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Greying workforce helps keep wage growth subdued

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01.10.2019

Amid all the excitement about rock-bottom interest rates, the economy recently chalked up another record that you may have missed.

The share of people who are either in work or looking for a job has been steadily climbing, and last month, official figures showed it reached its highest level since records began in 1978.

RBA governor Philip Lowe has said the increase in labour supply has made it "quite difficult" to generate a tight labour market.Credit:AAP

This milestone may not grab headlines quite like cheaper home loans or the prospect of another housing boom, but it's arguably just as important. What's more, it has a lot more to do with lower interest rates than you might imagine. But more on that later.

One of the more surprising economic trends in recent years has been the surge in the share of the population who are in jobs or looking for work, a ratio known as the participation rate.

As Treasurer Josh Frydenberg has been keen to highlight, our participation rate has "never been higher," and it's gone hand in-hand with more people having jobs.

You'd expect the Treasurer to highlight this positive side of the story, but more striking is what's driving the increase in participation. In a nutshell, the two key reasons are ongoing growth in female participation, and, more surprisingly, that Baby Boomers are staying in the workforce for longer than........

© The Age