AseanOur Thinking /
29 March 2018
When it comes to the looming UK workforce shortage and skills scarcity, “wait and see” is no longer an option. Organisations must urgently plan ahead to ensure the future of their workforce and safeguard productivity and growth.
This is not about migration: these shortages will persist whatever a post-Brexit world looks like. Our new Workforce Monitor March 2018 report reveals more.
It has been one year since we launched the Mercer Workforce Monitor to examine the UK population and workforce in a pre- and post-Brexit world and understand related business impacts. Our initial reports provided insights into the UK’s workforce crisis and migration challenges.
Our newest report examines the latest employment and migration statistics to identify shifts in macro trends. We then take a deep dive into the impact of age and migration on each region in the UK. The patterns explored in this paper – of ageing, migration and consequent severe workforce shortages – are a call to action.
Key findings from the March 2018 report:
1. The workforce crisis is playing out as we predicted, according to the most recent employment and migration statistics.
- The demand: The numbers of both jobs and vacancies are increasing. The UK has half a million more jobs and 56,000 more vacancies than a year earlier. The total number of job vacancies is almost 816,000, the highest figure since comparable records began.
- The supply: The number of people looking for work is falling (the unemployment rate is at its lowest since 1975), as is that of inactive workers in younger age groups.
Companies are already starting to feel the pain of not being able to recruit and retain. Previously, organisations assumed they could access talent to match their plans, whether by tapping the foreign labour pool, targeting graduates, outsourcing or taking significant portions of their business online. But the workforce and population trends we’re seeing now suggest that organisations can’t proceed on the same faith. The workers may simply not be there.
2. We’re potentially focusing on the wrong staffing strategy to fix employment gaps.
Retiring workers take valuable skills, knowledge and experience with them when they leave the workforce, so it makes sense that we have seen a doubling down on training and entry programmes for younger workers. But, as we foresaw in our original analysis, there simply won’t be enough younger people to fill the gaps left by retiring workers. In fact, the under-50s will start decreasing dramatically over the next 7 years, and we are already starting to see the effects:
- There were 82,000 fewer people between the ages of 18 and 24 in employment compared with a year earlier (despite the reduced unemployment rate).
- There were 200,000 more workers between 50 and 64 compared with a year earlier.
Employers need to incorporate all age groups in both talent acquisition and learning and development strategies, allowing for upskilling and re-skilling of older, established workers to complement graduate and entry-level initiatives. There is an incentive to hold on to the knowledge and experience of older workers to provide more time for knowledge transfer and adequate training and development of younger workers.
3. London is most exposed to an ageing workforce.
With a younger working population than the rest of the UK and a much heavier reliance on young, non UK-born workers, London will be hit harder by the ageing workforce and rapid slowdown in net migration than any other UK region. According to our projections, the capital can expect to have 25% fewer resident under-30s in its workforce by 2025, more than any other region in the UK.
As London’s population continues to grow, assuming migration limits, the city will need to support a much larger population with a relatively smaller workforce. This could lead to severe workforce shortages and pose a number of increased risks to London-based employers.
4. Health and social care dilemma
An ageing population that is living longer will place increased strain on an already struggling health service. Jobs and vacancies in the health and social care sector are at an all-time high, and there is not enough workforce supply to meet this demand. This could mean longer waiting times, delayed operations and a deteriorating quality of care.
Our models forecast an increased demand for labour in this sector of 712,000 based on the needs of an anticipated further 2 million over 65s in the UK by 2025. If UK plc funnels the net increase in employment towards meeting this demand, then there will be almost nothing left for the rest of the economy. However, if other sectors can better attract people and skills, how will we fix the health and social care crisis?
Download our March 2018 report to take a deeper dive into our analysis and see how your organisation can respond to these workforce challenges.
Previous Mercer Workforce Monitor™ press releases
