Tuesday, January 31, 2011

Baby boomers turning 65 not as dire for labour market as previously thought

The first of the baby boomers are turning 65, which is having a profound impact on the labour market. The Treasury’s 2010 Intergenerational Report assumed that the ageing population would cause the labour force participation rate to track along at just above 65 per cent until about 2017 and then start declining. But recent analysis by leading industry analyst and economic forecaster, BIS Shrapnel, shows that this view is now too pessimistic.

According to BIS Shrapnel’s Long Term Forecast Update, the participation rate will increase once demand for labour picks up later this year. It will continue to trend upwards, peaking just after the middle of the decade, before returning to its current level by the middle of the next decade.

Contact: Tim Hampton