Historically low unemployment and more flexible working arrangements since the pandemic have spurred tens of thousands of older people back into the workforce in a trend one economist has dubbed “the great unretiremement”.

Nearly half a million people entered the labour force in Australia over the three years to October 2022. But in an extraordinary demographic shift that accelerated when borders closed and the supply of foreign workers was curbed, about four of every 10 of the new workers were over the age of 55.

Val Fell, 93, a member of the Council of Elders, has been postponing her retirement for years.Credit:Janie Barrett

Val Fell, 93, has been postponing her retirement for years.

“When I was in my 80s, I used say, ‘I’m going to retire at my next birthday’” she said. “Then I said I was going to retire at 90. People now say to me, ‘I’ll believe it when I see it.’”

Fell, who turns 94 in February, is a member of the Council of Elders, which advises the federal government on the quality and safety of aged care services. She is also an ambassador for the Older Persons Advocacy Network, Dementia Australia and the Council on the Ageing.

Fell said work provided older people with a greater sense of community and purpose, while in return, older workers offered experience, sympathy and understanding, particularly in areas experiencing skills shortages, such as nursing, aged care and allied health.

“I’m trying to give back, and it keeps my mind active – not so much my body because a lot of what I’m doing involves sitting on Zoom, so that doesn’t do much to help my mobility,” she said.

“But it helps give you a reason to get up.”

The trend – partly driven by demographic forces linked to the ageing population – has been particularly pronounced in Melbourne, where a record 61.2 per cent of 60- to 64-year-olds were actively participating in the workforce in October, up from 57.1 per cent in October 2016.

In Greater Perth, more than 70,000 additional workers were recorded since October 2019, with 37 per cent of those aged 55 and over.

Nationally, almost one in five of Australia’s workers, or 19.6 per cent, are now aged over 55, up from just 11.4 per cent two decades ago in October 2002.

The trend is being driven by demographic forces linked to an ageing population, but KPMG urban economist Terry Rawnsley said improved job flexibility and limited travel opportunities over the past few years had also encouraged older workers back into paid work.

Rawnsley said the trend was well under way before record-high inflation and cost of living pressures emerged this year. But if those economic pressures continued, he said, there could be an even bigger rise in older people going back to work to make ends meet.

“Our labour market is continuing to go gangbusters,” Rawnsley said. “What we are seeing is a great unretirement, primarily driven by more favourable workplace conditions.”

KPMG analysis shows the labour force grew by 491,000 between October 2019 and October 2022 (using a 12-month rolling average to smooth out volatility). Of that, about 186,000, or 38 per cent, were aged over 55.

“For people who thought they might retire and travel around Australia, or travel abroad, that option was no longer on the table through the height of the pandemic, so many chose to simply keep working,” Rawnsley said.

“The fact that workplaces have become more flexible in what has been a tight labour market, with working from home options readily available and more flexible working hours, seems to have made older Australians less inclined to retire, too.”

Fell, who lives in Wollongong and was recently awarded the Medal of the Order of Australia for her advocacy work, said older people wanting to work faced significant barriers, including employers assuming they were beyond their used-by date.

“As far as employers are concerned, once you get to a certain age, they think they shouldn’t really worry about employing you because you can’t offer very much,” she said.

National Seniors chief advocate Ian Henschke wants more older Australians in the workforce.

Although the news is positive for workers, employers are struggling to fill job vacancies and skills gaps. Ian Henschke, chief advocate at National Seniors Australia, warned Australia was facing a workforce crisis “never seen before”, with severe shortages of workers, particularly in healthcare and aged care.

He said efforts to boost participation were crucial, including cutting the pension at a punitive rate for more than one day’s paid work a week.

“Australia needs to see a lift in its productivity growth and its participation rates,” Henschke said. “In particular, mature-age participation can play a key role in tipping the balance between the number of future retirees and the number of workers available to support them.”

He said an extra 3 percentage points increase in participation among workers aged 55 and over would result in a $33 billion boost to the national economy, equivalent to about 1.6 per cent of national income.

Australia’s unemployment rate was 3.4 per cent in November, the lowest in 48 years, with a labour force participation rate – measuring the proportion of the working-age population either working or actively looking for a job – at 66.8 per cent, the highest on record.

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