Australia’s economy could surge by another $29bn by employers making it easier for older workers to get their next role.

Fresh research released by KPMG found the Australian workforce is missing a trick by not embracing older workers.

KPMG urban economist Terry Rawnsley said Australia’s labour force participation has “stalled over the last five or 10 years” but getting people aged 55 to 65 back into the workforce could help combat the national skills shortage.

“It’s a pretty big productivity boost if we could get these workers back into the workforce,” he said.

Australia’s labour force participation rate is relatively low compared with global peers, largely thanks to older Australians leaving the workforce.

Comparing Australia to the rest of the world Mr Rawnsley pointed to our relatively poor participation rate of just 69 per cent.

Global peers, including Sweden, Japan, Estonia and New Zealand, are all above 80 per cent.

KPMG suggests getting a participation rate closer to 77 per cent – or adding around 240,000 jobs – would boost the national economy and drastically reduce the current skills shortages.

Mr Rawnsley said the three retirement pillars Australia has in the form of a pension, super and private savings, means people can afford to retire earlier in Australia which might explain why Australia has slipped from 17th to 24th globally in workforce participation among 55–64-year-olds.

“ … a lot of other countries don’t have superannuation for people to draw on,” he said.

Analysis of ABS data found that workers aged 55–64 who lose a job take around 20 months on average to find a new one, compared to about nine months for prime-age workers.

Mr Rawnsley said this created a strong disincentive for them to remain engaged in the labour market.

He said if employers could make a few simple changes to allow for older experienced workers, it would have a positive impact.

For example, Mr Rawnsley said older workers tended to prefer part-time work, so if employers and employees could agree on flexible arrangements, they would be more likely to find the right employees for the role.

“(Businesses) who have been successful in recruiting the older age groups are ones which offer flexible work arrangements, training and development,” he said.

“The labour market’s pretty tight so they’re still more job vacancies in Australia than there were before Covid so businesses have to be flexible if they want to attract the right sort of workers.”

Mr Rawnsley said while an older worker might not be familiar with particular procedures, software or programs, they would likely have a lot of experience and might just require training similar to what a business would give a more junior employee.

“I think this is kind of once again where employers can also come to the party because (for) some businesses it might be quite a niche piece of training which is required,” he said.

Mr Rawnsley said the increased employment of older workers would also help ease inflation.

“We know that our businesses are struggling with skill shortages and supply chain issues so if we could magically, from within the existing country find 240,000 workers that would make it easier for businesses to do their business and ease inflationary pressures,” he said.

“It’s a nice sort of free hit to boost the productivity within the economy.”