Keep on keeping on: predicting who will be able to work until they are 70 years old

Schofield, Deborah, Shrestha, Rupendra, Cunich, Michelle, and Callander, Emily (2016) Keep on keeping on: predicting who will be able to work until they are 70 years old. Report. University of Sydney, Sydney, Australia.

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Abstract

[Extract] The Federal Government announced in its 2015 budget that, in addition to increasing the age of eligibility for the Age Pension to 67 years by 2023, it plans to further increase the age of eligibility to 70 years by 2035[1]. The economic drivers for this policy were emphasised twelve months earlier in the National Commission of Audit Report (2014):

Once the impacts of an ageing population and expected lower growth prospects in the longer term are taken into account a growing fiscal gap will emerge at all levels of government across Australia if current expenditure and revenue policies remain unchanged.… Today we have five people working for every one retired person, by 2050 we will only have 2.7[2].

Justification for increasing the age of eligibility for the Age Pension has centred on increasing longevity and related costs of pension payments and health and aged care. Treasury’s 2015 Intergenerational Report (IGR) highlighted this point, stating: “A greater proportion of the population will be aged 65 and over. The number of Australians in this age group is projected to more than double by 2054-55 compared with today” and thus the Government has also implemented policies to increase the labour force participation of older Australians[3]. However, the capacity of people to work until the age of 70 not only depends on the availability of incentives and employment opportunities but their health capacity to do so. Although the Australian population is living longer, there is evidence that they are not a healthier population (Productivity Commission report on An Ageing Australia, 2014)[4].

We estimated there are 512,700 people aged 65-69 years who will be in the labour force. Of these, 500,600 are projected to be able to keep working until the age of 70 (312,600 in full-time and 188,000 in part-time) and 97,700 who will not be able to work due to their ill-health. We also estimated the effects (and ranking) of the individual’s main chronic condition on their probability of participating in the workforce, where arthritis, back problems and other diseases of the musculoskeletal system were the top three conditions that would keep most people out of the labour force.

The fundamental role of health in enabling labour force participation has, and will continue to be, a key concern for policymakers. For example, the Council of Australian Governments’ (COAG) current agenda for human capital and mature-age employment states that: “The foundation of the nation’s human capital is the health of its people. A strong economy requires a healthy current and future workforce”[5]. The current project provides much needed information about how many people will have the health capacity to work beyond the age of 65.

Item ID: 49753
Item Type: Report (Report)
Related URLs:
Funders: IRT Research Foundation
Date Deposited: 13 Sep 2017 04:48
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140208 Health Economics @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910209 Preference, Behaviour and Welfare @ 50%
92 HEALTH > 9204 Public Health (excl. Specific Population Health) > 920408 Health Status (e.g. Indicators of Well-Being) @ 50%
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