Who will look after the elderly in Australia?

Our resident Stats Guy wonders who (or what) will be looking after elderly Australians in the years to come.

May 20, 2024, updated May 20, 2024
Australia faces big challenges with its ageing population, writes Simon Kuestenmacher. Photo: TND/Getty

Australia faces big challenges with its ageing population, writes Simon Kuestenmacher. Photo: TND/Getty

Last week we discussed just how big the demand for aged care will be in the coming decades. More than half of all people aged 85+ will need some sort of care. This care can be provided by family members or professional aged carers.

Since we are doubling the 85+ population in the next 14 years from 586,000 to 1,189,000, we can be sure that the need for aged care workers will grow at roughly the same rate.

That’s a problem, considering the sector is already dramatically understaffed.

But it gets worse. Last year I introduced the concept of the retirement cliff. It’s a simple measure that shows what share of the workforce is already of retirement age and what share is aged between 55 and 64, meaning they will fall off the retirement cliff in about a decade.

Some jobs face steeper retirement cliffs than others.

As the chart below shows, the jobs a typical aged care home relies on face very steep retirement cliffs.

We established that we already have a current shortage of registered aged care nurses, residential care officers, and aged carers; we realised that the future demand for such workers is increasing rapidly; and now we learned that a disproportionately big share of workers will retire in the coming decade. Ouch.

Sadly, we are not done yet.

Things get worse when we look at arguably the most important job in the aged care system – aged carers.

The chart below shows the age profile of the roughly 225,000 aged care workers who were employed in Australia during the 2021 Census.

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We see a relatively strong cohort of young care workers in their late teens and early 20s. At first glance this looks promising – have we found the formula to attract sufficient young talent into aged care?

We shall revisit that question a bit later. In their 20s, 30s, and 40s, workers are leaving the industry before returning at scale in their 50s and 60s. Once folks hit retirement age, the physical nature of the job ensures that most aged care workers retire very quickly.

Can’t we just migrate our way out of this shortage? Isn’t that what we’ve done in the past few years? A much higher proportion of aged carers (41 per cent) were born overseas than in the nation overall (33 per cent). Migrants are even the majority of aged carers in their 30s (54 per cent).

Let’s understand the foreign-born aged carers a bit better. Migrants work in aged care during their 20s and 30s and leave the profession during their 40s. Retirement starts at scale at age 60 and speeds up rapidly post 65. There is reason to believe that we will lose huge numbers of foreign-born aged care workers to other industries soon. Let me explain.

Among younger migrant aged care workers (aged 26 to 38) just over 50 per cent hold at least a bachelor’s degree. Since education is still the best indicator for your future income, it is unlikely that these highly skilled migrants will remain in the low-paying care sector throughout their whole career.

Likely visa conditions and the prospect of citizenship keeps them temporarily in a low-paying industry. Sooner or later, we will lose these aged care workers to better paying jobs, especially since the skills shortage extends to other sectors and it should be relatively easy for them to secure a better paying job.

The high costs of living make such a career shift even more likely.

In 14 years when we will have doubled the 85+ cohort, a large share of migrant aged care workers will fall off the retirement cliff and will need to be replaced. Australia has limited spots available on the skilled migration list and can’t possibly assign enough to the aged care sector to fill all the job vacancies.

That leaves us with our Australian-born aged care workforce. How many of these workers will we need to replace in the coming decade and how can we attract more workers?

To be frank, the age profile of Australian-born care workers is very frightening. We see a huge spike of young workers, a massive decline during their 20s and 30s, and a massive block of workers in their mid-40s to early-60s.

Australian born aged care workers tend to have qualifications in line with their profession. Over-qualification isn’t an issue to the degree it is with foreign-born aged carers.

We can be certain that the spike of young Aussie carers will leave the industry. We constantly need to recruit, train, and farewell new young Australian carers.

Retaining them throughout their 20s and 30s is a hard challenge. It takes a special workplace to pull this off.

A scarily huge share of Australian-born aged carers are aged 51 and over which makes them of retirement age just in time for the doubling of the 85+ cohort in 14 years.

To sum up, we need many more aged care workers by 2038 but will lose crazy high numbers of aged care workers in the lead-up. It’s a problem of catastrophic proportions. How might we try to tackle this shortage?

Local and international recruitment at record pace is the easiest part of the answer. Under-utilised segments of the workforce will be encouraged to take up careers in aged care.

This means more efforts must be made in training and up-skilling of new recruits. These efforts can only do so much considering how big the need for more workers really is.

New models of aged care will emerge. Localised ambulant care services will offer individualised care in the home. This could well be a platform-based service (think Uber-care).

Step aside carpooling, it’s time for care-pooling services. A handful of households in a neighbourhood pay for a shared full-time carer or two.

In relatively small numbers, pensioners will simply move to low-cost facilities overseas. YouTube is full of retirees telling us how to live out your golden years in Cambodia or Vietnam where young workers are plentiful and care services can be purchased at low costs.

We will adjust our homes to prolong the independent living phase of the lifecycle. Buy stocks of companies adding lifts to houses and expect high demand for home renovations to remove steps, widen doors, and add monitoring systems.

Technology will be used much more to ensure independence in old age. Wearable technology, like an Apple Watch, will feed data into a centralised healthcare system that alerts ambulant care services of falls, pending health complications, and heart attacks.

Aged care in 14 years will look very different to what it does now!

Demographer Simon Kuestenmacher is a co-founder of The Demographics Group. His columns, media commentary and public speaking focus on current socio-demographic trends and how these impact Australia. His latest book aims to awaken the love of maps and data in young readers. Follow Simon on Twitter (X), Facebook, LinkedIn for daily data insights in short format.

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