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Australia Faces Ageing Work Population Crisis

By Virginia Marsh, Financial Times

June 23 2005 

Australia needs to put "considerable effort" into improving the employability of older workers if it is to prevent the size of its labor force stagnating, according to the Organization for Economic Development and Co-operation.

Failure to increase the proportion of older people in work could contribute to "rising labor shortages, a pronounced slowdown in economic growth and worsening public finances," the OECD warns in a report prepared for the government.

While acknowledging that, in some respects, Australia is better placed than other industrialized nations to cope with an ageing population, the Paris-based organization says the country faces several challenges, including the second highest jobless rate among men of prime working age of its members and above average rates of early retirement.

Although Australia's official retirement age is 65 for men and is being progressively raised to this age for women, the OECD says most Australians leave the workforce much sooner. On average, women stopped working at 57 and men at 62, it says in a report on ageing and employment in the country published this week.

"Older Australians face a number of disincentives and obstacles to remaining in work for longer which over the longer term could become more acute," it says.
The report also criticizes the lack of co-ordination on ageing strategies within the government and says it needs to simplify and improve current policies, rather than introduce new schemes.

The centre-right coalition government, which asked the OECD to prepare the report, acknowledged it needed to improve mature age participation rates. However, it said it had made progress since the study began and that the OECD had not been able to evaluate initiatives announced in the May budget.

The OECD recommended, among others, that Australia reduce tax incentives to retire early, provide better job search help for older Australians, raise awareness of anti-age discrimination laws and tighten eligibility for disability benefits.

On the positive side, it said Australia would be less sensitive to an ageing population than other OECD countries because its welfare system was primarily based on means-tested benefits and because a growing share of older people would rely on private rather than state pensions. 

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