Labour force participation defies trends

By MATHEW DEARNALEY

Rising numbers of students and people retiring early have dampened participation in the country's labour force, in a reversal of the usual trend at times of low unemployment.

The Labour Department says the proportion of the working-age population in the labour force usually rises when unemployment is low, in response to better job prospects, but it in fact declined from 66.8 per cent to 66.2 per cent in the year to March.

Although the working-age population grew 2.1 per cent to 3.01 million people, the number not in the labour force increased by 39,000 - or almost 4 per cent - to 1.02 million.

Students, including many from overseas, accounted for about half the increase, while newly retired people comprised 25 per cent.

Department researchers, in their June labour market outlook, say recent strong economic growth may have increased people's wealth to the extent of inducing them to retire earlier than usual.

Unemployment remains at historically modest levels, although it eased up to 5 per cent in the three months to March from a 15-year low of 4.9 per cent, and is expected to peak at 5.5 per cent in the next nine months.

It is expected to decline to 5.2 per cent by March 2005, depending on higher growth from world economic recovery.