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3.II.(c)    Demographer and author of "After a fit of peak, bosses could face labour woes" identifies a parallel between price increases in West Texas Crude after "peak oil", with Australian labour prices increasing as we have hit "peak labour"

Demographer and author of "The Big Shift", Bernard Salt, KPMG partner's article of 18 May 2006 "After a fit of peak, bosses could face labour woes" identifies a parallel between price increases in West Texas Crude after "peak oil", with Australian labour prices similarly rising after the rate of growth in the labour force plateaus and then commences to subside.  The KPMG partner calls this zenith in labour supply "peak labour".

Bernard Salt points out that there has been a close correlation between growth in the labour force and growth in the population from which the labour force is drawn.  However, he predicts that growth in number of people in the 15-64 group will fall rapidly:

*        Year to June 2006 - number of people in the 15-64 group increased by 168,000 or 1.2%.

*        Forty years earlier - June 1966 - rate of growth in the 15-64 group was 2.6%.

*        Forty years ahead - June 2046 - rate of growth in the 15-64 group will be 0.2%.

The pool of people from which we draw labour ramped up during the 1960s as baby boomers moved beyond childhood (aged 0-14) and into the working age group (15-plus).  Ramp-up which marked the 1960s will, in the coming decade, give way to a ramp-down as boomers moved beyond the working age group.

Back half of the 20th century was marked by a high level of growth in the number of people in the working age group.  Peak era of growth in the working age population was the decade to 1993.  Bernard Salt's analysis asserts we are now on its leeward side of the plateau of "peak labour".  Over the three years to 2006 the number of people added to the pool from which our labour force is drawn has trended down.

Underlying pool from which this labour is drawn has expanded at a reduced rate.  This means that should the present economic boom, largely fuelled by China, end, and high participation rates (between population and labour force) subside, then the labour market will resettle to a base that is lower than its trajectory in 2003 had implied.

The working-age segment of the Australian population will -

(A)        continue to grow at a reducing rate over the next 25 years; and

(B)        will plane into 2050.

The reason for this labour outlook is because the number of people in the working-age segment of the population expanded as boomers entered this cohort in the 1960s and 1970s.

The boomers will then exit as they move beyond 64. The first boomer turns 65 on July 1, 2011, and over the following 15 years all four million will move out of the working-age population and into retirement or die.

Bernard Salt predicts that many boomers will extend their working life beyond 64 next decade as they realise they do not have sufficient funds to live in the manner to which they have become accustomed.

His 100-year perspective of growth in the working-age population indicates that without incentives to increase the rate of labour force participation the underlying demographic bedrock shows contracting growth rates in this decade and the next which will increase the cost of labour.

In the 1960s phase of growth the power balance between worker and employer rested with the employer citing "If you do not accept my terms and conditions then I will choose someone else".  In the ramp-down phase in this decade and next, the power balance shifts from the employer to the worker because there is not the same depth in the labour pool to select an alternative candidate.