Replacing the projected retiring baby boomer nursing cohort 2001 – 2026

In Australia, two major government reports, the Intergenerational Report [1] and the Report on the Economic Implications of an Ageing Australia [2] have identified future budget pressures as a threat to the sustainability of the Commonwealth budget and the availability of health services to future generations. One of the main drivers was found to be growth in health expenditure. However, the shrinking supply of labour as the health workforce ages and retires may pose just as large a threat to the availability of health services.

There is no doubt that the health workforce is ageing [3, 4] however, the timing of potential shortages depend upon when health professionals choose to retire. Nurses are the largest health professional group and, in the past in Australia, they have retired significantly earlier than medical practitioners [5]. As the oldest of the large baby boomer cohort turns 60 this year we can expect nursing retirement in significant numbers over the next ten to fifteen years.

However, there are few papers from Australia or other countries which project the rate or timing of nursing retirement [6, 7] although a number have indicated that nursing shortages are anticipated as the nursing population ages [8‐10]. At the same time as a large proportion of the nursing workforce will be entering retirement, projected growth in the size of the labour market is expected to slow [1]. Understanding the timing and extent of nursing retirement is particularly important as there is already a shortage of nurses in all Australian States and Territories – listed on the National Skill Shortage List released annually by the Department of Education, Science and Training [11].

This paper used a specially defined extract from the past four Australian Bureau of Statistics (ABS) full Censuses for the years 1986, 1991, 1996 and 2001 to measure and then project future nursing retirement through to 2026 and ABS population projections to estimate the size of the labour pool from which the future workforce will be drawn.

Australian Bureau of Statistics (ABS) population estimates and projections were obtained to 2025 by single year of age and by sex [12, 13]. The series used was the medium growth Series B, which assumes medium population growth resulting from medium migration, life expectancy and fertility. (Series A assumes high population growth as a result of higher migration, life expectancy and fertility and Series C assumes low population growth and has the same life expectancy and fertility assumptions as series B but lower migration[20].)

The population estimates were used to prepare population pyramids to examine ageing of the general population and the size and age distribution of the pool of labour from which future nurses will be drawn.

Attrition rates as nurses leave the workforce (due to factors including relocation, retirement, ill health and death) were estimated from the special extracts from ABS Census data (drawn from the full national data set) for registered nurses in 5-year age groups for the years 1986, 1991, 1996 and 2001. This Census data is not generally available as information on nurses is generally grouped into a single "health professional" occupation category. Attrition rates for nurses aged 45 to 75 and over were derived by following five-year cohorts through each of the 1986, 1991, 1996 and 2001 censuses and calculating the net loss from each cohort every five years. The formula is expressed as:

where CAR= Cumulative attrition rate, N = number of people, ti=census date and t1=first census in series (1986).

The nursing population in 2001 was "aged" so that for every five years in the future, each five year age group moved up to the age group five years older to represent the nursing population in 5, 10, 15, 20 and 25 years time. The attrition estimates were applied every five years to estimate the net number of nurses aged 45 years who would leave the workforce as they aged. Attrition from 2001 to 2006 was estimated to establish a current base year for projections from 2006 to 2026.

It was assumed that past patterns of attrition within each five year age group would be maintained into the future and that between the ages of 75 and 80 all remaining nurses retired. This was a reasonable assumption as there were very small numbers in the 75+ age group. Sensitivity analysis was undertaken to determine the effect of a higher or lower rate of retirement than that projected.

Statistical analysis was undertaken using SAS (version 9.1). All tests were undertaken at the 5% level of significance. Tests of association between categorical variables were done using chi-squared tests. Although the data was from a full national census, tests were undertaken to determine whether differences over time within the nursing workforce were of a sufficient magnitude to be statistically significant.

Why is it that we have entered this rapid period of nursing retirement which is set to continue to 2026? Ageing of the population is part of the explanation, with about 75 per cent of the nursing population in the baby boomer cohort or older. Further explanations from Australia and other countries include a decline in nursing undergraduate commencements [14], retention difficulties and the higher average age of new graduates from nursing programs. [15]

These are the demographic and social underpinnings of this phase of rapid retirement from 2001 to 2026. But there is a policy environment in Australia that promotes nursing retirement before the age of 60 years. Most baby boomer and older nurses are employed within the hospital system and have access to employer superannuation. Those employed by public hospitals will have been required to join the State Authorities Superannuation Scheme (SASS) or the State Superannuation Scheme (SSS). These are savings schemes contributed to by members and the employer. They provide a "defined benefit" which is an accrued multiple of the employee's final average salary. The SASS was introduced in 1988 and was closed to new members in 1992 [16]. Those who retire can take their benefits at their eligible retirement age of either 55 years (for members who transferred from older schemes) or 58 years. The SSS was introduced prior to the SASS, but was closed in 1988 when the SASS was introduced. Under the SSS, members elected a retirement age of 55 or 60 years and contributed their savings accordingly with higher contributions for those who chose the younger retirement age. However, it is possible for a nurse who elected retirement at 60 to retire earlier once they have reached 55 years, but their pension will be at a lower rate.

Nurses in these two schemes would be in the baby boomer or older cohorts now aged about 40 years or more and this helps explain the high rate of retirement between 55 and 60 years. It also suggests that the currently gradual increasing of age of eligibility for age pension for women in Australia from 60 years of age to 65 years of age and incentives to delay retirement [17] may not result in high workforce participation of older nurses.

Increasing the average retirement age of nurses would go some way to alleviating future workforce shortages. Biviano et al [6] indicates that delaying nursing retirement by 4 years has a modest effect (9 per cent in 2020) on increasing nursing supply in projections of nursing supply for the US.

Until recently, retirees have not been able to draw a pension and continue to work part time which has been a disincentive to retire partially rather than completely. However, newly introduced changes to superannuation in Australia will provide more incentive for nurses and other Australians to keep working. The Australian Government have changed the superannuation rules to allow workers to continue to work while drawing on a superannuation pension from 1 July 2005 [18]. This may encourage nurses, and particularly women with children with a lower accumulated balance because of broken employment patterns, to continue to work. However it remains to be seen whether this economic incentive will be sufficient to persuade nurses to work longer as there are other non-economic reasons why nurses may have been retiring early, including musculoskeletal injuries and the heavy physical nature of nursing [21], job characteristics such as inflexibility of shift work, working conditions and relatively low pay for the skills required [22] and, for women, aligning their retirement age with on average older husbands [5, 23].

Australia faces a period of rapid retirement from the nursing workforce which has recently begun and which will mean the loss of about 90,000 nurses over the next 20 years. Ageing of the population and population growth will result in increased demand for nursing care that is unlikely to be met by the current proportion of young adults completing nursing training. Careful planning to balance recruitment of new nurses, and policy incentives to improve retention of nurses is required to ensure that there is an adequate nursing workforce to meet the needs of an ageing population.