The Business of Ageing
Realising the economic potential of older people in New Zealand: 2011–2051
Ministry of Social Development Report
The first baby boomers – the generation born between 1946 and 1964 – will reach 65 years in 2011. This will drive major demographic, economic and social changes:
- the number of New Zealanders turning 65 in the 12-month period June 2011 to June 2012 is expected to be 18 per cent higher than in the preceding 12-month period by 2031, the number of New Zealanders aged 65 and over is expected to exceed one million, almost double the current number
- an increase in the labour force participation rate of older people from 16 per cent in 2010 to 26 per cent by 2030 could offset the growing demands for funding New Zealand Superannuation over this period.
The challenges of funding the health care and pension needs arising from this demographic shift are well-documented, but what do we know about the economic opportunities? Is there another side to the story: will baby boomers redefine what it means to turn 65 and cast aside the concept of retirement, choosing instead to blend work and leisure into their late 60s and even 70s? Baby boomers have redefined every life stage they have passed through – why shouldn’t this continue past the age of 65?
This report presents new research undertaken by the Ministry of Social Development on the potential future economic contribution of older people, focusing on two opportunities for New Zealand’s growth over the next 40 years. These are to:
- increase the number of older people who choose to remain active in the workforce: to make the most of older peoples’ expertise and experience employers will need to demonstrate more flexibility
- tap into the growing consumer market: baby boomers will be healthier, better educated and have more spending power than any other generation reaching 65 in New Zealand’s history.
This research models three scenarios which indicate that over the next four decades from 2011 to 2051, older New Zealanders may make a significant contribution to the economy:
- 7–10 per cent of the labour force could be aged 65 and over by 2051, up from 3–4 per cent in 2011
- their earnings from employment could rise from just over $1 billion to about $10 billion
- tax paid on earnings from employment could increase from about $200 million to about $1.8 billion
- the value of unpaid and voluntary work by older people is expected to rise from an estimated $5–6 billion to more than $22 billion
- consumer spending by older people could rise from about $11 billion to over $45 billion
- spending on food and entertainment is expected to increase four-fold.
This report aims to highlight the value of older workers to employers. It aims to stimulate discussion and a better understanding of the potential of this growing consumer market for businesses. For policymakers and commentators it offers evidence of a different view of the contribution of older people in the coming decades.
Not all baby boomers may want to remain in paid work, but flexibility and changing attitudes will be key to harnessing the potential of those who do. New Zealand’s economic competitiveness over the next 40 years will hinge on how we build on the skills, knowledge and economic power of its older people.