UK faces ‘Herculean task’ responding to age trends: Mercer

A new report modeling four post-Brexit scenarios suggests that, without action, the size of Britain’s future workforce could hamper economic growth prospects.

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The Mercer Workforce Monitor suggests positive net migration has softened the impact of the UK’s aging population. With inward migration predicted to fall, the report outlines four possible situations.At best, says the global talent, health, retirement and investments consultants, workforce growth – which historically correlates to economic growth – will increase slowly.

Responding to the aging population post-Brexit

To offset the aging population, which needs a larger working-age population to sustain public services and pensions investments, businesses and governments should be looking to prioritise automation and boosting worker productivity, says Mercer.“The UK has made a decision and we now need to respond to it as best we can,” said Julia Howes, specialist in workforce analytics at Mercer. “The big question for society is how we handle the ratio of young to old.“As with Japan, we’re asking fewer workers to fund the pensions and healthcare of an increasingly large older generation – and look after their own future as well. This will create a very different world and all of us – individuals, governments and organisations need a plan of action.”

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Four scenarios

Mercer drew on official national workforce and demographic to outline four scenarios to reach its conclusions.The first, least dramatic, outlook is no change to the government’s expectation that migration drops from the current 335,000 per year to 185,000 by 2020 and thereafter. Here, the total population increases 5.5 million to 71.2 million in 2030, with the workforce increasing from 33.4 million to 35.1 million over the same period. Yet there are already skills shortages in many industries.The second model limits migration to 100,000. It sees the UK workforce grow to 34.4 million in 2030 and the overall population increase by 4.5 million to 70.2 million. This means fewer workers supporting a larger population and the related pressures increasing on pensions and healthcare funding, compounding current skills shortages and demographic pressures.Limiting migration to 40,000 as in the third scenario results in “dramatic headwinds”, says Mercer. The working population increases by just 400,000 from its 2016 base to 33.8 million in 2030, while the total population grows by 3.7 million to 69.4 million. Mercer anticipates the UK would experience acute skills shortages, with government revenues coming from fewer workers needed to support more people.The final projection Mercer terms the “Great EU Remigration.” It envisages an outflow of EU-born and non-EU born workers caused by an unwelcome social environment in the UK. Combined with a net outflow of UK-born workers too (a group according to the Bank of England that has historically left the UK in higher numbers than returned since records began in 1964), the UK’s working population shrinks by 700,000 to 32.6 million while the overall population increases by 2.3 million from 65.7 million to 70.2 million. The inability of certain sectors of the UK economy to fill roles could be dramatic. For example, according to the Campaign for Science and Engineering, a quarter of academic staff in UK universities are non-UK nationals.

Workforce plannng, inclusion, productivity and automation

Mercer believes the report is a “wake-up call” to businesses and government. It is launched at a time when the government is launching is strategy aimed at keeping people in the labour market longer and negotiating Britain's exit from the EU.Commenting on the research, Gary Simmons, partner at Mercer, says: “Both the government and businesses have a Herculean task ahead of them in determining how we respond to the changing shape of our society.“We hope that our modeling is a wake-up call to the business community. There is a tremendous opportunity for far-sighted organisations to begin determining and implementing clear plans in response."If they do not act now, they could potentially find they do not have their share of the people and skills they need in future. The solution lies in analysis, automation and accessibility.“Companies should analyse and understand the make-up of their workforce. They should look to increase retention of current staff and be accessible: employing sectors of UK society that might be under-represented in the workforce – women, disabled, the long-term unemployed.“They should also be investing heavily in automation where possible as well as improving employee productivity, through training and skills.”

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