Popular fears that a horde of elderly and dependent baby boomers will soon be sucking the life out of an ever-shrinking younger workforce are being dismissed by a top economist, who says older Kiwis are staying at work in record numbers.
Kel Sanderson, managing director of Business and Economic Research Ltd (Berl), has taken a closer look at census data and found a dramatic increase in the number of older New Zealanders continuing to work.
If proved correct, his projections of more older people staying in their jobs could have profound effects on our economy. The Government's Super Fund and conservative stockpiling of surpluses could prove unnecessary.
"No doubt such a view supports cause for the banks and the Reserve Bank to increase their forecast consumer price index (and interest rates), and the Treasury to project falling fiscal surpluses and difficulties funding infrastructure investment," he says.
Sanderson thinks alarm at what one newspaper describes as the "grey tsunami" is overstated and needs serious rethinking.
He is challenging the premise of "dependency ratios", which have so far assumed that people aged over 65 are dependent on others in the workforce. His census study shows a rapid increase in the number of older people staying at work.
"The number of 'dependants' - those not working or looking for work - when compared with those working is not rising, in fact it's falling. This means that despite the baby-boomer generation about to hit their mid-60s, the supposed burden on younger workers will get less, not more."
Rather than looking at age, Sanderson studies the people not working - which he counts as everyone under 15, plus everyone over that age "not in the labour force". This second group includes parents at home looking after children, students and elderly people who no longer work.
Unemployed people are included in the labour force because they are available for work.
Sanderson accepts using "dependency ratio" is not necessarily the best way to describe things because it includes mothers at home with children. He has coined a new phrase - the "Labour Force Support Ratio". This is the number of people supported by each 100 in the labour force. Anyone working for "more than one hour a week for monetary reward" is included in the workforce.
That number peaked in 1991 when, for every 100 people in the labour force, 107 were not.
It has been steadily declining since. The 2006 census showed just 86 dependants for every 100 people in the workforce.
Sanderson's projections show this decline continuing well into the future. By 2016, he expects this ratio to fall to 78 dependants for every 100 in the workforce. A further projection to 2021, has the ratio around 78 or 79.
"The popular press and some policy groups in New Zealand draw the self-evident assumption that in future the economy will come under high stress as baby boomers reach 60, [the] age of retirement. Then there will be a grey tsunami swamping the declining number in the labour force," says Sanderson in an article published late last year. The baby boomers have been turning 60 from about 2005-07 but are simply not retiring at the same rate, he says. In 1991, 25 per cent of those aged 60 to 64 were in the workforce. Now that number is more like 65 per cent.
"The baby boomers are no less willing than their Kiwi predecessors to continue working through the 60- years-old retirement barrier and into older age," he says.
The participation rates have been increasing since 1991, although the strongest increases have been from 2001 to 2006. This is an average annual compound rate of increase of 8.5 per cent, very high when compared with a 1.2 per cent annual population increase between 1991 and 2006.
And it's not just a move towards part-time work that's driving the change because the rate of part-time workers in the older age groups is relatively unchanged.
"In 1991, 44 per cent of those aged 65 to 74 working were employed part-time, and despite the trebling of the number employed by 2006, still only 46 per cent were part-time. Thus, there has not been a substantial change in the share of older people who are working part-time."
"So the dependency rate tide will continue going out, and there is nothing in the evidence to expect a grey tsunami with attendant negative consequences, at least not in New Zealand," says Sanderson.
Brien Keegan, business manager of Link Recruitment's Auckland office, says the greater number of older people working means that, for the first time, workplaces have three generations employed - the "baby-boomers" alongside "Generation X" and "Generation Y".
"Companies are becoming more aware of employees who've got a bit more experience under the belt," says Keegan. "What companies need to do and think about though is that these people are often looking for a more flexible working environment.
"We see a lot of people who are either returning or looking for a change in the workforce.
"They have got great skills and experience but may only want to do two or three days a week. So I think, from that point of view, companies need to be a bit more proactive in hiring people with that kind of remit."
Asked if employers are being somehow forced into hiring more older workers because of a shortage of younger people, Keegan says he doesn't think so.
If anything, they are seeing the value that older people can bring to their workforce, he says.
The "brain drain" of people going to Australia needs to be put in context, says Keegan, since one-quarter of the total is children.
Each generation brings its own skills, says Keegan, but organisations may need to be more savvy about integrating older people into their team culture.
"We often see people who retire, or retire early, miss the social contact from the workplace."
Whatever economic factors come into play this year - falling house prices and rising interest rates among the most topical - the outlook for job hunters is as positive as ever.
A report by recruitment firm Manpower Employment says that of the 953 employers it spoke to, 24 per cent intend to hire more people during the first quarter of this year.
A massive 72 per cent predict no change in staffing levels at all, while just 4 per cent anticipate their workforce will fall this year.
A year-on-year comparison shows a 2 percentage point improvement in the current net employment outlook.
The just-released Hays quarterly forecast also shows where the hot job spots are. And it shows there will be a definite upswing in permanent vacancies in the coming months.
"The shortage of experienced skills means solid candidates will be snapped up with speed this year, and provided jobseekers know what they want and why they want it, the year will provide prime opportunities to advance your career," says Jason Walker, regional director of Hays in New Zealand.
He says most vacancies are as a result of staff departures, which is a common trend at this time of year.
But he says new jobs are still being created because of extra headcount requirements or restructured roles.
Just like last year, Walker says employers are moving quickly once they get a good candidate in their sights.
"Good candidates will continue to receive multiple offers of employment," he says.
But job hunters can't rest on their laurels, says Walker. Plenty of firms are looking abroad to fill their vacancies.
"In light of the ongoing demand for staff, many employers are proactively searching for talent overseas," he says. "Large employers are competing not only with other organisations locally, but also with international companies for the limited supply of candidates."
- Steve Hart