses is just a myth,

      • WW MAAATE….As you have done I have seen plenty of fat b…rds who are flat out getting out of a chair to wave their sign! As to all this medical crap – that is just what it is…crap thought up by a bunch of totally useless retards on exorbitant salaries who have to keep dreaming up more useless rules to impinge on actual productive processes just to justify their continuing to be employed.
        RE NDIS…Yup! it was always going to be the biggest scam in the nation outside of negative RAT interest rates. The more you hear about what is going on the worse it seems!

    • “The dependency ratio ..”

      Bingo. In 2050 it’s meant to be 2.1 for the U.S. (down from 7.1 in 1950). If you look at welfare in general it is a ponzi scheme (pay as you go) — which is why the immigration tsunami in straya. The politicians who made all those promises many decades ago were never going to be held accountable but the ones in charge now have to deal with it and this is easier than having to make the tough calls and reform the system.

  2. Maybe give them a shot at all the services jobs exported overseas to desks, finance , IT etc .it seems no one wants to talk about it as it is done by not only private enterprises but also goverment.Yet every project including Adani is argued as creating jobs

    • Yes, like my job gone to India and my wifes job replaced by Indians, all of course due to the ‘shortage’ of workers in each of our fields apparently and as we were circa 50 years old at the time, end of career’s. Now finding the part time, casual McJobs are being done by foreign ‘students’ and no doubt for less than min wage.
      The only cure for this is a new government which puts the people first rather than ‘if its good for business, its good for Australia’ routine.

  3. Baby boomers will need to grow their hair long, fetch their peace symbols and tie-dyed shirts and head to Centrelink.

    This is karma man!

    • You mean Kama in reverse? ie the ones pushed out of work 10 – 20 years before official retirement are not the ones buying up streets of real estate, they are in fact part of a majority who have no say in society either political or economically, ie the normal workers from labourers up to mid level tech or lower management types.. I personally dont know any boomers that fit the ‘boomer’ photo-fit which predominates in this type of forum.

  4. Jumping jack flash

    Businesses won’t employ old people, they won’t employ young people.
    Businesses won’t employ people full time.
    They certainly don’t give anyone working for them payrises.

    What’s left?

    Oh, of course: getting rich from someone else’s debt.

    • > “What’s left?” you ask?
      457 visa immigrants. My company replaces anyone who resigns with 457 visa applicant, normally at around 0.6 of the cost.

      • Jumping jack flash

        Oh yes I was going to say 457s but that was too obvious, I thought.

        I was speaking to a Kuwaiti recently about foreign workers in Kuwait. Apparently they they have policies for foreign workers that make sense. For instance, he was saying, any foreigner working in Kuwait is paid according to their market rate and local currency exchange rate, based on whatever country they’re from. So, an Indian IT professional working in Kuwait is paid as if they were working in India.

        This makes 3rd-world foreigners working in Kuwait attractive for employers, like it is here, but unlike here, 3rd world foreigners don’t swarm in looking for prized Australian dollars that they can then ship home, where even a small amount (by Australian standards) is worth a fortune in their local currency. It removes the advantage.

        So then, he was saying, as a result of this policy few foreign workers work in Kuwait, and instead they all go over to New Dubai. And the Old Dubai “stinks like Egypt”.

    • Rumour has it that Westpac are not paying bonuses this year. That’ll have a big impact highly geared employees counting on it. May even free up some jobs for the elderly if people leave – yeah right.

    • Jumping jack flash, I read that the stimulus package in Kuwait only went to citizens of Kuwait – unlike Rudd’s $900 cheques which went to foreigners and Aussies alike. Can you ask him about the stimulus package in Kuwait? If true, it is great that they look after their citizens and do not give a damn about foreigners.

  5. boomengineeringMEMBER

    Not working is bad for you, I’m still working could have got the old age pension years ago. Not only would there be a saving in pension payouts but people who work go to hospitals less as well.

    • Being stimulated is important, doesn’t have to be paying work though. I think we rely on our older citizens for all kinds of social and community work. Various clubs, churches and charities would be significantly weaker without retirees to administrate them. I wonder what our democracy would be like without all the scrutineers. Sure there’d always be political types for scrutiny, but older heads will be less hot about it.

    • Boom…agree and in same boat.
      Note my comment above re stop n go! We need to start thinking seriously about this stuff. Mind you when, eventually, TSHTF a shortage of workers is not going to be the problem. A shortage of trained productive workers still will be I’m guessing.

      • boomengineeringMEMBER

        Flawse, Just read your above post, can’t agree more.correct again Flawse. I worked my arse off when young, retired at 37, hated it,went into a new venture, then lost it all 87-89 crash but at least found out how horrible retirement is.

  6. I currently work with a number of folk on the other side of 60.

    It hasn’t been great. The entitled whining that goes on far, far outstrips what a millennial is capable of. Age doesn’t necessarily bring maturity and perspective; if someone has spent six decades of their life focusing on petty shit, they get real good at it.

    • No, none of these issues has ever been up for the vote. You could say millenials with their potential housing problems also ‘got what they voted for’ It is a nonsense to suggest this. Both LNP and Labor have had the same policies for decades on most of the big issues. ie no government is working for the majority population, they are all in bed with bankers, big business and personal self interest, ie they are all traitors.

  7. Wages are flat or sliding in real terms. What imaginary labour shortages are these people talking about ?

  8. Great article. People are lured or pushed out of the work force long before they become unable to make a contribution. In 1881 (before the aged pension), the British government looked into work force participation of men over 65. It found that 73% of them were still working (see The Cambridge Economic History of Modern Britain). We could probably do even better. The average job is far less physically demanding now than was the case then, and the baby boomers have had better diet, better health care, smaller families, and better living and working conditions than their 19th century ancestors. The main problem is really that there aren’t enough jobs, even for working age people. There would otherwise be no reason for anyone to receive a free ride just because he or she has passed a magic birthday. When offshoring of jobs is allowed, it deprives people who could be self-supporting of work and forces those with work to support them.

  9. But the old farts are difficult and slow … hire young guns instead, they still have the eye of the tiger!

    • boomengineeringMEMBER

      Slow and steady wins the race. My whole life I’ve worked slow but always finish before the others.