And older
Growth in the proportion of elderly New Zealanders is
expected to quicken after 2011, when the large birth cohorts
of the 1950s, 1960s and 1970s enter their sixth and
subsequent decades of life.
The OECD is projecting that over the next 25 years, around
70 million people will retire in OECD countries to be replaced
by just 5 million workers – a reduction in the working-age
population of 65 million. This contrasts with the past 25
years when 45 million new pensioners were replaced in the
workforce by 120 million baby boomers.
A consequence of the reduced domestic supply of workers
in OECD countries is that migration policies generally will
become more open, making it more difficult for New Zealand
to attract skilled migrants and to retain its own skilled people.
The ageing population will change the nature of work
Labour-market dynamics will be affected by the increasing
average age of the workforce, the smaller size of entry
cohorts, and an increasingly global market for labour and
technology. If we are to produce a workforce that has the
education, skills and talent required to compete effectively in
a global economy, we will need to encourage new modes of
work, new organisational forms and life-long learning.
Pressures in the labour market are likely to increase the
incentives and demands for women to be in paid
employment. Unless workplace conditions are responsive to
families, this is likely to exert further downward pressure on
fertility, accelerate the process of population ageing, and
further reduce the size of the future workforce.
These trends mean the “quality” of our young people will be
paramount if they are to fully participate in society and the
economy and so meet the challenges ahead. Looking
towards the labour market of the 2010s and 2020s, we need
to ask whether we are doing enough to ensure that this
relatively small group of new workers is fully prepared.
We have a window of opportunity
Because of a birth rate that is relatively high compared to
other OECD countries and an increase in births around 1990
(the “baby blip”), New Zealand has a window of opportunity
to address potential problems arising from the population
dynamics outlined here.