Research Note: How Australia’s ageing workforce is reshaping the labour market

Like all developed economies, Australia’s population is steadily ageing. As fertility rates have fallen and life expectancy rises, older cohorts constitute an increasing share of the population. While much of the public discussion on ageing focuses on the impacts for elderly people - issues around retirement transitions, aged care services and health outcomes - it also has major implications for the workforce and broader economy.

Employees aged 50 and over now account for almost one-third of hours worked in Australia - twice the amount of a generation ago - as older employees participate at higher rates, and stay attached to the labour market for longer.

Several structural dynamics are driving this process. One relates to gender, where much of the increase is being driven by women staying in the workforce for longer. Another from occupations, with ageing advancing faster and further in traditional clerical and industrial trades roles. Another concerns changing employment patterns, with older workers more likely to work part-time and less likely to work full-time jobs.

The workforce is not only getting older, but its structure is changing as it does.

This research note examines the dynamics around the ageing of the Australian workforce. It explores how changes surrounding gender, industry, occupational and employment patterns are leading to complex and uneven ageing dynamics within the labour market.

The steady ageing of the Australian workforce

As Australia's population becomes older, so too does its workforce. In 1991, employees aged 50 years and over contributed around 16% of total hours worked. By 2026 their share had almost doubled to 29%, with uplifts recorded in every age cohort within the over 50s group. There was a temporary and sudden increase in the older workforce share during the pandemic - when many employees over 60 delayed retirement exits - that has eased out in subsequent years. Nonetheless, the trend towards an older workforce remains a steady and secular trend.

Two forces are driving workforce ageing. The more obvious is that the Australian population is getting older, and naturally the workforce ages with it. But equally important is the fact that older people are remaining attached to the workforce for longer than previous generations. Improvements in health, workplace flexibility and job design have made longer working lives possible, while the financial pressures of rising life expectancy have made it more attractive and/or necessary for many.

But within these macro-level changes in the age composition of the workforce are several important structural changes relating to gender, occupations, and patterns of workplace engagement. Unpacking these structural changes reveals which elements of the labour market are driving the ageing process.

Rising female participation is a key driver of workforce ageing

One of the structural drivers of workforce ageing is rising participation amongst older women. Over the past 25 years, there has been a significant uplift in participation rates for older female cohorts: a 15% rise for 50 - 54-year-olds, a 27% rise for 55 - 59-year-olds, and an astonishing 35% rise for 60–64-year-olds.

Rising participation for older employees is primarily a female-driven phenomenon. While rates for older male cohorts have also increased, their growth has been far more muted due to already high levels of engagement. Surging female rates has greatly narrowed the gender gap amongst older workers, and functioned as the primary contributor to the uplift in older worker participation.

Several factors have contributed to this shift, including changing social norms, higher educational attainment leading to broader career paths, improved health outcomes, economic necessity, and greater access to flexible work arrangements. The result has been a fundamental reshaping of Australia's labour market, with older women representing one of the fastest-growing segments of the workforce.

See also Research Note: Closing the gender gap in Australia’s workforce participation

Industrial and government sectors are older and ageing faster

While the workforce is getting older across most sectors of the economy, the pace and extent of change vary widely between industries.

The oldest workforces are often found in industrial sectors such as wholesale trade, manufacturing and transport as well as in rental & real estate. In these industries, over-50s account for more than a third of employees, and over the last decade their workforces have aged faster than the national average. Two government-dominated sectors - public administration and education - also have high shares of older staff. These industries tend to be more traditional, with long-established occupational pathways, longer employee tenure and lower rates of job mobility.

At the other end of the spectrum are youth-biased industries, such as accommodation & food, retail, information and financial services. These often have lower barriers to entry, flexible and casual work arrangements, and higher levels of staff turnover, all of which enable greater uptake of younger employees that offsets ageing dynamics.

Two key outliers from this pattern are construction and mining, which despite being industrial sectors have relatively youthful workforces. This likely relates to the physical nature of many jobs in these industries, which can limit participation for older workers. It is common for industrial trades employees to move from construction and mining to manufacturing and transport as they age.

Overall, most industries have seen their workforces age over the last decade. However, three industries - utilities, healthcare and education - have bucked the trend and seen their workforce become younger. This relates to very high rates of employment growth in these industries, which has created opportunities to bring in new employees.

Differential ageing trends in traditional and emerging occupations

In a similar pattern to that facing industries, there is also differential ageing trends at the occupational level. The chart below shows the over-50s share of the workforce for Australia’s 80 main occupational subdivisions. It reveals that occupational effects are highly pronounced, with major differences in both overall age levels and changes in ageing over the last decade.

Overall, there is a clear association between seniority and workforce ageing - managerial occupations have a much older workforce than entry-level positions. However, three additional trends can be identified:

• Traditional occupations - those which have existed for a long-time, and/or have relatively stable employment levels - tend to have much older workforces. Examples include clerical roles, industrial trades and non-specialist managers. These occupations are also ageing at a faster rate, evident in the large left-to-right movements on the chart.
• Emerging occupations - those which are newer, and/or have seen larger employment growth in recent years - tend to have younger workforces. Many of these occupations involve the use of newer technologies, particularly for technical professionals. Others are associated with the fast-growing health and care sector, which has increased its hiring of younger new trainees as it expands.
• Physically demanding occupations - such as construction trades, industrial labourers, store persons and hospitality workers - tend to have the youngest workforces. As noted above, this reflects a tendency for employees to exit these occupations as they age.

Importantly, some occupations are defying the national trend and becoming younger. This is evident in many professional occupations, particularly those with a healthcare or technology focus.

Workforce ageing in occupations reflects both the retention of experienced staff and weaker inflows of younger workers. Many traditional occupations depend on accumulated knowledge and industry experience developed over long careers. In other cases, workforce ageing may signal challenges attracting younger workers into occupations, resulting in increasingly older workforce profiles. As retirements increase, succession planning, business continuity, knowledge transfer and workforce skills development become increasingly important considerations.

Job mobility is much lower for older employee cohorts

Older employees reveal different patterns of workforce engagement than their younger counterparts. One of the most pronounced examples is in terms of job mobility.

One of the strongest predictors of job turnover is employee age. Up until the age of 30, annual job turnover rates are around 10% to `12%. From that age turnover rates begin to decline, falling to 3.5% in the 60-64 cohort that corresponds to the standard age of retirement. Very few employees over 65 change jobs.

These age-sensitive turnover rates reflect changing relationships to work as people age. Workplace factors including role seniority, organisational knowledge, and occupational specialisation, each of which can impose barriers to moving between employers. At a personal level are factors such as care responsibilities (for both children and elderly dependents), financial circumstances, risk aversion, and transition to retirement plans.

Lower job mobility amongst older employees has both benefits and costs. Benefits include better retention of technical expertise, organisational knowledge and industry experience. It lowers recruitment and training costs, supports a return on investment in workforce development, and strengthens business continuity. Longer-tenured older employees can also play an important role in mentoring and developing younger staff, particularly as businesses contend with persistent skills shortages and tight labour market conditions.

However, lower job mobility also carries costs. It can make it harder to recruit specialist skills externally, push up wages and benefits as employers work to retain staff, and limit opportunities to bring younger employees into roles that are already filled, a particular challenge for industrial sectors facing both rapid technological change and concentrated workforce ageing. It also raises the risk of clustered retirements in long-tenured workforces, leaving businesses exposed when groups of their workforce exit at similar times.

Part-time work extends workforce participation, especially for women

Another factor distinguishing older employees is the prevalence of part-time work. After the age of 50, part time work patterns become far more common. In the 50-54-year cohort, around one-in-six male and one-in-three female employees work part time. By the retirement age cohort, these rates increase to one-in-three for men and two-in-three for women. After the age of 65, part-time work becomes the dominant pattern for both genders.

This has considerable implications for businesses as the way employees exit the workforce differ by gender. The rise in part-time work enables many employees to reduce hours without fully exiting the workforce, supporting a gradual transition toward retirement.

Flexible work arrangements have become an important mechanism for retaining experienced employees who may no longer wish to work full-time but are not yet ready to retire. For employers, retaining these workers helps preserve technical expertise, organisational knowledge, and mentoring capacity, while reducing recruitment pressures in a tight labour market.

Gender differences in retirement patterns partly reflect occupational and industry composition. Older men are more likely to work in occupations such as plant operators and factory processing, where full-time work remains common, while older women are more often employed in roles where part-time work provides a pathway to exit workforce participation.

As Australia's workforce continues to age, flexibility around how older workers stay attached is likely to become increasingly important for businesses to retain experienced staff and for employees to remain attached to the workforce, in a capacity that suits both. Industries with the oldest workforce profiles, particularly wholesale trade, manufacturing and transport, face the greatest retirement exposure and the largest succession planning, knowledge transfer, and business continuity challenges.