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The challenge of the flipping age pyramid

By Malcolm King - posted Tuesday, 6 March 2012

While it is early days in the war against age discrimination and inflexible workplaces, there are some signs that recruitment agencies and employers are getting in step with the times. The low birth rates in the 1980s and 1990s, under funding of TAFE in those years, and the relative disinterest by younger generations to learn a trade, means that the supply for skilled labour can't keep up with demand. The market is blind to appearances. The only color that matters is the black ink written in the profit column of the spreadsheet, and in the current labour market, experience counts.

Older workers are working longer. Recent data from the Australian Bureau of Statistics (ABS) shows that 1.93 million workers aged 55 and over were employed in 2011 - almost double the 1.01 million employed a decade ago. The growth in workers in their early 60s has leapt from 274,000 a decade ago to 634,000 now. The number of women working at that age has roughly trebled, from 90,000 to 268,000.

Couple these facts with research from here and overseas, which suggests that cognitive decline in ageing is vastly overstated for the majority of the population. Only about one per cent of the population will suffer from Dementia before they hit the 60-65 age group rising to eight per cent for those aged 75.


Lets cut to the chase - staying mentally active and socially connected leads to better cognitive flexibility. Even so, there will still be large numbers of people who will grab at the chance to retire. These fall roughly and imprecisely into two camps: those white-collar earners who have paid off their house and have between $500,000-$1,000,000 in superannuation and/or investments. These people may want to work part time or when it suits them.

Those 'blue collar' workers in the 50s and who are still paying off their house will put retirement on the backburner. Many older worker families earning $60,000 or less are feeling the pinch of rising food and energy prices. For them, retirement seems like a distant and receding dream.

Imagine what would have happened if Keating and Kelty didn't fight for mandatory superannuation.

Throughout the past, the age structure of the population resembled a pyramid. It had a broad, youthful base and a small, elderly top. This still remains the characteristic age profile of many developing countries. In developed countries today like Australia, the age structure looks like a Chinese lantern: it bulges in the middle. In the 21st century the age pyramids of developed countries are flipping. The elderly top will be wider than the working age middle, which in turn will be wider than the youthful base. If the trend of Boomers remaining in work or returning to work continues, with the government's help, then the threat to the health and age care budget and the potential to the hip pockets of younger folk will be relatively small. Indeed, the earning power of the smaller younger generations will be assured as their knowledge and 'can do' attitude will be worth premium pay rates.

So the story of the next forty years will be defined by how we respond to the challenge of the flipping age pyramid. Attacking age discrimination, up-skilling older workers and legislating so that workers pay more superannuation are some of the ways to tackle this problem although I suggest market forces are leading the way.

I predict one of the most interesting aspects will be in the personal dynamics of boomer marriages. I am not talking about whose turn it is to reverse the caravan in to a tight spot in a seaside caravan park. The pressure will come as couples disagree about when to retire and how to live the retired life. Some couples are out of sync: the women, younger and with broken work patterns behind them, are now finally moving into top jobs. Their partners are winding down, wanting to make the most of the strong dollar, and enjoy themselves for a while. A woman at 60 is expected to live another 26 years, and a man another 23 years. They have before them a second adult life to fill. Without the snare of ambition, and children to support, there is the chance to do something meaningful.


The voting power of the Boomer generation has been understated. I would have expected the post war generation - whose ideals were fostered either by radical, or liberal principles - to be much more vocal in pressing their case for improvements in aged care facilities, mental health services, nurse to patient ratios and funding for hospitals.

The notion of a voting bloc in pluralist societies is nothing new. The Greens and their pro-environment push is probably the most successful. Of course there are a multitude of factors that sway individuals in the way they vote. Yet a party garnering votes on a Boomer political platform and directing preferences as they see fit, is something we may well see over the next ten years.

The wellness movement is growing apace in Australia as CEO's realise that fit and active staff are productive staff. Far from being a crystal gazing and incense wafting 'feel good' movement, it is accessing some of the best science available to boost staff knowledge and application of nutrition, psychological and financial health and flexibility through yoga and Pilates. The wellness movement will become a must have for those hoping to hold on to their best staff.

Spare a thought for what is happening overseas. While Australia may be able to fund its ageing population by the boomers working longer, the combination of government debt in Europe has reached a tipping point. The cumulative debt and the compounding interest payments on that debt, is out of control, much like feedback from an amplifier.

Ireland's gross domestic debt is the equivalent of 105 per cent of its GDP, Greece's is 129.2 and Portugal's is 92.9 of GDP. Italy's debt is 132.7 per cent of GDP and Japan's is 204.3 percent of GDP. The last time debt burdens were this high, not a single country in the world had a median age higher than 36. Today, half of Europe has a median age over 40 and rising. The number of younger Europeans entering the labour market in the 15-24 age cohort is shrinking and will decline over the next 40 years by about 25 per cent. The question is, how will these nations fund their aged pensions and healthcare programs?

A partnership between the ageing boomers - devoid of glassy reminiscences about Jimmy Hendrix's guitar playing - with an emphasis on 'downloading' skills and experience, will give the nation a competitive advantage that others in tired old Europe won't match.

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About the Author

Malcolm King is a journalist and professional writer. He was an associate director at DEEWR Labour Market Strategy in Canberra and the senior communications strategist at Carnegie Mellon University in Adelaide. He runs a writing business called Republic.

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