I was sent the below chart showing how workforce ageing has reduced the US’ labour force participation rate by around 3.5% since 2008.
This population ageing effect is largely responsible for the plunge in the overall 16+ participation rate from around 66% to 62.25% over the same period:
In the wake of this data, I decided to examine Australia’s labour force participation rate (LFPR) to ascertain whether population ageing is having a similar impact here. And the short answer is a clear “no”.
As shown in the next chart, Australia’s overall 16-64 LFPR hit a record high 80% in the year to September 2022:
In fact, every age group other than 15-24 year olds are experiencing record high (or near record high) LFPRs:
Even the 65+ LFPR, shown on the right axis above, was tracking just under its record high level in the year to September 2022.
An analysis of employment-to-population ratios (EPR) shows similar results, with Australia’s 15-64 EPR at a record high 76.8% in the year to October:
Likewise, every age cohort other than 15-24 year olds are experiencing record high (or near record high) EPRs, including over 65s (shown on the right axis below):
In short, Australia’s labour market has dodged the ‘ageing bullet’, which also helps to explain why wage growth is so much softer in Australian than other advanced nations.
Australia is not experiencing the same degree of labour shortages as elsewhere because such a high proportion of our population is working.
