The Business of Ageing

New Zealand recognizes the contributions of seniors to its economy, in a report, The Business of Ageing, updated 2015 the authors draw some interesting conclusions. Here are some:

Many perceive our ageing society as a burden, yet it’s one of our greatest achievements. A growing number of older people are in good health, have valuable skills and experience and are making a significant contribution to our economy and society.

As the older population grows so will their spending power. Businesses will need to better understand this group and the role they will play as consumers in the future. The rapid expansion of businesses signing up to the SuperGold card shows how this market is growing. At the same time, as the traditional ‘working age’ population shrinks, businesses will need to retain and harness older workers skills in order to sustain their long-term growth and profitability

Older people are becoming a large consumer group

Older people’s incomes come from sources such as the Government (especially New Zealand Superannuation), investments, gifts, asset sales and employment. Owing to the expected growth in those aged 65-plus (and the implied improvements in their health):

The after-tax income for this group is projected to be more than $73b by 2051 – a significant increase on the 2013 projection of $68b 

Spending by older people (including GST) is expected to rise from $13.8b per year in 2011 to about $39b in 2031 ($36.3b in the 2013 update), $65b in 2051 ($60.3b) and $85b in 2061

If these trends follow current spending patterns, 27 percent of this spending will go towards foodstuffs, clothing and footwear, and 22 percent to housing and housing-related items. Further down the list are health (11 percent), transport (13 percent) and recreation and culture (11 percent).

Older people will play an increasing role in the labour force

This update projects trends in older people’s labour force participation using the Treasury’s 2012–13 Long Term Fiscal Model (LTFM) and Statistics New Zealand’s National Labour Force and Participation Rate Projections.

The LTFM provides relatively detailed demographic and detailed labour force projections to 2061, while the Projections derive from and complement the LTFM and are closely associated with the National Population Projections.

Unfortunately for this update, the expected release of the updated National Labour Force and Participation Rate Projections has been delayed until at least the end of 2015 – so the 2012 figures have been used instead.

The 2012 Labour Force Projections were that:

The number of people aged 65-plus in the labour force would climb from about 130,000 in 2012 to 240,000–500,000 in 2036 and 280,000–660,000 in 2061

The largest growth would occur between 2011 and 2031 as the baby boomers move into the 65-plus age group.

The Participation Rate Projections suggested that:

By 2051–2061 the percentage of 65- to 69-year-old men in the labour force would have increased from 45 percent to 65 percent, and women from 31 percent to 55 percent

By mid-century 12 percent of men aged 80-plus and 10 percent of women in the same age group would be working

>>The labour force participation rate for older people would increase from 21 percent to 31 percent in 2031, falling slightly to 29 percent by 2051

>>The percentage of older people in the overall labour force would rise from around 5 percent to 13 percent by 2051.

Older people’s earnings from paid work will increase

The 2013 Household Income Survey, which was released on 28 November 2013, indicates that:

17.5 percent of people in New Zealand aged 65-plus are in some form of paid work, up from 15.5 percent in 2009 but lower than the 19.6 percent recorded in 2012 (partly due to the increasing number of people aged 80-plus)

The average weekly earnings for this group has risen from $439 per week in 2012 to $557 – a 27 percent rise

The average weekly income for self-employed people has risen from $243 to $251.

The 2013 Census provides additional detail on older people’s income. It indicates, for example, that 40,600 people aged 65-plus earn more than $82,000 a year from all sources, representing about 7 percent of those in the age group. This is well below the 10 percent recorded for the overall population.

This update projects that, in 2013 dollars:

Older people’s total work earnings are likely to increase from about $2.8b in 2011 to about $11.3b in 2031 and $18.2b in 2051

Remuneration for older self-employed people is likely to rise from about $0.4b in 2011 to about $1.6b in 2031 and $2.6b in 2051.

An ageing population presents both public spending challenges and economic and social opportunities. As well as participation in paid work, experienced and wise older people contribute to their communities. They add value through their volunteer work and helping their families, and many support others to participate in paid work, such as by caring for their children.

The updated figures reinforce the conclusions on older people’s economic value outlined in the 2011 and 2013 reports.  The Business of Ageing Project highlights the need to act to make sure that the ageing population increases productivity, economic growth and living standards, rather than constraining them.

Responses other OECD countries have implemented to realise the economic potential of its ageing population include:

·        promoting age-friendly infrastructure

·        creating flexible workplaces

·        reforming pension systems

·        introducing active ageing policies

·        removing barriers to older worker employment, such as removing mandatory retirement

·        tax credits, and informing employ