Pensioner work scheme will do little to help ease skill shortage: Researchers

Researchers at the university said the government does not understand the changing demographic of the Australian workforce and the new rules that will allow pensioners to earn up to $11,800 per year, up from $7,800 will expire on 1 July 2023 and have not enough time for it to have any real impact on the economic outlook for Australia.

Data already showed that average hours worked in full-time employment by people in the 65 years and older cohort equal or exceed people in the 15–64 years age group.

And in fact, the employment growth of those over 65 years of age over the past decade has been more than twice those under 65 years of age, meaning there are already a large majority of pensioners continuing to work.

“There is clear evidence that people over 65 years of age are interested in continuing to work and, in fact, work equally as hard, or harder, than younger employees,” said one of the authors of the report, Associate Professor Michael O'Neil.

“It’s hard to reconcile this profile and motivation of older people with outcomes in the workplace where only 3.8 per cent of Age Pensioners are earning employment income but employment participation by those over 66 years of age who are not on the Age Pension, is estimated [to be] around 28 per cent. 

“Additionally, in contrast to the average full-time hours being worked by this cohort being at or above the workforce average, this 65-year and over cohort generally works less part-time hours than those aged 15–64 years. Participation by 65 years and older in the hospitality sector is also well below the average of other sectors for this age group.”  

Associate Professor O'Neil said the federal government has missed a golden opportunity to ease one of Australia’s most pressing economic challenges, the shortage of skilled labour, by not tapping into the expertise of pensioners to a greater extent.

“While the effectiveness of the Federal Government’s new changes will be how potential and actual Age Pensioners react, and the proposed changes are yet to be legislated, they appear likely too small and of potentially too short a duration to be of much impact,” he said. 

He said the recently announced limited increase in the tax-free income earning capacity of people on pension showed a lack of understanding about the changing demographic in Australia. 

“With the population of those 65 years and older expected to be the fastest growing for at least the next few decades, getting the appropriate public policy settings and employer and employee attitudes is likely to have a significant influence on workforce growth and composition, productivity and household incomes, amongst other issues,” he said. 

He added the analysis undertaken by the South Australian Centre for Economic Studies Independent Research Fund showed that when opportunities are available, the workforce 65 years and over can respond quite quickly. 

“This might hold lessons for changes in Aged Pension Income test policy affecting the dis-incentive to work; the attitudes of employers about employing those 65 years and older; and reskilling and training policies of governments and employers,” he said. 

“The Federal Government needs to revisit its earlier decision and examine all of these issues and create an environment in which all Australians who want to work can make the maximum contribution to our economy and community.” 

Other advocates and industry groups agreed and said while the scheme is a step in the right direction, it is not enough to entice more pensioners into the workforce.

National Seniors chief advocate Ian Henschke said the government had not addressed one of the key barriers when it came to pensioners working: the prospect of interacting with Centrelink.

He said the government needed to make the system “simpler, more understandable and fairer” and to make the move permanent.

National Seniors said increasing the time frame for eligibility for the Work Bonus increase means more pensioners, veterans, disability support pensioners, and recipients of the Carer Payment over pension age will have the incentive to work and fill critical labour force shortages.