NZ now has a greater labour force participation rate than in 1987
The New Zealand labour market now has a greater proportion of participants compared to nearly four decades ago, with older Kiwis seeing the largest increase in participation rate, according to Infometrics.
Informetrics data showed that labour force participation rate (LFPR), which is the number of people active in the labour force divided by the working age population, has lifted by around five percentage points to 71.6% in March, from 66.6% in March 1987.
Brad Olsen, Infometrics CEO and principal economist, said there were two key factors that led to the increase in the labour force over time: an increase in female participation in the workforce, and the rise in older people working later in life.
“Between 1987 and 2023, male participation in the workforce edged slightly lower, from 79.2% to 76.1%,” Olsen said. “However, female participation rose 12.5 percentage points from 54.7% in 1987 to 67.2% in 2023. This increase in female participation has been driven by several factors, including an increased focus on female employment in traditionally male-dominated jobs, greater childcare support being provided, rising household costs requiring additional household income.
More older people working longer
All age groups except for the 15-19 and 20-24 age brackets saw increases in their participation rates, but the change was more pronounced for older Kiwis.
For the 60-64 age group, the increase was nearly 44 pp from 32.5% in 1987 to 76.1% in 2023. That means more than a third of the 60-64-year-olds continued to be active in the labour market compared to 1987. The 65-69 age group, too, has seen a similarly large increase of nearly 34 pp, from just 14.5% in 1987 to 48.4% in 2023.
“With the age of NZ Super set at 65 years, the general expected retirement age is often considered to be 65 years,” Olsen said. “But this data tells us that nearly half of those age 65-69 are still active in the labour market – hardly a strong piece of evidence of retirement.”
The proportion of people aged 70 and over who were still active in the labour market has also increased, albeit at a much slower pace. From 5.8% of this age group active in 1987, the figure has increased to 14.6% this year, Infometrics data showed.
“Combined, around 25% of those aged over 65 years in New Zealand are still active in the labour market,” Olsen said. “This rate has risen considerably over time (from below 10% in 1987) but has been increasing at a less rapid pace over the last 10 years, and appears to have plateaued in the last few years.”
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