Impacts of Sydney’s Retirement Wave
It is becoming more and more apparent that the ongoing retirement of baby boomers is having an impact on Sydney’s economy, as indicated by recent data published by the Australian Bureau of Statistics and SGS Economics & Planning. Such data suggests that this social issue is driving a decline in the amount of jobs available in some of Sydney’s most expensive suburbs.
The amount of workers living in some of Sydney’s most affluent suburbs, most notably those in the east and north of the city, fell during 2016. Such areas were fortunate enough to have some of Australia’s lowest unemployment rates. The unemployment rate in the eastern suburbs was at 2.8% in November. Terry Rawnsley from SGS Economics and Planning "The labour markets in those regions are strong with high participation and very low unemployment," he said. "This suggests the fall in employment is being driven more by demographic factors, such as Baby Boomers leaving the labour force, than by economic weakness."
The last decade has seen a turn in the lives of many baby boomers, those born between 1946 and 1961, with many commencing their retirement. Such a transition is having a significant economic impact given their non-participation in the workforce. This is being exacerbated by many retirees in such a demographic choosing to stay in the city, as opposed to moving to regional areas to enjoy their twilight period.
Such an issue is incrementally placing a strain on the infrastructure of cities like Sydney due to younger workers requiring to live further from the city, and requiring to travel to their workplace in employment hubs on a daily basis. A further risk to this is if retirees sell their homes and move into apartment closer to such employment hubs.
Australian Bureau of Statistics data has confirmed that 5,000 jobs has been added to the eastern suburbs over the last 5 years, in contrast the 27,000 jobs that were added in Parramatta, and 39,000 on the NSW central coast. The NSW government release a report on intergenerational issues in 2016 which confirmed that the aging of the population would result in a budget deficit of 3.4% of GDP by 2056, clearly unsustainable.
The jobs growth picture in regional NSW was mixed, however employment stability in the Illawarra, Newcastle and Hunter regions remained strong, supporting the argument that proximity to Sydney is key in ensuring employment growth. Such areas remain to have good housing affordability.