What’s influencing Australia’s future workforce?

The future of the Australian workforce has been outlined in a recent report. The results show we have a lot to plan for if we’re to keep up with an ever-evolving landscape.

The 2023 Intergenerational Report by the Treasury discussed the major trends influencing the workforce. A few major themes were present, each of which is expected to have significant effects on the Australian economy.

Ageing population

With each year that goes by, so too does the life expectancy rise. With Aussies living longer, there are reportedly more people using government-funded services.

According to the report, the life expectancy at birth is expected to rise from 81.3 years for men and 85.2 years for women in 2022–23 to 87 years for men and 89.5 years for women by 2062–63.

Coinciding with this increasing life expectancy is a lower fertility rate. According to the Treasury, a range of societal, cultural, and economic factors are causing women to delay and even forego childbirth. While the fertility rate is in line with most other advanced nations, it has been below the replacement rate of 2.1 babies per woman since the 1970s, and it is expected to remain that way.

These factors have caused our population to age, with the median age expected to rise by 4.6 years in 2062–63, reaching 43.1 years. The proportion of Aussies aged 85 and over is set to triple, too.

So, what effect are these statistics having on the wider workforce? The Reserve Bank of Australia (RBA) believes the ageing population has resulted in reduced labour growth. While migration is helping to counteract these effects, it is expected that growth will continue to slow.

This is likely to result in a tighter labour market, potentially putting pressure on wages and inflation. It’s not all bad, however, as the RBA says that with an ageing population comes less demand for labour, which could lessen the consequences.

Digital transformation

Unsurprisingly, technology is having a major impact on the way we work. Not only has this digitisation boosted our economy, but it has revolutionised work processes.

According to the Treasury, tech has raised workers’ skills, encouraged wage growth, and made us more productive.

Systems like artificial intelligence (AI) have allowed us to streamline and automate processes, eliminating repetitive tasks and letting us focus on what matters most. Similarly, the Treasury notes that these systems have made work safer; however, not all would agree, as seen in the headlines with many high-profile data breaches rocking the country.

Technology is expected to continue altering the way we work in the years to come, especially AI, which we are still relatively new to. The Treasury believes this rise in tech will allow us to tackle arising challenges, such as climate change.