National Labour Force Projections 2020-base

Reference period

This release contains 2020-base projections of the labour force usually living in New Zealand. These supersede the 2017-base projections released in December 2017. The new projections have the estimated resident population in the labour force at 30 June 2020 as a base, and cover the period 2020–73 at one-year intervals. The labour force projections are derived from the latest National population projections: 2020(base)–2073 (released 08 December 2020) by multiplying the projected population by the assumed labour force participation rates (LFPRs), by single year of age and sex.

Detailed projection results, including projections for individual years and by single-year of age and sex, are available in NZ.Stat.

Main changes since the previous 2017-base projections

The derivation of the projections involves a review of all projection assumptions. Compared with the previous 2017-base projections (December 2017 update), the main changes to the median assumptions are:

• male LFPRs for ages 21–53 years remain at 2020 levels, instead of increasing slightly over time as in the 2017-base projections
• female LFPRs for ages 17–58 years are slightly higher than in the 2017-base projections, and female LFPRs for most other ages are lower, especially at ages 75+ years
• male average hours worked (AHW) for all ages remain at 2020 levels, instead of decreasing for ages 15–76 in the 2017-base projections
• female AHW are higher for ages 29–70, instead of 32-39 and 52–70 in the 2017-base projections.

Projection assumptions

Projection assumptions are formulated after analysis of short-term and long-term historical trends, recent trends and patterns observed in other countries, and government policy.

Population projections

Labour force projections for 2020–2073 are based on the population projections summarised in the release National population projections 2020(base)–2073.

Labour force participation

Labour force participation rates (LFPRs) measure the proportion of the population in the labour force, either part-time or full-time. LFPRs differ significantly across age for both males and females.

The main features of the median LFPR assumptions between 2020 and 2073 are:

• increases in LFPRs for males aged 54+ years and females aged 22+ years, especially for males aged 65–72 years and females aged 57–71 years, reflecting increased flexibility in the age of retirement (with no compulsory age of retirement), changing attitudes to retirement, and increasing life expectancy and wellbeing in the older ages
• increases in LFPRs for females aged 25–36 years, partly reflecting declines in fertility rates and increases in childlessness
• small decreases in LFPRs for males and females aged 15–20 years, partly reflecting increasing rates of participation in tertiary education.

Future labour force participation trends are uncertain and depend on a range of factors.

• changes in population composition and different trends in population subgroups (including ethnic groups).
• trends in fertility including the timing and number of births.
• trends in the patterns of education (especially tertiary education) and work, including the timing, duration, and proportion of time dedicated to those activities.
• trends in the balance between paid work, unpaid work, family, and leisure activities at different ages.
• changing macro-level conditions (eg global and national economic conditions, government policies) that affect the labour market and demand for labour.
• trends in health and mortality, affecting well-being and life expectancy, especially at ages above 50 years.
• changes in financial considerations, including eligibility for government superannuation, especially at ages above 60 years.

Average hours worked

Average hours worked (AHW) measures the extent to which the labour force is available for work. As with LFPRs, AHW differs significantly across age for both males and females. Assumed AHW are formulated from analysis of trends in the Census of Population and Dwellings and the Household Labour Force Survey (HLFS) based on average hours worked by those working. People in the labour force who are not working are assumed to be available for work to the same extent as those working.

The main features of the median AHW assumptions between 2020 and 2073 are:

• increases in AHW for females aged 29–70, partly reflecting declines in fertility rates and increases in childlessness
• no change in AHW for males.