Louise McGrath (00:13):

Welcome back to DBrief, a podcast where we explain policy to industry and industry to policymakers. I'm Louise McGrath, Head of Industry Development and Policy at the Australian Industry Group, and I'm joined today by Jeff Wilson, Head of Research and Economics. Welcome, Jeff.

Jeffrey Wilson (00:18):

Thanks, Louise.

Louise McGrath (00:20):

And Jeff's here to discuss two recent research reports covering how our workforce is ageing and what that means for retirement plans, and how both are affecting industry.

Louise McGrath (00:39):

Regular listeners may recognise a theme here, from apprentices to Asian-literate workers — we're spending a lot of time thinking about workforce planning and what our Members need to meet the challenges of a digitised, decarbonised and diversified economy. Jeff, when people hear the phrase "ageing workforce", many think it's a future challenge, but your research suggests it's already reshaping the labour market today. What's the single most surprising finding from these reports?

Jeffrey Wilson (00:58):

Thanks, Louise. So what we've done with this is try to have a look at some aspects that happen at the end of working lives — particularly as workers age, getting towards the end of their careers, and then how that transition to retirement process works. We'll talk about some of the numbers in a second, but probably the big thing in this story about ageing and retirement is how important that end-of-working-life phase is for our industry, the economy and the labour market.

As you mentioned, when we normally think about things like skills shortages or workforce planning, it's often at the start of the process — there's a discussion about people going through education and training, how we get young people successfully into the workforce. With a bigger focus on gender in recent years, there's also been a particular look at women and what happens in midlife for women, particularly when caring responsibilities knock people out of the workforce, which has earnings and various other implications. But as the population gets older, what's going on at the end of the process is becoming a more important part of the picture. Older workers are a greater share of the workforce than ever, retirement's changing dramatically, and it's just as important to think about the exit as the entrance point when we're thinking about the workforce that industry needs for everything we talk about on this podcast that we're aspiring to in Australia.

Louise McGrath (02:24):

And given how strong superannuation has been in the Australian workplace for such a long time now, do you think Australian businesses are underestimating how quickly this shift is happening?

Jeffrey Wilson (02:35):

They are. Population ageing, like most demographic trends, is slow and steady — it's not something that swings up and down dramatically year to year, we just get a little bit older every year. But there are some big changes — how people are retiring around their super, access to pensions, what's happened during COVID with people staying in the labour force longer — that mean some of these things are a little bit of a wave that's just about to crest. We're about to have the first full superannuation generation retiring — people who've been in compulsory super since it started — and I think this is going to change quite dramatically. Business really needs to think about that cradle-to-grave sense of their workforce, not just the "in", but as this wave goes out, what are we doing across the whole stack?

Louise McGrath (03:24):

And as you say, these things start slowly, then suddenly. So what's happened to the age profile of Australia's workforce over the past generation?

Jeffrey Wilson (03:33):

Yeah, and this is probably the big headline number — how aged is the workforce? About a generation ago, back in the early 90s, one in six workers in Australia was over the age of 50. We use over the age of 50 because while people think of the retirement age as being 65, a lot of people — particularly historically women — have retired younger than that. So apologies to any over-50 listeners, but you're an older worker for these purposes. It was about one in six a generation ago, and over that time it's now increased to about one in three today — about a third of the workforce.

There are two things going on there. One is just that Australia's population is ageing, and that means everyone gets a bit older. But we're also seeing not just that there are more older workers, but that they're participating more — people are retiring later and extending their working lives, potentially working more hours later in life rather than retiring in their late 50s. So we've got an ageing thing in Australia, but we've also got a workforce where people are able to work more and for longer because of a lot of the changes we've seen in industry over the last 30 years.

Louise McGrath (04:55):

And both these reports have got a lot of really rich data, but the one finding that really stood out for me was the dramatic increase in workforce participation among older women. How significant do you think that shift has been?

Jeffrey Wilson (05:08):

This has actually been one of the major drivers of ageing — not just this story, but women's participation generally. Unfortunately, for a lot of history, women have left the labour market really early. There were points a generation ago where women's retirement age was 54 — a good decade before what people thought of as the standard retirement age. That was associated with a lot of things, like women leaving the labour market when they had kids and never really getting back in in a full sense. But what we've seen over the last few years is a real uptick in women at older age groups staying in the labour market for much longer. One statistic I'd point out is women between the ages of 60 and 65: back in the year 2000, only 20% of women in that age group were in the labour market. Today the number's 55%. A lot of that comes down to changes in flexibility in the labour market that have let women stay much longer than they had before.

Louise McGrath (06:13):

And has the experience been universal? I don't think all industries are ageing equally — are there particular sectors where the challenge is becoming especially acute?

Jeffrey Wilson (06:23):

We do have some ageing "hotspots" in Australia. These are often associated with traditionally male roles in the workforce, particularly in industrial jobs that have been steady for a fairly long time. We see a lot of this in areas where Australian Industry Group Members are very active as well — manufacturing, construction, utilities, road transport. For your pop quiz: the oldest-aged workforce in Australia is truck drivers. There's also another ageing hotspot in government sectors — particularly public service and public administration.

At the other end, we've got some very youthful industries. Healthcare and social assistance — which includes aged care and childcare — the education industry, and other "young person" industries like accommodation and food services stand out, largely because these are growing large industries with a lot more entry points for young workers.

The other one I'll leave you with is construction, which is a bit of a young person's hotspot. A lot of this is to do with the manual nature of construction jobs — if you think about a building site, there's a lot of physical movement, it's not been prone to automation. Bricks still have to be carried to the top of the house; someone has to literally do it. So construction is, to some degree, a young person's job — a lot of young people go into the industry, but when they hit middle age they often shift into another, less physically demanding industry rather than retiring outright.

Louise McGrath (08:12):

I was thinking, when you were talking about manufacturing, those workplaces have become increasingly safer, which makes it easier to support an older workforce. Now, your second report challenges some long-held assumptions about retirement. What's changing about the way Australians leave the workforce?

Jeffrey Wilson (08:30):

Historically, retirement was a bit of a one-off transition for a lot of people. You'd work and work, probably for as long as you could, and then one day you'd retire and that would be it. One of the really interesting things that's been changing is the way retirement has become much more of a planned, gradual process — thinking about flexibility, transitioning to part-time work, changing jobs to keep a working life going, like moving from a physically demanding role to a less physically demanding one. Retirement is far less "working, then not working" than it's been traditionally — it's become a more flexible process, with real thinking about how we keep workers engaged in the labour market in the right job, in a way that sustains them, rather than just doing the job for life and dropping off at one point.

Louise McGrath (09:40):

I was actually speaking to an older woman who has finally retired, but she admitted she'd had three goes at retiring, and three retirement parties.

Jeffrey Wilson (09:53):

[laughs] Been a terrible retiree — but obviously well loved, given three separate parties. I think this reflects another statistic that jumped out at us: half of older workers don't actually have a clear retirement plan.

Louise McGrath (10:08):

So why does that matter for employers, do you think?

Jeffrey Wilson (10:11):

This was one of the most interesting things we discovered doing this research, and I'm not sure it's been pulled out of the data by anyone before. We were looking at how many people were going to retire soon, to help different industries understand how many, say, manufacturing or healthcare workers will be retiring, and what should be planned for. And something that struck us was that the most common answer about retirement plans was "I don't have a retirement plan". Another very common answer — the second most common among over-65s — was "I never intended to retire". I'm just going to keep going until I can't.

I think in earlier parts of the labour market, particularly for industrial and manual workers, there was more of an agreed retirement age — my father and grandfather got to 62, the company gave them a watch, and that was it. You knew when you'd retire. But as retirement has become more complex and flexible, it's more up for grabs — financial circumstances have changed too. It used to be you'd get to retirement age, retire, and go on the old-age pension; you knew what retirement looked like. Now there's superannuation, house prices, care responsibilities and more, and it means about half of people in the zone for retirement — those over 55 — don't have a retirement plan, don't know, or aren't intending to, which we'd suggest is probably unrealistic. Most people are going to retire.

So the challenge for employers is that if a third of your workforce is over 50, a large share of that workforce doesn't have firm ideas about what their remaining tenure looks like — and there's a risk of unplanned retirements. People might need to leave because of changing personal circumstances, caring responsibilities, or health issues, without ever really getting to plan for that transition. It's a challenge for employers from a workforce-planning point of view, but also a challenge for employees — to have a good retirement, you want to work out your financial and life situation ahead of time. If you don't have a plan, a plan might get made for you by circumstance.

Louise McGrath (13:11):

And if I think of who's done it well — Tracy Brown, one of our dear colleagues at Australian Industry Group for a very long time, recently retired in July. Three years ago she told me that was her date, and she worked out her succession plan, onboarded new people, made sure corporate knowledge was passed on — it was really gold standard. But it's clear from your research that many retirement intentions are often inaccurate, particularly for workers under 60. Why do you think people are so poor at predicting when they'll leave the workforce?

Jeffrey Wilson (14:12):

This is a challenging one. We ran a natural experiment with the data — we turned the clock back five years, asked people when they thought they'd retire, then tracked that cohort forward and measured how many actually did. The interesting finding was that for roughly every person who thought they'd retire in the next five years, almost two people actually did — which says there's a lot of unplanned retirement in there, people without a plan who then have something happen — life, work, whatever — and they have to go.

But age 60 seemed to be the point where predictions got accurate. Under 60, things were very unsure; once people reached 60, their retirement guesses became nearly one-to-one accurate. I think there's a bit of a psychological effect — a lot of people treat their 60th birthday as a life-transition moment. There's also the system: in Australia, the preservation age for superannuation is around 60, the age pension age is 67, and you need to start lining up your affairs. So as the financial system's got more sophisticated — superannuation, pensions, part-pensions, housing — it's forcing people, once they hit their early 60s, to actually make decisions and come up with a plan. Before that, most people just haven't thought about it. A good number of people do retire earlier for lifestyle, health or family reasons, but we'd like to see everyone more engaged with the question earlier.

Louise McGrath (16:29):

Yeah, I've had a few people over the years retire, and I think sometimes something new happens in the industry, there's change, and they just think, "I'm done — I'm not going to learn one more new thing."

Jeffrey Wilson (16:43):

[laughs] "I can't do this next one, no."

Louise McGrath (16:46):

And I also think when partners have retired — if someone's partner has retired, that's when I'm alert. Because often there's travel, extra coffees... I think, yeah, it would be nice! Anyway, we'll have a break now, Jeff, and then come back and think about the new economics of retirement.

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— Break —

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Louise McGrath (17:22):

Welcome back to DBrief, where I'm speaking with Jeff Wilson about two new reports from the economics team — one on ageing workforce, the other on retirement factors. Jeff, historically retirement was often linked to health or lifestyle factors, and your report suggests financial considerations are becoming increasingly important, with change afoot in the tax settings too. What's driving the change for people as they consider retirement?

Jeffrey Wilson (17:48):

There are two things going on, Louise — a big story about the financial system, and another about gender differences.

On the financial side, a lot of this is due to the introduction of compulsory superannuation in Australia in the mid-1980s. We're just getting to the point where the first generation who came through a full compulsory superannuation system — since they started working out of high school — are coming up to retirement. That's been a really big change for household finances. Prior to that, retirement was mostly about the value of your house, your savings, and the old-age pension — a fairly straightforward transition once you qualified. But with the introduction of super, a lot of this generation's retirement is now driven by their superannuation, and there's a lot more complexity: how much have you made, how's it invested, do you take it as a lump sum or a part pension, how does that intersect with the rest of your finances? So when we look at people's declared retirement intentions, financial security is now the number one consideration by a long way. Pension access has become less important, and so has health.

Health issues — people retiring because they can't keep doing the job, or get sick — have become less important partly because people are ageing healthier than in the past, and partly because of more automation in industry, so fewer people are stuck in physically demanding jobs that force retirement. My grandfather retired because he couldn't go up a ladder anymore — he'd been up too many times.

But there's a big gender difference in that top-level story. Women's retirement decisions are heavily driven by family dynamics — a partner retiring, caring responsibilities, which increasingly late-middle-aged women take on for elderly parents, and job stress is another commonly cited factor. For men, it's more traditional and individually focused — financial security, when and how much super they'll get, declining interest in work, and a desire for more leisure time. Men are also much more likely to say they never intend to retire — the "over 65s working forever" group — which probably connects to professional and personal identity being tied up in work. So retirement's become more of a financial and less of a health or pension-age consideration, and we're seeing real gender differentiation in why men and women make that choice.

Louise McGrath (21:39):

I was speaking to a Member about this recently, and they were conscious they had a lot of people with no intention of retiring, and were trying to help them imagine life without work — bringing in things like men's sheds and volunteer opportunities to help break down some of the mystery. It's an important succession-planning issue for companies. We often talk about labour shortages — do you think there's a risk that a wave of retirements deepens skill shortages in certain sectors?

Jeffrey Wilson (22:19):

Probably in those areas we mentioned with a more aged — and often more male — workforce. The biggest risk across the whole country, for me, would be the road transport industry, particularly truck drivers. It's the most aged workforce in Australia, highly male-dominated, and has a relatively young effective retirement age because it's a physically demanding job to drive a truck for a long time. There'd be a reasonable expectation that around 1.5% of the workforce retires in any given year nationally — that's much higher in road transport because of those particular features, so there's a big issue there around refreshing that workforce. You see similar patterns in other traditional, often male-dominated occupations that are getting older.

The other issue that comes up in the context of skills and training is the need for that workforce to train younger people. Businesses taking on apprentices is a big story, but you need supervisors who can manage apprentices and sign off on their work — and that's often someone getting close to retirement themselves. So when you lose these people, you don't just lose them as a worker, you lose them as a trainer who can run that shop-floor training process. That might be one of the biggest risks — not just losing the worker, but losing the trainer.

Louise McGrath (24:09):

I do think sometimes there's a hesitancy to have people working alongside each other with a 40-year age gap — that's two generations. Speaking with companies, they do think, "how can we bridge that?" It can work really well if it's done well, but it is a bit of a challenge for some.

Jeffrey Wilson (24:29):

I'm a big believer in intergenerational workplaces — it is an opportunity. When we think about transition to retirement, there are big questions about whether someone can go part-time to keep working, say three days a week, and there's flexibility in some workplaces that can make that hard for certain jobs. There's also a qualitative question of what you're doing — in industrial jobs, are you on the tools or helping other people who are on the tools? It's about more than just part-time hours or accessing your super — it's about what that means for someone's identity in the workplace, in a way that a generation ago just didn't come up: you hit 62, you were done, and you stopped going to work one day.

Louise McGrath (25:22):

Yeah — I imagine there'd be some workplaces hoping certain people might leave so others can try new things and new practices. All sorts of complex issues that can be very emotional for a lot of people.

Jeffrey Wilson (25:40):

I've never retired myself, but I've worked for people who have, and there's — whether you're the manager or the subordinate — there's nothing quite like your boss saying, "I'm retiring, I'm going in a month." It's a challenging thing from every perspective.

Louise McGrath (26:00):

Well, yeah, it can be fraught for all sorts of different reasons, and it really requires employers and employees to work together. So Jeff, if you were a CEO listening to this podcast, what's the first thing you'd be doing differently because of this research?

Jeffrey Wilson (26:17):

The first thing would be to jump on the research and have a proper look, to get a sense of how exposed your business is — there are big differences across occupations and industries. In these papers, which we'll link at the end, you can actually go and find your industry and get the ages and numbers specific to you. That national story I started with — older workers going from a sixth of the workforce to a third — is just the national average; in different industries it'll look quite different.

So the first thing is to take an inventory of what's going on in your business and your industry — is my business older or younger than typical for my type of business in Australia? Then think about it in more complex ways: there are big differences around financial security depending on what kind of super people have been in, and there's this big gender difference too — men's and women's retirement decisions are driven by different things, at different times, for different reasons. So take that into account, get informed, and think about this as part of your workforce planning — not just "are we getting enough young people in the door", but what does ageing and retirement actually look like in my business. There's no one-size-fits-all answer, but get informed, because this isn't a trickle, it's turning into a flood.

Louise McGrath (28:19):

And I think a lot of companies have a superannuation fund they work with that's always happy to come in and talk to employees about transition arrangements — there are a lot of resources out there that could help drive this conversation.

Jeffrey Wilson (28:37):

Given that a lot of employees don't have retirement plans — or if they do, they're not very accurate at earlier stages — this is a really good opportunity to get people thinking about it positively, because unplanned retirements or sudden exits aren't good for the employee either. No one wants that to just happen to them. So prompting that discussion is genuinely useful — people often go, "you're right, I hadn't actually thought about it." It's also about thinking through flexibility, part-time options, and what your role looks like socially in the workforce as you get to that stage. Done well, it can be really beneficial for everyone, particularly for long-term employees you'd like to see go out on a good note after a long career with you.

Louise McGrath (29:45):

And now for our policymaker listeners — when you think of Australia in ten years from now, what would success look like? What would tell us we've adapted effectively to an older workforce?

Jeffrey Wilson (29:57):

Here's an interesting one I've just thought of. One of the challenges around the older workforce is that people don't change jobs much — young people change jobs often, and as you get older, you change roles far less. But the retirement transition we're talking about requires some kind of job change — part-time, flexible work, or changing the composition of what someone's doing to keep them engaged. So we're asking the part of your working life where you change the least to actually change the most.

I think success for Australia would be getting to a point where we see more change and flexibility at that age — I'd love to see the labour statistics show job mobility increasing for older workers in coming years. That would be a marker that practices are changing, workers are getting ready, and employers are getting flexible — because that's what's going to enable people to stay engaged longer, and that's what we're going to need if we're going to avoid even worse skills shortages than we already talk about on this podcast.

Louise McGrath (31:19):

Alright, well thanks Jeff — that's about all the time we've got today. Thanks for listening. If you have any questions or comments, you can always email us at industry.policy@australianindustrygroup.com.au. And if you found this podcast via a link on our website, please subscribe on your usual podcast platform and leave a review — it helps more people find us. We'll speak in a couple of weeks.