Facts about mature age employment - Manufacturing Industry

Australia's economy is in a very strong position . The outlook for 2005-06 is for continued growth (at 3 per cent), low unemployment (near 5 per cent) and inflation remaining within the target band (around 2½ per cent). The Government is committed to reduce the effect that ageing will have on our economy by maintaining high rates of productivity growth, further increasing rates of workforce participation, and investing wisely to address future pressures on the budget (2005-06 Budget Overview).

Australia's population is ageing as a result of declining fertility and mortality rates. Over the next 40 years, the proportion of the population of working age will decline, while the proportion of Australians aged 65 or more will almost double, to 25 per cent (The Australian Government, Intergenerational Report, Budget Paper no. 5, May 2002).

What does this mean for business? Please see over for your own industry's statistics. The potential supply of mature age workers will grow rapidly in the years ahead while the supply of younger workers will contract in relative terms. The working age population currently grows by 180,000 a year, but it is expected to grow by only 175,000 for the entire 2020 decade. "Unless demands adjust accordingly, organisations will be paying a premium for youth" (Access Economics, unpublished data 2004).

As shown in the graph below, in Australia now the labour force participation rate falls very strongly after age 50.

Labour Force Participation

        Source: ABS Labour Force Survey, November 2005.

What does this mean for business and Government? If we stem the decline in labour force participation for mature age workers, business, and the economy as a whole, will be better prepared to meet the demand for labour in the future. If the workforce participation of Australians aged 55 to 70 increased by 10 percentage points, this would largely cancel out any negative effects of an ageing population (Access Economics, Population Ageing and the Economy, January 2001, p36).

Why employ mature age people?

Given the trends in the age of Australia's labour force, it makes good sense for businesses to retain, and recruit, mature age workers. Mature age employees, as part of a diverse workforce, also offer businesses many benefits. For example:

• Retaining mature age workers can mean retaining productive workers who are familiar with the organisation's customers, products and systems (Access Economics, Population Ageing and the Economy , January 2001, p4).
• Mature workers carry the "corporate memory" of an organisation, which is the product of a long-term investment in training and experience. This corporate memory may be difficult (and time consuming and costly) to replace when the person leaves.
• Mature age workers have a lower turnover than younger workers (saving the costs of recruitment and training new employees).
• Mature age workers have characteristics that managers' value - they may be more loyal and have a stronger work ethic (Access Economics, Population Ageing and the Economy, January 2001, p14).
• As Australia's population ages, so will the customer base of Australian businesses. It makes sense to match staff with this changing demographic profile by employing mature age workers (Access Economics, Population Ageing and the Economy, January 2001, p10).

Manufacturing Industry

Employment in Manufacturing (the third largest employing industry with 1,073,900 workers) fell by 84,200 (or 7.3 per cent) over the five years to May 2005. Food, Beverage and Tobacco Manufacturing was the only sector to record an increase in employment over the five years up 19,200. Future growth in Manufacturing output is expected, but productivity gains and contracting-out of services will limit job gains. Manufacturing contributes to job opportunities in many other industries and, importantly, to Australia's exports and economic growth. In November 2005, 36 per cent of those employed in Manufacturing were aged 45 to 64 years, only slightly higher than the 35 per cent employed in all industries.

Total Employment

Cultural and Recreational Services

Source: ABS Labour Force Survey, November 2005.

Skill shortages in Manufacturing are mainly for Trades occupations and there are skill gaps - some workers have appropriate formal qualifications, but not the up-to-date technical and/or employability skills needed in an industry facing the pressures of international competition. Good job prospects exist for several occupations in manufacturing, including Safety Inspectors, Forklift Drivers, Sales Representatives and Cabinetmakers.

Compiled by:

Mature Age and Youth Policy Branch
Department of Employment and Workplace Relations