Australia facing a brain drain as baby boomers retire, youth unemployment remains high: AMP.NATSEM Report

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1 16 November 2014 Public Affairs Tel: Website: AMP.com.au/media AMP_AU Australia facing a brain drain as baby boomers retire, youth unemployment remains high: AMP.NATSEM Report Australia is facing a brain drain as a massive wave of skills and experience exit the workforce with retiring baby boomers, while youth unemployment is 4.5 times higher than the rest of the working age population, according to the latest AMP.NATSEM Income and Wealth report. AMP.NATSEM: We can work it out Australia s Changing Workforce looks at how Australia s workforce has changed over time, unemployment across Australia and compared to other countries, incomes and gender structure of the workforce. With the baby boomer generation moving into retirement the proportion of older people, those aged 65 and over, will rise to nearly a quarter of the population, from 13.5% to 22.7% in 2050, taking valuable skills, knowledge and experience from the workforce. At the same time, the youth unemployment rate, those aged 15 to 19 looking for full time work, is 4.5 times more than it is for those aged 20 and over, at 27.2% compared to 6.2%. AMP Chief Customer Officer Paul Sainsbury said the AMP.NATSEM report showed the challenges of Australia s workforce was two-fold. People over 65 are projected to make up nearly a quarter of the population in the future. As older people leave the workforce they will take with them skills and experience, while many young people are struggling to find work. As a consequence, it might mean that younger people are not getting the experience they need to do these jobs in the future. The report highlights the challenges of an ageing population. With lower birth rates and much longer life expectancy, it is critically important for people to adequately plan for their future so they not only enjoy a comfortable retirement, but also Australia remains prosperous as the workforce composition changes, Mr Sainsbury said. The report also finds the representation of women in the workforce has shifted significantly. These days women are the majority in four out of eight occupation groups measured by the Australian Census, compared to only two in 1991 and one in Key findings: AMP Limited 33 Alfred Street Sydney NSW Australia ABN AFSL

2 Australia facing a brain drain as baby boomers retire 2 Challenges of an ageing population The baby boomer generation is moving into retirement, with the proportion of older people, those aged 65 and over, expected to rise to nearly a quarter of the population by 2050, jumping from 13.5% in 2010 to 22.7% in This will see a significant depth of skills, knowledge and experience move out of the workforce. Australia s fertility rate below replacement level Australia s fertility rate is below replacement level, meaning the proportion of working age people is forecast to drop to 60% by 2050, down from 67.4% in Youth unemployment The youth unemployment rate, those aged 15 to 19 who are looking for full time work, is 4.5 times more than it is for those aged 20 and over. More than 75% of young people work part time, more than double those aged 20 and over. International employment comparisons Australia is in the top 10, at 6%, when it comes to low unemployment. This is significantly lower than many other countries, particularly parts of southern Europe where unemployment rates above 10% are common, including Spain (24.5%) and Greece (27.3%), meaning a quarter of their workforce is unemployed. Increasing female participation in part time work Part time employment is increasingly important with around 30.7% employed part time. The large increase in female participation is a key driver of part time employment with female participation increasing from 52% to 61% between 1991 and Significant structural change Australian occupations have changed significantly over the past 100 years. Primary producers, such as farmers, accounted for the highest proportion of the workforce in 1911 at 30%, while today they make up just 1.3% of the workforce. By contrast, in 1911 only 7% of workers were classed as professionals, whereas today they make up nearly a quarter of the workforce (22%). Incomes across industry Workers in mining have the highest salaries, with a median income of $2134 per week. This compares to workers in agriculture, forestry and fishing who earn $761 per week, and reflects the change in demand for occupations such as farming and fishing. Incomes by occupation Looking at incomes by occupation, professionals top the list with a median income of $1546 per week, with labourers having the lowest weekly median income at $892 per week. State by state Across Australia, Tasmania has the highest unemployment rate at 7.1%, compared to the national average of 6%. NSW has the highest income earners in the country, in the Sydney suburbs of Darling Point, Edgecliff and Point Piper, while Western Australia is home to the second highest income earners, in the Perth suburbs Cottesloe and Peppermint Grove. Professor Robert Tanton, of NATSEM, said: The report shows significant change over the years resulting in a very uncertain workforce. Young people are facing difficulties gaining employment due to changes in technology, tougher economic conditions and increasing requirements for qualifications, while older people are retiring and taking skills, experience and knowledge with them, Mr Tanton said.

3 Australia facing a brain drain as baby boomers retire 3 Since 2002, AMP and NATSEM have produced a series of reports that open windows on Australian society, the way we live and work and our financial and personal aspirations. AMP publishes these reports to help the community make informed financial and lifestyle decisions and to contribute to important social and economic policy debate. Download a full copy of the report at: Media enquiries: Renae McGregor Ben Phillips AMP NATSEM, University of Canberra Ph: Ph: Mob: Mob:

4 Australia facing a brain drain as baby boomers retire 4 Appendix AMP.NATSEM Report: We can work it out Key charts Source: Commonwealth Treasury, 2010 Source: ABS (2014a)

5 Australia facing a brain drain as baby boomers retire 5 Source: ABS (2013d). Income is Total Personal Gross Weekly Income from all sources. Source: ABS Census 2011

6 Australia facing a brain drain as baby boomers retire 6 Source: ABS (2014a) Source: ABS (2014a)

7 Australia facing a brain drain as baby boomers retire 7 AMP.NATSEM Report: Australia s changing workforce - Infographics