New Zealand’s workforce continues to age, raising questions about whether there will be sufficient workers in the future to meet the economy’s needs. But changes in life expectancy have shifted working patterns for people over time, and it’s clear that more people are working longer.
We often field questions about workforce participation by age, and thought it timely to examine these trends to help inform the changing considerations around future workforce needs.
A greater proportion of labour market participants
Over the last 36 years that we have detailed labour market data for, the labour force participation rate (LFPR) has increased by around five percentage points, from 66.6% in the March 1987 year, to 71.6% in the March 2023 year.
Although the participation rate doesn’t get as much attention as the level of employment, wage inflation, or the unemployment rate, it remains an important metric that helps tell us how the workforce is changing. The LFPR is the number of people active in the labour force (employment and unemployed) divided by the working age population (which is the labour force plus those not in the labour force, like stay-at-home parents not looking for a job, or university students not looking for a job).
The increase in labour force participation over time is due to two key factors – an increase in female participation in the workforce, and the rise in older people working later in life.
Between 1987 and 2023, male participation in the workforce edged slightly lower, from 79.2% to 76.1%. However, female participation rose 12.5 percentage points from 54.7% in 1987 to 67.2% in 2023. This increase in female participation has been driven by several factors, including an increased focus on female employment in traditionally male-dominated jobs, greater childcare support being provided, rising household costs requiring additional household income.
More older people active in the labour market for longer
Increased participation in the labour market has also been pronounced for older New Zealanders. Although participation rates for those aged 25 to 49 have increased by between two and nine percentage points, double digit increases appear for every age group from age 50 upwards.
The 60-64 age group has seen the largest increase in participation rate, rising nearly 44 percentage points from 32.5% in 1987 to 76.1% in 2023, meaning more than a third more 60-64 year olds today are still active in the labour market compared to 1987. The 65-69 age group has seen a similarly large increase, of nearly 34 percentage points from only 14.5% of that age group active in the labour market in 1987 to 48.4% in 2023.
With the age of NZ Super set at 65 years, the general expected retirement age is often considered to be 65 years. But this data tells us that nearly half of those age 65-69 are still active in the labour market – hardly a strong piece of evidence of retirement.
The proportion of people over the age of 70 who are still active in the labour market has risen too, albeit at a much smaller pace. In 1987, only 5.8% of this age group was still active, 8.8 percentage points lower than today’s participation rate of 14.6%.
Combined, around 25% of those aged over 65 years in New Zealand are still active in the labour market. This rate has risen considerably over time (from below 10% in 1987), but has been increasing at a less rapid pace over the last 10 years, and appears to have plateaued in the last few years.
Generally lower youth participation, but a recent sharp rise
Over the same 1987 to 2023 period, youth participation has fallen, with the number of proportion of 15-19 year olds active in the labour market falling nearly 12 percentage points from 65.6% in 1987 to 53.9% in 2023.
Over time, there’s been a sustained push to ensure young people remain at school and attain qualifications to support them in the jobs market post-education. This push is reinforced by the sharp and sustained decline in the rate of students leaving school early. Between 2002 and 2006, around 70 in every 1,000 15 year old students were leaving school early. After changes in 2007, that rate has averaged around 10 per 1,000. This tightening in the early leaving policy saw a change in trend, with a marked participation rate decline from 2007.
Although the current youth participation rate is considerably smaller now than in 1987, the rate has increased sharply in the last two years. The labour force participation rate for 15-19 year olds fell to its lowest point of 42.3% in the March 2013 year – a decade ago. After that, the youth participation rate remained at around 46% until 2022, when it sharply rose to 50%, and then again further to 53.9% in 2023.
This rise in the participation rate for 15-19 year olds likely highlights two trends. First, the labour market at its recent tightness has encouraged more people to seek out work (both while at school, or instead of school), given the jobs and wages on offer. Second, the higher cost of living has also required more young people into the workforce to support themselves and their families.
This article was first published here. It is reposted with permission.
28 Comments
Cost of living, cyclic busts with investments, and longer life.
Seems like all the ingredients required to work until death.
Hard to see it going the other way, isn't it? The government's going to get a great deal out of millennials. They'll be working until 70 and probably only be eligible for ten years of Super before life expectancy drops off, if they haven't been swindled out of it by then.
IMO it will be means tested like Australia at some point. Already national is going to increase Super age and Kiwisaver withdrawal age to 67 for most under 50. So people will have less time to use use their Kiwisaver savings. Guessing when that occurs, the government will scrap the $521 contribution, otherwise they will be paying it for an extra 2 years.
And the King of Id addressing his good peasants said “I have good news and bad news. First the bad news. I am going to nationalise all your provident and pension funds. Second the good news. You will all be allowed to work until you are eighty five.”
Why should the productive sector sponsor the leisure of those that are capable of still working?
Prior to the last 150 years or so, working until death was the norm. Even when state-supported retirement was introduced, it was only for those actually invalided from work by age. So it's really only the improvement in public health during recent times that has made a "leisurely" retirement even conceivable.
150 years ago the State did not have welfare like today, NO dole,No support for single or married mothers with children etc, that was the your problem and your family problem. life was very hard in those days.
Great question. Ask the "productive" sector when they reach 65?
No doubt they were so productive they have self-funded any retirement they want, and will refuse their super payments.
Unlike the generation who voted majorly against self-funded superannuation in the 1970s, and then went on to turn basic shelter into an investment vehicle for their retirement (paid for by young renting wage earners) and simultaneously "hands out" for a non-means tested government super which could bankrupt the country.
Nzdan, if the young stayed and home with their parents a bit longer and saved their money they wouldn't be competing for rental accommodation and then complaining that they can't afford a house.
Our first property in Wanganui has a current CV of $382,000
Housing is still an affordable proposition outside some of the main centre's, just have to take off the blinkers.
Guessing it needs a lot of money spending on it and lots of deferred maintenance etc. Sometimes cheap old houses are false economy, over buying new due to not having a modern living layout, uninsulated and parts of the house reaching the end of their life. . The main benefit is often that it is seen as a future investment due to often having land which could allow multiple dwellings on it in the future, and there is no GCT on the family home, apart from I guess buying with the intention to make a profit.
Completely wrong Wellingtoninvestor, the house is still solid and in good condition, it is cheap because of its location in Wanganui, it was our first house and got us on the property ladder.
Bought my first home in Masterton 2017 for $200k. This involved convincing my employer that I could move from Christchurch to Masterton, commute by train 2 hours each way to Wellington. Was basically given 3 weeks notice to be in the Wellington office.
But you can still take off the blinkers and realize this is not doable for 90% of young people out there.
"This rise in the participation rate for 15-19 year olds likely highlights two trends"
There's probably a third reason - potential young workers are reawakening to the fact that getting a job and training whilst on it is far better than strapping a student loan to their chest and spending 4 years at uni to, maybe, get qualified to do something.
How many more graphic designers do we need compared to infrastructure workers? (Disclaimer: Our eldest daughter spent 4 years and $40k to join a crowded field of similar graduates here and in London, and now works for one of our large infrastructure companies - actually out doing the manual stuff on occasions - and not only loves it, but gets ongoing management training and is paid well to boot)
Agreed. We rank 32nd (out of 36) in student participation rate in the engineering, manufacturing and construction domains (vocational and academic). The data says this number might actually be inflated by higher participations among international students in STEM courses in NZ.
Wow really surprised at the numbers, must only be the commentators in the comments section that got to retire early. No way I would want to work until 65 but it depends on how you structure your life I guess.
Also it can depend on recent events, things happen and very quickly, you can only make that decision when your 65 age comes
Do you have a plan to retire early? It means for most people, sacrifice and hard work. Potentially a 2nd job and forgoing some standards in the Kiwi lifestyle (alcohol, eating out, SKY TV, new cars etc). Or maybe you are well paid and make good financial decisions.
In other words, spend your youth burning yourself out with overwork and financial stresses only to retire a few years earlier than the herd.
That's actually a pipedream sold to students and workers (work hard now and enjoy later in life) in developing countries - wear yourself thin at work to buy cars and houses that you will never have the time to enjoy in your lifetimes.
Actually it is no pipedream. I'm retiring Q1 next year @ 57. Conscious decisions to own nothing of real value excl the family home and income generating investments. Crap car, 2nd hand clothes (jeans/jackets), shop at K-Mart, spend virtually nothing on alcohol or eating out. And I'm content with my choices.
The equation is simple, just earn quite a bit more than you spend, and save or make some sensible choices with the surplus. Early on I thought that was part of the point of the site, to make good choices towards independence. Instead it's more of a complaints department.
I always liked this clip from The Gambler
With the present climate of high inflation, Government services getting worse eg healthcare, the pension low and super also not quite covering expenses, older people have NO choice but to continue working maybe to 70 years old. In some countries you MUST retire at 65 if your an employee. Luckily in NZ thats not the case, you have a choice
Yep, if you manage to work 40 years and scratched together $500000, you could live in luxury on the $5-10 grand, while government policy carries on trashing the value of your nest egg.
Can some one tell me the answer please
The LFPR is a measure of working age people in the workforce - what is the definition of working age?
Does this include people over the age of 65
and under ?
In 2008-2015ish, Auckland Uni alone were pushing out almost double the graduate teachers than positions available nationwide. Why? Apart from the scam industry that is modern universities, the word on the street was that older teachers were no longer retiring (particularly in Auckland), as they wouldn't be able to afford their mortgages if they did.
I expect to see the same going forward from here - and in other industries besides. Expect to see vacancies to replace deaths increase.
A 15 yo gets told they're too young, even to do voluntary work.
Photo of a trim brad olsen, looks good
Yup, and then those same 15 year olds are ridiculed by the oldies for not going out and getting jobs.
I worked at a supermarket and McDonalds when I was at school, alongside my peers. But these days you go into a supermarket/fast food joint and there's barely a kid to be seen because we flooded the country with migrants.
I enjoyed the segment but just to point out the age of superannuation eligibility in 1987 was 60 and now it's 65 so the growth in the 60-65 age group wasn't an economic miracle of free market incentives but an engineered outcome.
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