Demographic Future Australia Ageing Population Baby Boomers Retiring
“From the Business Spectator ‘Australia’s irrevocable, inevitable growth challenge’. Australia’s labour market participation rate has fallen sharply over the past few months and is now at its lowest level in seven years. But that pales by comparison with the expected decline resulting from ‘baby boomers’ retiring and the population ageing.
The participation rate – the share of working age population in the workforce – is a key measure of labour market and economic health. Since peaking towards the end of 2010, the participation rate has declined by 1.2 percentage points to be at its lowest level since October 2006. Part of this is a reflection of weaker labour market conditions, transitional industries and a non-mining sector that could generously be characterised as subdued. But there is also a longer-term trend pushing the participation rate down: an ageing population…
…With the possible exception of climate change, the ageing population is the biggest economic challenge that the country faces over the next few decades. The best way to mitigate the problems of an ageing workforce is to increase the fertility rate, boost migration or raise the retirement age. But the reality is that Australians will have to accept lower growth, productivity and standard of living.”
The demographics growth challenge. By Leith van Onselen. ‘After spending the better part of three years warning about the adverse consequences of Australia’s ageing population, it’s good to see Business Spectator’s new economics writer, Callam Pickering, take up the mantle…
… I agree with everything that Pickering has said, except for the suggestion that increasing immigration will help mitigate the ageing conundrum. Immigration only helps to delay population ageing by pushing the problem onto future generations (whilst creating potential problems in other areas). Indeed, when the current batch of migrants inevitably grow old and retire, Australia will find itself in exactly the same position, with policy makers once again seeking to kick-the-can down the road via more immigration.
Ultimately, the best way to alleviate pressures from an ageing population is to: 1) seek out policies that boost Australia’s productivity; and 2) expand labour force participation (e.g. by raising the retirement age). But even with concerted action in these areas, Australia’s employment-to-population ratio will continue to decline, lowering growth and living standards in the process.’
Good examples of how definitions of immigration and population are conflated and confused, i.e. making no distinction between permanent immigrants and temporary residents included in the net overseas migration NOM (or ‘churn’) then included in estimated resident population.
Media in Australia appear complicit in the negative exaggeration of immigration and population growth (while confusing and conflating definitions) popular with ‘nativists’?
Why is this important? Temporaries, being international students, 457 temporary workers and 2nd year backpackers, have very different behaviour and effects versus long term permanent residents and citizens (inclusion of international students in NOM data has been described as a ‘statistical anomaly’ in UN definition).
They are temporary with limited rights and majority will leave without drawing upon benefits e.g. unemployment benefits, aged pension, etc.; although paying taxes (if working), high fees (if student), spending on accommodation, food, services thus contributing to the economy.
Further, elephant in the room for Australian working age population is the prevalence of obesity, diabetes and other health issues, one issue of many to be faced by an ageing population expected to work longer…..
Meanwhile The Economist explains the benefits of temporary residents to the economy, and debt:
‘Immigration A fresh headcount Why a new wave of migrant workers could help sustain Britain’s recovery. …..A final reason to welcome foreigners is the debt burden, which will exceed £1.5 trillion by 2015. Spread across natives alone, the bill runs to £28,650 per person. But divvied up across Britain’s immigrants too the load lightens to £21,800.
If the current pattern—lots of immigration, lots of churn—continues, many of the Bulgarians and Romanians who arrive will return home before their fiscally costly retirement years. They will not cure Britain’s debt hangover, but should help ease it.’