18 December 2018

United Kingdom, London

  • UK workforce shortage will hit 1.9 million by 2025
  • Gaps to be filled by underrepresented labour sources
  • Recruitment and retention strategies must change to reduce reliance on traditional talent pools
  • Mercer framework helps businesses build a diverse, inclusive workforce
New figures compiled by Mercer project an impending 1.9 million UK workforce shortage of by 2025 if labour demand continues to increase at the same rate as the last ten years. The shortfall is compounded by a dramatic decline in the number of foreign-born workers from Q3 2017 to Q3 2018, with a fall of 93,000 EU-born workers and 38,000 Non-EU born workers in the UK. This is the fastest rate of decline since records began in 1997, as the impact of the Brexit vote begins to be realised.

The rise in job vacancies is also at its highest since 2001, at 845,000 for August to October 2018, up by 44,000 from a year earlier. With 43,000 fewer people looking for work, companies are already starting to feel the impact of a competitive and scarce talent pool.

Underpinning the analysis is a post-Brexit net migration assumption of 100,000 per year. This is consistent with the Treasury’s recent paper “EU Exit – Long-term Economic Analysis”, which assumes a net zero EU migration scenario and ultimately results in a £40 billion hit to the economy. This assumption could well turn out to be optimistic, with net EU migration having fallen by 115,000 to 74,000 in the last two years and an ageing EU demographic making migration increasingly less common.

However, detailed analysis of untapped UK talent pools by Mercer reveals that by implementing measures to focus on underrepresented labour sources and embrace diversity, businesses are capable of plugging the gap. Achieving this would require most employers to change their mindset and establish a strategy for recruitment and retention that’s fit for this new age.

Gary Simmons, Partner at Mercer, said: “It has been 70 years since the UK experienced such severe workforce shortages. With Brexit and the ability of the UK government to restrict immigration from the EU, businesses must act now to address the impending labour shortage. Plugging the gap is not going to be easy, but it is achievable. Creating a workplace appealing to all, irrespective of age, gender, sexual orientation, disability and ethnic background is a business necessity.”

Based on research across underrepresented groups in the workforce, including people with disabilities, older and female workers, Mercer has identified significant untapped resource and sets a realistic target of attracting almost 1.8m workers by 2025 to meet the majority of the shortfall.
  • Older workers - According to the Mercer Workforce Monitor, the number of over 50s in the workforce will increase by 14% between 2015 and 2030, while under 30s will decline from 25% to 23%, making retaining and attracting older workers key. With the baby boomer generation now moving through to retirement and gradual increase of the state pension age, strategies to slow the rate of retiring could increase the workforce by 900,000 by 2025
  • Workers with disabilities – Over the past five years, the number of people with disabilities in the workforce has increased from 51% to 56%, an increase of 817,000. Measures to increase participation at a similar pace by 2025 could add 475,000 to the workforce
  • Female workers – Mercer’s analysis shows the main driver of under-representation of women in the 20-50 years old bracket of the workforce is that they are not entering the workforce at all, rather than the commonly-held notion that it’s driven by childcare needs.  With female participation having increased from 60% to 66% over the last ten years, strategies to increase participation by a further 5% by 2025 would add an additional 400,000 workers

Based on experience advising clients on how to address the impending workforce crisis, Mercer has set out a framework to facilitate a change in mind-set and create a truly inclusive culture in UK businesses.

  1. Facilitate entry – fundamentally change accessibility through information sharing, revaluating entry criteria and improving foundation skills in workers of all ages
  2. Enable re-entry – foster a wholesale culture shift from assessing candidates based on entry level qualifications to learning in all stages of life by establishing returner programmes, implementing measures to build confidence and educating and retraining employees
  3. Foster a thriving workforce – embrace adaptive working through all policies and procedures by building an inclusive culture, personalising the employee value proposition (EVP) and developing technology that supports and empowers people with disabilities.

“Businesses have the power to create a positive vision for the UK workforce by truly embracing diversity and putting the necessary steps in place to foster a more inclusive workforce and culture. Clearly government policy will play an important role, but it is incumbent on businesses to take the necessary steps themselves and reduce their over-reliance on traditional talent pools,” concluded Mr Simmons.

Notes to Editors

For further info visit:

About Mercer Workforce Monitor

Mercer Workforce Monitor is a regular publication that tracks and projects the changes in the UK’s workforce caused by migration and demographic change using data from numerous official sources.  Mercer’s first edition highlighted how the UK’s ageing society combined with post-Brexit limits on migration is likely to cause a workforce crisis unless companies follow the five lines of defence: Retaining staff, diversifying their employee base, automating, relocating to new parts of the UK or, more drastically, reconsidering business operations in the UK.

About Mercer

Mercer delivers advice and technology-driven solutions that help organisations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 23,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), the leading global professional services firm in the areas of risk, strategy and people. With nearly 65,000 colleagues and annual revenue over $14 billion, through its market-leading companies including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit Follow Mercer on Twitter @Mercer. In the UK, Mercer Limited is authorised and regulated by the Financial Conduct Authority.