Australia could add nearly $29 billion to its economy each year by keeping more older workers in employment, according to new research from KPMG Australia, which argues that the country is failing to capitalise on a growing pool of experienced talent.
The report estimates that increasing workforce participation among people aged 55 to 64 from 69% to 77% would bring an additional 236,000 workers into employment. The shift would generate $16.7 billion in extra wages and $12.3 billion in additional business profits, delivering a combined annual GDP boost of $29 billion.
The findings come as Australia falls behind several developed economies in mature-age workforce participation. OECD data shows Australia ranked 24th globally in 2025, down from 17th place, with countries including Sweden, Japan, Estonia and New Zealand recording substantially higher participation rates among older workers.
Economic pressure
The report arrives as labour shortages continue to constrain business growth across the country. Job advertisements remain significantly above pre-pandemic levels despite softer economic conditions and tighter migration settings.
“Maintaining older talent is a multi-billion-dollar opportunity sitting in plain sight if we can get the settings right,” said KPMG Urban Economist, Terry Rawnsley.
“We have a large pool of experienced, work-ready people, yet businesses are still struggling to fill roles. Closing that gap is one of the most practical ways to ease labour shortages, boost economic activity and taxation revenue,” he added.
KPMG's modelling suggests that restoring participation growth among older Australians to its historical trend could help address workforce shortages without relying heavily on overseas labour.
Lost momentum
Australia recorded strong gains in mature-age employment participation between 2005 and 2015, when the rate for workers aged 55 to 64 climbed from 54% to 65%. The increase was supported by growth in service-sector jobs, greater workplace flexibility and more opportunities for part-time employment.
However, the pace of improvement has slowed considerably over the past decade.
“Australia has done a lot of the hard work lifting participation among older workers over the past two decades, but that momentum has now stalled at exactly the wrong time,” Rawnsley said.
He added that Australia's retirement income system, including superannuation, the age pension and private savings, may be encouraging some workers to leave the labour force earlier than they otherwise would.
Re-employment challenge
One of the biggest barriers facing older Australians is securing a new role after losing a job. According to Jobs and Skills Australia data cited in the report, workers aged between 55 and 64 take around 20 months on average to find new employment, more than double the nine months typically required by prime-age workers.
The difficulty of re-entering the workforce can discourage mature-age Australians from seeking further employment and contribute to lower participation rates.
Employers have a key role to play in improving outcomes through flexible working arrangements, targeted training programmes and redesigning jobs to better suit experienced workers.
“This is not just about workers; it’s about how employers think about jobs and keeping older talent. Flexible work, targeted training, and better job matching can make a real difference, and in many cases, small adjustments can unlock a highly productive worker,” Rawnsley said.
“There are also over 200,000 people aged 55-64 who are on JobSeeker and around 250,000 receiving the Disability Support Pension. This reflects a significant group of people who may be eager to contribute but are not finding the right support to help them join the workforce,” Rawnsley said.
Untapped workforce
The report highlights a sizeable pool of older Australians who remain outside the labour market despite having the potential to work. KPMG argues that policies supporting workforce retention, retraining and flexible employment could unlock significant economic benefits while helping businesses address ongoing labour shortages.
With Australia's population continuing to age, the consultancy said boosting participation among experienced workers could become an increasingly important driver of economic growth in the years ahead.