The Australian Government is required to produce an Intergenerational Report at least every five years that assesses the long-term sustainability of current Government policies and how changes to Australia’s population size and age profile may impact on economic growth, workforce and public finances over the next 40 years.
A projection into the future, the Intergenerational Report contains analysis of the key drivers of economic growth – population, participation and productivity – and examines what effects projected changes in these areas will have.
Below are key points on how Australia will change over the next 40 years, according to the recently released 2015 Intergenerational Report.
What will our population look like?
Population is projected to grow at 1.3 per cent over the next 40 years, slightly slower than the 1.4 per cent of the last 40 years, to stand at 39.7 million in 2055.
Aussies will live longer and continue to have one of the longest life expectancies in the world. In 2055, life expectancy at birth is projected to be 95.1 years for men up from 91.5 years today and 96.6 years for women up from 93.6 years today.
Here comes a much older Australia
Furthermore, there are projected to be around 40,000 people aged over 100 in 2055. This is a dramatic increase, up from the about 5,000 Australian centenarians today and well over 300 times the 122 we had back in 1975.
There will be fewer people of traditional working age compared with the very young and the elderly. This trend is already visible, with the number of people aged between 15 and 64 for every person aged 65 and over having fallen from 7.3 people in 1975 to an estimated 4.5 people today. By 2055, this is projected to nearly halve again to 2.7 people.
Where is our economy headed?
Economic growth is projected to average 2.8 per cent a year for next 40 years compared with 3.1 per cent for the past 40 years.
Of the three key drivers of economic growth, productivity has historically been the most important to Australia’s economic performance. Productivity growth over the next 40 years is projected to average 1.5 per cent, same as the average of the 2000s, down from 2.2 per cent in the 1990s.
By 2055, the workforce participation rate for Australians aged 15 years and over is projected to fall to 62.4 per cent in 2055, compared with 64.6 per cent today.
As Australians live longer and do so in better health, more will continue to lead an active lifestyle and participate in the workforce after they reach traditional retirement age.
Participation rates among those aged 65 and over are projected to increase strongly, from 12.9 per cent today to 17.3 per cent in 2055.
Is Australia ready for an older workforce?
Several University of Sydney experts weighed in on the 2015 Intergenerational Report’s projections for an older workforce in the next 40 years.
“The intergenerational report reflects Australia’s moral panic over its ageing population,” said Dr John Buchanan. “Ageing is not a problem. The issue we face is related to the distribution of the productivity gains that we make.”
“A number of countries have on average older populations than Australia and have dealt with it through an equitable distribution of wealth generated through productivity gains.”
Professor Ian Hickie was on the same page with Dr Buchanan saying, “Ageing is not the central issue for Australia’s economic and social future.”
“Health status is the critical determinant of individual productivity. For modern economies, it’s what’s in your head that really matters – that is, your cognitive and behavioural resources. It’s your mental health and brain capacity that determine your capacity to work and be productive.”
We need to prepare for an older workforce
“While mature workers can be a real asset in the workforce, many workplaces currently do not consider promoting the health and safety of older workers,” Dr Martin Mackey pointed out.
“If workers are to be encouraged to extend their working life beyond current retirement age, employers need to structure working conditions to match the health and physical capacities of older workers, particularly for those in manual work.”
Associate Professor Leanne Cutcher echoed Dr Mackey saying, “If the Intergenerational Report is to have the impact that the government, policy makers and employees of all ages are hoping it will, then it is business that needs to take the lead in re-imagining careers, shifting to an age-inclusive culture and establishing the organisational structures whereby people of all generations can work with, for and alongside one another.”
What is the way forward from here?
Check out this talk given on the Challenge of Change website by famous science commentator, Dr Karl on the challenges and opportunities for Australia based on the 2015 Intergenerational Report.