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4102.0 - Australian Social Trends, 1994  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 27/05/1994   
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Contents >> Work >> Not in the Labour Force: Early retirement among men

Not in the Labour Force: Early retirement among men

Increasing numbers of older men are retiring from full-time work early, half of them because of ill health.

Over the last 20 years there has been a trend towards early retirement evidenced by the decline in full-time labour force participation among older men. Between 1973 and 1993 participation of men aged 55-64 years in the full-time labour force declined from 79% to 52%. As might be expected declines were greater for the 60-64 years age group than for the 55-59 years age group. In 1973, the majority (72%) of men aged 60-64 years worked full-time. By 1983 less than half (38%) worked full-time. Since then the rate has remained much the same.


In association with this decline in full-time labour force participation of older men there has been an increase in those working part-time, particularly in the 10 years to 1993. While part-time participation rates for men aged 55-64 years were low relative to full-time participation rates (7% compared to 52%) there appears to be an increased tendency for some men, particularly those aged 60-64 years, to ease into retirement through a period of part-time employment prior to leaving the labour force permanently. As a consequence of their increased participation in the part-time labour force, the proportion of men aged 60-64 years who were not in the labour force fell between 1983 and 1993, from
57% to 53%.


Some of the factors which have influenced these changes in labour force participation of the pre-retirement age group include the deterioration in labour market prospects for older workers (see
Long-term unemployment), increased availability and attractiveness of non-labour sources of income such as government pensions and superannuation (see Retirement income), and changed attitudes in general to work and leisure.

MALE FULL-TIME LABOUR FORCE PARTICIPATION RATE



Source: Labour Force Survey

MALE LABOUR FORCE PARTICIPATION

Full-time
Part-time
Not in the labour force
Age group (years)
%
%
%

1973
      25-54
95.1
1.3
3.3
      55-59
85.9
2.4
11.7
      60-64
71.6
4.4
23.9
1983
      25-54
90.8
3.2
6.0
      55-59
73.8
4.4
21.7
      60-64
38.2
4.6
57.2
1993
      25-54
86.9
5.0
8.0
      55-59
63.8
6.5
29.8
      60-64
39.3
7.3
53.4


Source: Labour Force Survey

Retirement and early retirement

The standard retirement age, defined on the basis of age pension eligibility, is currently 65 years for men and 60 years for women.
Early retirement is defined as retirement from the full-time labour force before the standard retirement age.

The Retirement and Retirement Intentions Survey defines retired people as those aged 45 years and over who have ceased full-time work and who do not intend to work or to look for work on a full-time basis in the future. Early retirement is examined in this review mainly in terms of men aged 55-64 years who are not in the full-time labour force.



Patterns of early retirement

In both 1983 and 1992 the majority of retired men aged 55 years and over had retired early. The proportion retiring early also increased over the period, particularly for those who retired between the age of 55 and 59 years, from 18% in 1983 to 24% in 1992. In contrast the proportion who retired aged 65-69 years declined from 37% to 30%.

RETIRED MEN BY AGE RETIRED

Aged 55 years and over

1983
1992
Age group at retirement (years)
%
%

55-59
17.5
24.4
60-64
40.7
42.4
65-69
36.6
29.5
70+
5.3
3.7
Total
100.0
100.0


Source: Survey of Retirement and Retirement Intentions


Reasons for retirement

In both 1983 and 1992, almost half of retired men aged 45 years or over had retired for reasons of their own ill health. However, there was a marked increase in the proportion who retired for employment and other reasons, from 7% in 1983 to 16% in 1992.

REASONS FOR EARLY RETIREMENT AMONG MEN AGED 45 YEARS OR OVER

1983
1992
Reason for retirement
%
%

Personal reasons
90.3
81.4
      Own ill health or injury
49.4
49.6
      Decided not to work/more leisure
25.7
19.5
Family reasons
2.4
2.6
Employment and other reasons
7.3
16.0


Source: Survey of Retirement and Retirement Intentions


Sources of income

The availability of non-labour sources of income is generally acknowledged as critical to a person's decision to retire. This is regardless of whether retirement is voluntary or forced through labour market conditions, or through ill health or injury. Men who retire aged 55-64 years are less likely than those who retire at age 65 years or over to receive government pensions or benefits as their main source of income. In 1992, among men who had retired aged 55-64 years, 46% had retirement schemes, investments or savings as their main source of income and 42% had government pensions and benefits. In comparison, among men who had retired aged 65 years or over, 28% had retirement schemes, investments or savings as their main source of income and 64% had government pensions and benefits (see
Retirement income).

Along with the decline in full-time labour force participation among older men over the last 20 years has been an increased take-up of service and, more recently, disability pensions. There was a large increase in the number of veterans receiving service pensions during the 1980s, peaking at over 80,000 in 1983-86. The effect of large numbers of World War II veterans reaching their early 60s was a major reason for this increase. By 1993 the number of veterans aged 60-64 years receiving a service pension had declined to just over 6,000, the lowest in 20 years.


Among older men not in the full-time labour force (i.e. working part-time, looking for part-time work or not in the labour force), the take-up rate of the disability pension has increased considerably since the early 1980s, from 26% in 1983 to 39% in 1993. The patterns were slightly different for those aged 55-59 years and those aged 60-64 years. In the former group, 34% were in receipt of a disability pension in 1983, rising to 41% in 1987 and then easing to 38% by 1993. Among the latter group, 21% were in receipt of a disability pension in 1983 and this proportion rose over the next ten years to reach 40% in 1993. The increase was particularly sharp in the late 1980s when the numbers receiving a service pension were in decline. In addition, there appears to be a broad association with unemployment rates. For example, the unemployment rate of men aged 60-64 years was 7% in 1983 compared to 16% in 1993; corresponding figures for men aged 55-59 years were 7% and 12%. This is consistent with the increased likelihood of meeting the eligibility criteria for a disability pension in times of high unemployment (see
Social security transfer payments).
VETERANS RECEIVING SERVICE PENSIONS

Aged less than 60 years
Aged 60-64 years
Year
'000
'000

1973
6.3
15.7
1975
7.4
22.2
1977
8.8
33.5
1979
11.0
47.2
1981
11.8
61.3
1983
9.8
73.2
1985
4.1
85.3
1987
2.3
46.9
1989
2.3
30.3
1991
2.6
7.7
1993
3.3
6.1


Source: Department of Veterans Affairs
MEN RECEIVING A DISABILITY PENSION

Age group (years)
As a proportion of men not in the full-time labour force


55-59
60-64
55-59 years
60-64 years
Year
'000
'000
%
%

1973
13.4
25.1
30.9
33.3
1975
16.4
30.8
34.7
30.7
1977
21.9
37.2
38.5
30.6
1979
29.4
41.9
38.5
29.3
1981
31.4
41.3
36.7
26.4
1983
33.7
42.0
34.2
21.2
1985
43.4
49.8
40.6
23.1
1987
47.2
59.9
41.0
27.5
1989
45.7
71.4
38.9
34.4
1991
46.0
79.0
35.1
36.8
1993
53.9
86.7
38.3
40.2


Source: Labour Force Survey; Cass et al (1988)1; Department of Social Security Ten Year Statistical Summary and Characteristics of Pensioners


Unemployment and discouragement

With rising levels of unemployment over the last 10 years, the question arises as to whether or not early retirement is voluntary. Older men have been particularly affected by changes in labour market conditions since the early 1970s. This is partly because they were concentrated in some of the industries and occupations that have been most affected by structural change. In addition, they have higher levels of disability and ill health than younger men, reduced job mobility, and, often, less current qualifications. These labour market difficulties for older men have led to higher unemployment rates than prime aged men, longer durations of unemployment, and a higher incidence of long-term unemployment (see
Long-term unemployment).

Since the 1983 recession the unemployment rate of men aged 55-64 years has been consistently higher than that of men aged 25-54 years. Following the economic downturns in 1983 and 1990, there were increases in unemployment rates at all ages. In 1985 the unemployment rate of men aged 55-64 years was nearly 2 percentage points higher than that of men aged 25-54 years. In 1992 the unemployment rate of men aged 55-64 years had risen to over 3 percentage points higher than that of men aged 25-54 years. By August 1993 the unemployment rate of men aged 55-64 years was 5 percentage points higher than that of younger men (14% compared to 9%).


The incidence of long-term unemployment increases markedly with age. In 1993 the incidence of long-term unemployment among men aged 55-64 years was 61%, compared to 43% for men aged 25-54 years, suggesting that once older men become unemployed the likelihood of them becoming long-term unemployed is substantial.


In 1993 unemployed men aged 55-64 years were almost four times as likely to be long-term unemployed as unemployed men aged 25-54 years. The average duration of unemployment for men aged 55-64 years was about two years compared to about 15 months for men aged 25-54 years.


It is difficult to assess precisely how much labour market conditions have actually discouraged labour force participation of older men although the chance of older men becoming discouraged jobseekers is greater than that of prime aged men. Between 1983 and 1993, the ratio of discouraged jobseekers to unemployed among older men was at least four times higher than the ratio among younger men.

MALE UNEMPLOYMENT RATE



Source: Labour Force Survey
MALE DISCOURAGED JOBSEEKERS

Age group (years)
Number/100 unemployed in same age group (years)


25-54
55-64
25-54
55-64
Year
'000
'000
ratio
ratio

1983
6.6
7.3
3.2
21.8
1985
4.1
4.5
2.5
12.5
1987(a)
5.1
7.5
2.7
23.9
1989
5.3
4.9
3.8
17.3
1991
7.8
9.2
2.8
17.2
1993
9.4
14.5
3.0
23.8


(a) These figures refer to March of year indicated; all other figures refer to September.

Source: Survey of Persons Not in the Labour Force



Endnotes

1 Cass, B., Gibson, F. and Tito, F. (1988)
Towards Enabling Policies: Income Support for People with Disabilities Social Security Review Issues Paper No. 5.


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