Ageing, Adaptation and Opportunity Australia’s Labour Market at a Crossroads

We begin in a shifting labour landscape—a terrain where strength and strain coexist. Australia’s labour market remains a picture of resilience unemployment hovers below the OECD average at 4.1 per cent as of May 2025 even as signs of slowing surface through marginal employment growth and easing labour market tightness OECD. This juxtaposition primes us to face both the promise and the challenge embedded in ageing demographics. At TMFS we believe foresight anchored in clarity leads adaptation. This moment calls our collective attention to the choices that will define sustained inclusion and productivity.

Middle Section

1. Resilience with Caution
Australia continues to outperform its peers on unemployment, yet the pace of growth flags. Employment grew just 0.4 per cent over the year to Q1 2025—a modest gain reflective of tight labour supply and limited slack OECD. Key sectors such as accommodation and food services, arts and entertainment and real estate remain notably tight—an early warning that even resilient markets can strain under structural demands OECD.

2. Wage Recovery, Still Ground to Cover
Real wages in Australia are recovering, but the path remains uneven. As of Q1 2025, real hourly wages trail Q1 2021 levels by 4.4 per cent, and year-on-year growth stands at a modest 1 per cent OECD. Minimum wages have inched upward, driven by a recent 3.5 per cent adjustment in July 2025, yet real growth continues to lag broader expectations OECD.

3. Ageing, Productivity and Economic Momentum
Demographic shifts emerge as the defining force shaping Australian labour markets. The ratio of older dependents to working-age individuals in Australia is expected to climb from 0.29 in 2023 to 0.47 by 2060 OECD. This demographic momentum implies a slowdown in GDP per capita growth—projected to drop from around 1 per cent annually historically to just 0.77 per cent by 2060 absent productivity improvements OECD.

Yet the picture is not without remedy. Through inclusive labour mobilisation—specifically increased employment among older workers, gender equality improvements and migration—the OECD projects Australia could elevate growth to 0.93 per cent, approaching the OECD historical average of 1.04 per cent OECD. Enhanced productivity gains—perhaps through mid-capacity advances—could lift growth further toward 1.13 per cent OECD. This is both warning and invitation.

4. Supporting Late-Career Workforce Sustainability
The OECD highlights that policymakers must evolve to support later-career employment. Notably Australia shows improvement—employment rates for ages 60 to 64 reached 59.5 per cent in 2023, above the OECD average of 55.9 per cent OECD. Since 2000 employment among ages 55–59 increased by 18.1 percentage points and ages 60–64 by 26.9 points, both above OECD averages OECD. Yet, employment gaps remain sizable: for those aged 55–64, the gender gap in employment is 10.7 percentage points—below OECD average 13.5 points but still material OECD.

Policies that combat age discrimination, promote flexible work, lifelong learning, retraining and career transition support—such as the Career Transition Assistance programme for workers over 45—are critical in keeping older Australians active and productive OECD.

Closing Section
Australia’s labour market stands at a pivotal juncture. Beneath current resilience are slower growth, wage stagnation and demographic drags. Yet within those constraints lie opportunity—through thoughtful activation of under-utilised segments of the workforce and a productivity-first approach.

TMFS emphasises measured clarity in reframing ageing not as drag but as asset. We advise leaders to build multigenerational labour strategies rooted in flexibility, lifelong development, and inclusive access. We advocate for gender balanced workforce ecosystems, better integration of older workers, smarter migration policies, and productivity-enhancing innovation.

Let us convert demographic transition into strategic advantage. Australia can sustain living standards while reinforcing social cohesion. TMFS stands ready to guide leaders toward adaptive labour policies, positioning organisations and the nation for inclusive growth and enduring resilience.

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