National, state and territory chambers of commerce have today called on the Federal Treasurer to incentivise greater participation in the workforce by allowing age pension recipients to earn more without impacting their pension.
There are significant barriers for aged pension recipients to re-enter the workforce. Under the Work Bonus, a pensioner can earn an average of $480 a fortnight – or $12,840 a year – before their payments are reduced, at an effective marginal tax rate of at least 50 per cent. This is the equivalent of only one day a week at the minimum wage before their pension is reduced.
While the Work Bonus program allows more flexibility, raising its threshold will encourage greater participation, bringing more workers into the jobs market, and address the critical skills shortages.
Indeed, businesses of every size, in every industry, in every corner of the country, are experiencing the worst skill and labour shortages in more than two decades. Without access to workers, Australian businesses cannot compete in the global economy.
The new COVID-19 Omicron variant has also delayed the reopening of the international border to skilled migrants, working holiday makers and international students. In the absence of these arrivals, getting older skilled workers into the labour force will be key to Australia’s economic recovery.
Even when our borders do reopen, the global war for talent means we will be in fierce competition for skilled workers. Countries that can bolster their local workforces will be best positioned to boost productivity and realise their economic potential.
There is significant untapped demand for the over 65s to return to work. As ABS data illustrates, the number of additional hours worked by people over 65 has surged in the past two years from 685,000 hours to over 978,000 hours.
Quotes attributed to Andrew McKellar, chief executive, Australian Chamber of Commerce and Industry:
“There is an army of older workers, ready and willing to return to the workplace. However, skilled aged pension recipients have very little incentive to re-enter the workplace.
“In raising the Work Bonus threshold, pensioners would be allowed the opportunity to earn more, while businesses who are struggling to find staff would have access to workers, filling thousands of job vacancies.
“As the national, state and territory chambers of commerce, our united demand reflects the fact that businesses right across the country are crying out for workers. This is a simple step the Federal Government must take to grow our workforce, boost our productivity and drive our economic recovery.
This statement is released by:
Andrew McKellar, CEO, Australian Chamber of Commerce and Industry
Daniel Hunter, CEO, Business New South Wales
Greg Ireland, CEO, Chamber of Commerce Northern Territory
Stephen Tait, CEO, Chamber of Commerce and Industry Queensland
Martin Haese, CEO, Business South Australia
Michael Bailey, CEO, Tasmanian Chamber of Commerce and Industry
Paul Guerra, CEO, Victorian Chamber of Commerce and Industry
Chris Rodwell, CEO, Chamber of Commerce and Industry Western Australia