Summary of main findings

• Since the beginning of the 1990s there has been extremely strong growth in the number of older people aged 50-64 in employment.
• This growth reflects not only an increase in the older population but also the strong upturn in the proportion of older people who are working (labour force participation rate).
• The labour force participation rate among older workers in New Zealand is noticeably higher than in most OECD countries.
• High labour force participation rates have been accompanied by very low and declining unemployment rates.
• The biggest participation rate increase over the past 15 years has occurred in the 60-64 years age band. This highlights the impact of the implementation of a higher age threshold for New Zealand Superannuation (between 1992 and 2002). However, a continuing increase in participation rates for this age group after raising the age threshold suggests other factors are involved.
• In all three age bands (50-54;55-59;60-64) the female participation rate grew faster than the male rate between 1991 and 2005.
• While participation rates have remained relatively steady for males aged 50-54, they grew strongly for males aged 55-64.
• Participation rates among older Pacific and Asian females are lower than for other population groups.
• There has been no increase in the proportion of older workers working part-time or in those who are self-employed, despite a commonly reported preference among older people for shorter hours and self-employment.
• Strong growth in the size of the older workforce has occurred across all major industries between 1997 and 2005. However, the strongest percentage growth has occurred in the following industry groups; accommodation, cafes & restaurants, government administration & defence, education, health & community services, cultural & recreation services and personal & other services.
• Employment of older workers has grown across all major occupational groups. The strongest percentage growth by occupation between 1997 and 2005 has been among the relatively highly skilled white collar professionals followed by service and sales workers.
• Older workers are over-represented in industries with a reducing workforce such as manufacturing and agriculture but under-represented in some faster growing industries such as construction and utilities.
• Since 1997, hourly pay rates for older wage and salary earners have remained at a level similar to or slightly above average pay rates, although they are not increasing as quickly as pay increases for younger aged workers. An increase in the amount of hours worked has also helped raise income levels for this age group.
• Older workers have made an important contribution to New Zealand's strongly performing labour market. However, the reasons for older workers staying in work or retiring are complex and still not well understood. More research is required in this area to better understand recent trends and whether these trends can be sustained.

Background

The number of older people in the workforce has increased dramatically in recent years and has contributed strongly to the growth in New Zealand's overall labour force. The number of older people (aged 50 plus) in work has more than doubled from 267,000 in June 1991 to 547,000 in June 2005, an increase of 280,000 people. Older people comprised over half of labour force growth in New Zealand over this period. This growth has therefore been a significant contributor to labour supply, and has helped alleviate skill and labour shortages in a very tight labour market in the past few years. In the future, the willingness and capacity of older people to maintain or further increase their participation will become increasingly important for the labour market and for New Zealand's economic prospects^[1]. It is therefore important to gain a better understanding of this topic.

The growth in the older workforce over the past few years has been called "the quiet revolution" (McGregor 2004) and has been beneficial in a variety of ways. This development has not only allowed firms to have ongoing access to the skills of experienced workers, but also offers older individuals important social and economic benefits. By extending their working lives, older workers have increased their opportunity to remain active, to save, and to maintain their living standards.

The drivers of this growth are complex. It is important to realise the growth is not simply due to the baby boomer population bulge reaching higher age groups - strong increases have also occurred in the proportion of older people engaged in the labour market (the labour force participation rate). Different attitudes towards paid work and careers among the baby boomer generation (particularly women) may also be a factor, especially given the well documented differences between baby boomers and earlier generations in New Zealand. Some other reasons behind this growth noted in various studies include:

• Raising the age of eligibility for New Zealand Superannuation from 60 to 65. ^[2]
• Banning compulsory retirement in 1999.
• Reduction in the superannuation surcharge on extra income earned in 1997 (for the 65 plus group only).
• The Human Rights Act 1993 which has made age-based discrimination illegal.
• Better health, and the recognition among older people (especially ageing baby boomers) of the benefits around keeping active.
• Technological change reducing the manual intensity of some work.
• On-going skill shortages increasing older workers bargaining power.

These factors are in some cases highly interrelated. There are both supply issues (more older people want to/need to keep working up to and beyond the old norms of "retirement age"), and demand issues (such as the growing need for employers to retain older workers in sectors affected by skill shortages).

In this study, the "older" workforce is defined as people in the workplace aged 50-64. They currently represent about a quarter of the total workforce.^[3] The age of 50 is used as a start-point for analysis as it is used in a number of studies of the older working age population by organisations such as the OECD. It is also a significant group to study as New Zealand stands out as having one of the biggest increases in labour force participation among those aged 50-64 (OECD 2005). The age 65 plus is not included in this study, for two main reasons; Firstly, it is not a group that is reliant on paid work (the participation rate at 65 falls very sharply as soon as superannuation income becomes available). Secondly, it is a well documented group already.