Bernard Salt: Retirement of boomers mean big cut to migrant numbers could hurt SMEs

KPMG partner Bernard Salt has urged for a cautious approach to Australia’s population policy, saying the current levels of migration are about right and any moves to reduce that number should be phased in gently to account for the looming retirement of baby boomers.

Salt told SmartCompany this morning that any significant cuts to migration levels – which currently sit at 180,000 per year – should be phased in over the next 10 to 15 years to give business and individuals time to adjust, and with an eye on baby boomers exiting the workforce or cutting down on hours.

“My argument is to maintain the trajectory for this decade, and then review it,” Salt says.

His concern is the so-called baby bust, or the “big tilt” as he calls it, where boomers exit the workforce at a faster rate than generation Y enters the productive stage of their life cycle.

Salt expects the “retirement effect” to kick in around 2014 to 2016 as those born in the 1950s ease out of the workforce.

The demographer says because Australia has had high migration levels for about six decades, many people are unable to pinpoint how important it has been for the nation’s economic growth.

His comments follow a significant increase in migrant numbers from 2006 to 2009, although the rate of growth fell after former Prime Minister Kevin Rudd declared himself in favour of a “big Australia”.

Salt adds that while this is not a sufficient reason to maintain migration levels, one consequence of not cutting migration is that it will create a bigger pool of people to compete to buy businesses and houses.

A reduction in migrant numbers would also flow through to new homes built, which would in turn hurt trades which rely on new starts, he says.

Salt, who recently released the book The Big Tilt: What Happens When The Boomers Bust and Xers and Ys Inherit the Earth, says for business, one consequence of the ageing population in the workforce will be demands for greater flexibility from senior staff, and manual workers – such as truck drivers – being more susceptible to occupational health and safety issues.

In terms of migrant makeup, Salt says Australia should continue its generous humanitarian program, but also focus on a particular type of migrant: skilled, healthy and in their 20s and 30s, with a predisposition to Australian values.