Implications of Labour Market Change for Retirement Income Policy

Implications of Labour Market Change for Retiremen…
01 Jan 2001

There is much debate about retirement income policy. Several studies have examined savings behaviour and the future affordability of New Zealand Superannuation (e.g. Periodic Report Group 1997, Investment Savings and Insurance Association of New Zealand 1998). In contrast little attention has been paid to possible future changes in labour market behaviour or the implications of such change for retirement income policy.

The next section explores official New Zealand projections of population and labour force and briefly reports some labour force projections for other industrialised countries.

We then explore alternative labour force scenarios in the period out to 2051. These scenarios are anchored around demographic projections prepared by Statistics New Zealand and enable assessment of the likely impact of possible changes in fertility, labour force participation and migration. We also move beyond this set of official projections and consider other possibilities, including higher rates of female participation, delayed retirement and a significant reduction in unemployment.

The next section revisits the forces driving changes in work. Complementing the previous quantitative section, it explores qualitatively the major forces likely to shape labour market developments over the next 50 years and foreshadows some of the likely directions of change.

Finally, we explore some policy implications of our scenarios, including some options put forward by the 1997 Periodic Report Group, policies directed to increasing private and public savings and some other matters relating to the future workforce.

As with all extrapolations of trends it is necessary to recall that unforeseen events such as war, major pandemics or natural disasters could drastically change economic, social and demographic conditions. Equally, the labour market implications of information technology may be more revolutionary that we have allowed in our analysis.



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