Video: Bernard Salt discusses The Baby Bust 

The Baby Bust is the concept of the baby boom generation finally removing themselves from the workforce and entering retirement. The oldest baby boomer born in 1946 turns 65 in 2011and all of a sudden you have more baby boomers exiting the workforce than Generation Y’s entering the workforce. What this means is that the available pool of talent/labour that business can draw from starts to diminish. It also means that the rate of growth in the tax base, starts to slow down. 

If you’ve got more workers exiting the workforce than entering the workforce, it has direct implications on the demand for household formation, consumer sales and for taxation.  But I think the most direct and immediate impact of the Baby Bust, which I say applies from 2011 onwards, will be in the demand for skills and labour.  Australia has been struggling over the last 4-5 years for talent and labour. The impact of the Baby Bust will take this to a new level. I see this as a game changer.

We need a range of technical skills to deliver, or continue to deliver, prosperity to Australia over the next 10 years or so. Part of the solution I think is in increasing skilled migration. We might see a reversal in the numbers of 457 visas coming into Australia, an increase if you like. I also think there will be pressure for greater workforce participation.

Policies developed to encourage people to return to and to remain in the workforce. Work might become far more flexible, full time, part time, work remotely, work from home, job sharing, telecommuting.  All of these solutions I think will come into play as we try to get the greatest productivity out of the workforce over the next 10 years as it copes with the impact of the Baby Bust.

One of the issues for the workforce quite apart from the Baby Bust is the fact that many baby boomers will in fact choose to remain in the workforce. For example, having a 55 year old nurse lifting a heavy patient exposes a hospital to OH&S risks. I think the ageing of the workforce is a major issue, especially for larger corporations where many of the tasks will need to be re-engineered to achieve risk mitigation and to achieve the preferred outcome.

KPMG’s services that can address the impact of the Baby Bust, would include our Migration Services group which helps recruit and introduce talented people into Australia and place them in Australian businesses. In addition to that, our Performance & Technology group, goes into companies and can help re-engineer work tasks and work forces in order to achieve the right outcome. Property & Demographics group which can forecast pools of talent and labour around Australia to see whether or not there is sufficient depth in a particular market to recruit a particular workforce.