Every now and again we see stories of doomsayers talking about population “bombs” and “storms”. The Sunday Star Times runs one today which suggests that there is “a gaping hole in New Zealand’s workforce where all the 20 – 35-year-olds should be”. There is only one problem with this analysis from Professor Natalie Jackson, who heads Waikato University’s newly-formed Nidea, or National Institute of Demographic and Economic Analysis. The problem is that it is utter nonsense. A quick check of our population statistics will tell you that the population of 20-35 years old in the country has increased by 35,650 or 1.04% over the past 5 years (2005 – 2009). The population of the country overall has increased by 1.04% over the same time. Thus there is no new “hole” in our population statistics.
Of course, some of the 20 – 35-year-olds will be immigrants, as there probably is an outflow of home-grown kiwi kids, but this should not pose a problem. The majority of these immigrants will be relatively skilled and, in general, the immigrant work ethic is better than the indigenous one. This is not a slur on the New Zealander work ethic, this is a general observation for any country. Kiwis immigrating to Australia and the UK generally have a better work ethic than the people who are born there. They have more to prove.
The other half of this “perfect storm” is the baby boomer generation retiring. It is my opinion that this is a myth too. Knowing the boomer generation as I do (being one of them), I suspect the vast majority will not be retiring. While they may well draw their pensions, most will continue to work in some tax-attracting way. Many will pay a great deal more tax than they draw as a pension. I strongly doubt that the resultant large draw on pensions will eventuate. This would hold true even in the US, where many people have seen their 401k pension funds essentially wiped out.
So, in my opinion, there is no “perfect storm” coming. All that will happen is that the mix of older folk retaining employment will increase, placing some pressure on the younger end of the employment market, but not a lot – most older folk will not be working full-time and many will opt for contract work. Some will start their own businesses. I doubt many will be idle at 65.