Mercer Workforce Monitor™ - December 2018 Report | Mercer

Mercer Workforce Monitor™ - December 2018 Report | Mercer

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Mercer Workforce Monitor™: December 2018 Report
Mercer Workforce Monitor™: December 2018 Report
Calendar18 December 2018

New findings compiled by Mercer project an impending 1.9 million UK workforce shortage by 2025 if demand for workers continues to increase at the same rate as the last ten years. It has been 8 months 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. Since then, our discussions with clients have quickly gravitated to the core workforce issue that cannot be ignored: regardless of Brexit and in spite of automation, the UK is facing unprecedented workforce shortage.

How can UK employers respond to this shortfall while nurturing a thriving workforce in an environment characterised by uncertainty and huge disruption? They can take action through five lines of defence: creating a compelling employee value proposition, build and retain the workforce needed; diversifying their talent pool; investing in sustainable automation and productivity enhancements; moving and relocating work; and regrouping and reviewing their business strategy through the lens of people.

Our new Workforce Monitor November 2018 report, titled Diversification: Is There a N.E.E.T.* Solution to the Workforce Crisis?, looks more closely at that second line of defence: diversifying the talent pool.

We examine this approach through three key, untapped labour pools: female workers, disabled people and ageing workers.

* Not in Employment, Education and Training


Key findings from the November 2018 report:
 

1. The UK will have a projected 1.9 million workforce shortage by 2025 if current trends persist.

If demand for workers continues to increase at the same rate as in the last 10 years, our figures project an impending 1.9 million UK workforce shortage by 2025. 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 flows through.

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. Companies are already starting to feel the impact of 43,000 fewer people looking for work.

Underpinning our analysis is a post-Brexit net migration assumption of 100,000 per year. 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.

2. It’s not all bad news: companies can largely meet their recruiting needs by attracting more older workers, people with disabilities and women into the workforce.

Our detailed analysis of untapped UK talent pools reveals that by implementing measures to tap non-traditional labour sources and embrace diversity, businesses can plug the gap. To do this, employers must fundamentally change their mindset and establish a strategy for recruitment and retention that’s fit for this new age.

Our research uncovers significant untapped resources that could help employers attract almost 1.8 million workers by 2025 to meet most of the shortfall.

  • Older workers: the number of over 50s in the workforce will increase by 14% between 2015 and 2030, while that of under 30s will decline from 25% to 23%, making retaining and attracting older workers key. With the baby-boomer generation coming through and a gradual increase in the state pension age, strategies to slow the rate of retiring could increase the workforce by 900,000 by 2025.

    Older-age Participation Rates — Males


    Source: Office of National Statistics, Mercer Analysis


    Older-age Participation Rates — Females


    Source: Office of National Statistics, Mercer Analysis

  • Workers with disabilities: over the past five years, the proportion 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: our analysis shows that women in the 20-50 years old bracket of the workforce are not entering the workforce at all, contradicting the commonly held notion that their under-representation in the workforce is driven mainly by childcare concerns.  With female participation having increased from 60% to 66% over the last 10 years, steps to increase participation by a further 5% by 2025 would lead to an additional 400,000 workers.

    Difference Between Male and Female Participation Rates


    Source: Office of National Statistics, Mercer Analysis

 

3. Applying a Mercer framework can help companies reduce their over-reliance on traditional talent pools and foster a truly inclusive culture.

The second line of defence blows up preconceived notions of the “minimum requirements of the job” and allows organisations to consider carefully how to create a deal, an environment and a job that meet the full range of different employees’ needs by addressing the following.

  • Facilitating entry – employers must fundamentally improve accessibility by sharing information, revaluating entry criteria and improving foundation skills in workers of all ages.
  • Enabling re-entry – businesses can foster a wholesale culture shift by moving from assessing candidates based on entry-level qualifications to encouraging learning in all stages of life by establishing returner programmes, implementing measures to build confidence, and educating and retraining employees.
  • Fostering a thriving workforce – organisations must embrace adaptive working through all policies and procedures by building an inclusive culture, personalising the employee value proposition and developing technology that supports and empowers people with disabilities.

Previous Mercer Workforce Monitor™ releases:
 

 

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Download Mercer Workforce Monitor December 2018 report to read our analysis and learn more about how you can respond to today’s workforce challenges by embracing diversity
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We are here to help

Contact us if you are looking for stronger outcomes and building thriving organisations, Mercer can help you in the following areas:

  1. People strategy: Based on the principles of strategic workforce planning, this combines an external perspective of the future of work with internal workforce analysis.
  2. Talent availability assessment: This research process identifies where specific talent pools/skills are located, both in the “here and now” and in the future.
  3. Ageing workforce diagnostic and strategy
  4. Diversity and inclusion diagnostic and strategy
  5. Creating a compelling and authentic employee value proposition: Utilising four dimensions of insights — employer, employee, market and cost — we help unlock the unique value proposition and identify implications for HR programs, communications and branding.
  6. Mobility consulting and data services