Forecasts, estimates, projections and prognostications – how can we look into the future?

Judith Davey 3/7/2017

Statistics New Zealand (SNZ) is clear that it makes projections about the future, not predictions. Its projections are the outcomes of “various combinations of selected assumptions about future change in the dynamics of population change.” We can assume that trends will continue along the lines which they have established in recent times. Or we can factor in new directions based on emerging trends, overseas experience or “best guesses”.

We can’t be sure about what will happen in future with respect to –

Fertility      – (how likely is another baby boom?) SNZ thinks fertility will remain low.

Mortality     – linked to longevity, in which we hopefully expect further gains.

Projections cannot take into account factors such as catastrophes, epidemics, wars and government decisions which affect population trends. What about migration? There have been marked variations in movements in and out of NZ in recent years. Governments have some control over this, but what if all the expatriate Kiwis choose to come home?

I recently looked at projections related to the ageing of the populations – a trend which is very likely to continue. Here are some of my findings.

Changes in the age structure

We are likely to see a shift in the balance of children and older people in our population (see diagram). There are still more people under 15 than over 65. But the projections show that the lines will cross in about 2028 – just over 10 years from now. If the 65 plus age group continues its rise, by 2068 the NZ population will be made up of 28% under 15s; 24% aged 15 to 64; and 48% 65 and older.

Actual and projected figures for the under 15 and 65 plus populations

 Capture

What will this mean for “dependency rates”?

These compare the proportions in the so-called “dependent” age groups with those of “working age” – 15-64. This is a somewhat outdated measure as people are staying in school or tertiary education for longer at the lower end (school leaving age is now 16) and people are remaining in paid work in greater numbers after the age of 65. Would 20 to 75 be a more realistic definition of the working age population? These changes will have implication for future labour and skills supply, which will have significant social and economic implications.

Change in the ethnic composition of the older population

In 2013 the age group 65 plus was dominated by Europeans (88%) and this is likely to continue into the future although in a less marked form (see table). All other ethnic groups will increase their share, with the Asian group rising to a percentage higher than that for Maori – 14% Asian and Maori 9%.

Population 65 plus by ethnicity, 2013 and projected 2033            

Ethnic group 2013 % 2033 %
European 88.3 77.3
Maori 5.8 8.9
Asian 5.1 13.9
Pacific 2.6 3.8

Note: The census allows more than one ethnic affiliation to be recorded, so the sum of these categories will be higher than the overall total.

Life expectancy at birth and age 65

It is important to distinguish between life expectancy at birth and at age 65. Life expectancy at birth has increased from 67 to 80 for males between 1950-52 and 2014-16. The corresponding increase for females is 71 to 83.

The increases are even more striking for life expectancy at 65. Life expectancy at 65 is higher than at birth as individuals reaching that age have avoided dying from illness and accidents which happen to younger people.

Life expectancy is expected to continue to increase, but there are many uncertainties. SNZ suggests that for people born in the mid-2010s perhaps 11% of males and 17% of females will reach the age of 100.

Falling home ownership

At present, home ownership peaks in the 60-74 age group, but has fallen for all age groups over the last three censuses, except for the age group 85 plus (see diagram). In the middle age range – 35-54 – the percentage of homeownership has fallen by 10 or 11 percentage points. Over the total population it has fallen from 74% in 2001 to 64% in 2013.

So in the future we can foresee more people moving into later life without owning and house or, given the rise in house prices, without having paid off a mortgage. This is likely to mean higher housing costs for them and more difficulty in achieving a good standard of living once out of the workforce.

ownership tender

Labour Force Participation

Over the last three census dates there has been strong growth in numbers of older people remaining in the workforce, especially in the 65-69 age group, and especially for men. These trends are expected to continue with people living longer and healthier and no compulsory retirement.

males vs females

Between 2015 and 2068, the total labour force is projected to rise from 2.5 million to 3.3 million. These projections suggest that the number of workers aged 65 plus will increase from 183,500 to 428,300 – by 174%, rising from 6% to 13% of the labour force.  At the same time the total workforce will increase by only 31% and the numbers aged 15-24 (new workforce entrants) will decrease by nearly 1%. From this I suggest that employers will have to acknowledge necessity of keeping their older workers on and providing them with the working conditions which suit them, such as flexible hours, recognition of eldercare responsibilities and ergonomic improvements in offices and factories.

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About Age Concern New Zealand 'on research'

At the heart of everything Age Concern does is a passion to see older people experience well-being, respect, dignity, and to be included and valued. We support, inform and advise older people on issues such as access to health care, transport, housing, financial entitlements, and social opportunities. We also work to combat real problems in our society, like elder abuse and neglect, chronic loneliness and social isolation. We provide specialist services with trained and qualified professionals able to give expert advice and assistance. Age Concern is a charity and relies on the support of volunteers and public donations to do much of the work we do. To help us help older people, please consider making a donation of your time or money. To see how, visit www.ageconcern.org.nz
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