May 2005

 

 

Number-crunching shows that a maturing workforce is bringing its own increases in productivity, according to Professor Ross Guest from Griffith University, Queensland.

 

Using modelling techniques, Professor Guest postulated that “the size of the effect of an older workforce on labour productivity could be positive and of substantial magnitude.” Professor Guest’s paper suggests that the productivity gains from a more mature workforce could substantially offset the problem of fewer people working.

 

The paper points out that even when productivity is adjusted for age, workers of different ages cannot be “substituted” for each other perfectly in calculations, as they bring different skills and strengths to the job. Professor Guest says the ideal balance of different working age-groups is coming closer as the workforce matures.

 

The ageing workforce and lowering birth rate in Western countries has had policy-makers scrambling to increase labour force participation among previously excluded groups. Could this give them all a bit of breathing space? Professor Guest urged the recent Workshop on Labour Force Participation and Economic Growth  to support empirical studies to confirm these projections.