Untapped older workers could add $29 billion to Australian economy

17 June 2026

At a time when the economy is experiencing labour shortages, increasing labour force participation amongst experienced older workers could boost GDP by $29 billion, according to KPMG Australia.

The opportunity to better utilise experienced older workers comes as Australia slips from 17th to 24th globally in workforce participation among 55–64-year-olds.

According to OECD data Australia’s labour force participation rate was 69% in 2025. This is well below leading countries including Sweden (84%), Japan (82%), Estonia (81%), and New Zealand (80%) who all have more than four fifths of the 55–64-year-old workers contributing to the economy. 

The new modelling estimates that an increase of the workforce participation rate to 77%, driven by retaining older workers aged 55-64 years old, would add 240,000 more workers, translate into $16.7 billion in additional wages, and $12.3 billion extra profit for business which would have amounted to an additional $29.0 billion in GDP per year. 

“Maintaining older talent is a multi-billion-dollar opportunity sitting in plain sight if we can get the settings right,” said KPMG Urban Economist, Terry Rawnsley.

“We have a large pool of experienced, work-ready people, yet businesses are still struggling to fill roles. Closing that gap is one of the most practical ways to ease labour shortages, boost economic activity and taxation revenue.”

Older participation has stalled  

The 77% scenario is based on returning labour force participation growth to its long-term trend. Australia performed strongly between 2005 and 2015, boosting participation among the 55–64 age group from 54% to 65%.

This growth was in part due to the shift toward less physically demanding, service-based jobs, and a greater availability of part-time and flexible work. 

“Australia has done a lot of the hard work lifting participation among older workers over the past two decades, but that momentum has now stalled at exactly the wrong time,” Rawnsley said.

Boosting participation requires understanding the needs of different workers and employers. 

“Unlike other nations, Australia’s combination of the age pension, superannuation, and private savings, can encourage some people over 60, who might otherwise remain employed, to exit employment earlier,” explains Rawnsley. 

Australia’s workforce shortages remain a major constraint on economic growth, with job advertisements still around 40 percent above pre‑COVID levels despite weaker economic activity and tighter migration settings reducing the nation’s ability to rely on overseas labour to meet demand.

Barriers to participation remain

A key challenge is the difficulty older workers face re-entering employment. Jobs and Skills Australia (JSA) analysis of ABS data found that workers aged 55–64 who lose a job take around 20 months on average to find a new one, this compares to around 9 months for prime-age workers. This creates a strong disincentive to remain engaged in the labour market.

Employers also need to play a role. Evidence from JSA shows that businesses hiring mature-age workers are increasingly adopting strategies such as: 

• Flexible work arrangements (used by 32% of employers) 
• Training and skills development (28%) 
• Job redesign (20%)

“This is not just about workers; it’s about how employers think about jobs and keeping older talent. Flexible work, targeted training, and better job matching can make a real difference, and in many cases, small adjustments can unlock a highly productive worker.”

“There are also over 200,000 people aged 55-64 who are on JobSeeker and around 250,000 receiving the Disability Support Pension. This reflects a significant group of people who may be eager to contribute but are not finding the right support to help them join the workforce,” Rawnsley said.

Methodological Overview

A labour force participation rate scenario was constructed by applying the average annual growth rate in participation observed between 2005 and 2015 (1.8% per annum) to the 2015 OECD labour force participation rate. This produced a counterfactual participation rate scenario of 77% for people aged 55–64.

This participation rate was applied to ABS national, state and territory population estimates for people aged 55–64 to estimate the potential size of the labour force under this scenario. An assumed unemployment rate of 5% was then applied to derive an estimate of 236,000 additional employed workers.

Worker income increase was estimated using ABS Personal Income in Australia data. Median employee income for people aged 55–64 in 2022–23 ($87,300) was used to estimate additional wage income. To estimate non‑wage income, the non‑mining GDP per worker split between wages and profits was applied, yielding an estimated profit share of $52,000 per worker. These average wage and profit estimates were applied to the additional 236,000 workers, resulting in an estimated $16.8 billion in additional wages and $12.3 billion in additional profits under the 77% labour force participation scenario.

The median income for those aged 55–64 and the non‑mining GDP per worker are used as conservative assumptions, as some of the workers drawn into the workforce would likely have lower skill levels. 

Calculations Tables

There are 248,000 additional people in the labour force under the 77% scenario, and it is assumed that 5% are unemployed, resulting in 236,000 additional workers. The $29 billion increase relates to a single year based on the most recent annual data.

Sources
OECD Labour Force Statistic, ABS Personal Income in Australia, ABS Australian System of National Accounts, ABS National, state and territory population