Demographic change will have a profound effect on the UK labour market over the next two decades and beyond. Over 30% of people in employment in the UK are over the age of 50, and there are unlikely to be enough younger people entering the labour market to replace this group when they leave the workforce, taking their skills and experience with them. Employers need to recognise the potential issues they face, such as skills shortages, productivity challenges, labour shortfalls and an inability to meet customer service and production targets.
What can employers do to mitigate the risks posed by population change?
This report recommends that employers must lead from the top, with company boards meeting the challenge head on and playing a critical role in raising awareness across their organisations and developing a long-term strategy. Such a strategy must be holistic in nature and should be formed of four essential components, including:
1 Inclusive recruitment: employers must ensure that they do not, intentionally or otherwise, exclude relevant talent from their recruitment processes. This means, for example, that they do not screen out candidates by requiring unnecessary qualifications that could discriminate against older or younger candidates, for example requiring that people are university graduates when a degree-level qualification is not actually needed to do the job.
2 Improve the capability of line managers: ultimately someone’s decision to leave the workforce can be the result of a failure on the part of managers to appropriately understand
the needs of those they are responsible for. Line managers should be appropriately trained to ensure that they are able to meet the needs of a diverse workforce.
3 Invest in training, development and performance management: all employees, regardless of age, need training to keep their skills up to date and enable them to progress and develop their career. Older workers are less likely than their younger colleagues to take part in training, either because they are not offered opportunities to train, they are not encouraged to take part or because they fail to put themselves forward for training opportunities. Providing older employees with opportunities to retrain and develop their skills is a vital part of ensuring that they continue to feel motivated and challenged in their role. Employers need to ensure that older workers are not overlooked for training and they receive development opportunities and opportunities to progress their careers.
4 Support employee health and well-being: poor health is one of the biggest reasons for economic inactivity amongst those in their fifties. While good line management is clearly important in ensuring that any health problems are flagged up early on, employers should also offer access to many other forms of support, including occupational health advisers and counselling services where appropriate.
5 Move towards more flexible working: providing flexibility for workers who are more
likely to have ill health, caring responsibilities and other commitments on their time must form a key component of any strategy to improve staff retention. While employees currently have a right to request flexible working, employers do not have to grant it, but, in our view, they must be duty-bound to accept the request unless they can show that it could cause irrefutable damage to the business. And at the very least, employers should think about how, in the longer term, they could facilitate flexible working. In that regard, business and HR leaders need to consider the business case in their organisation for providing flexible working practices that match employee demand and at the same time meet the requirements of the business.
The UK labour market is increasingly reliant on older workers
Another major driving force behind future demand for labour will be the point at which people leave the workforce altogether. Since Q1 2008, the number of people aged 50–64 in employment has risen by 842,000 – the largest increase across any age group – while the number of people aged over 65 in employment has also risen by 437,000 (see Figure 5). This is a function of both population change, as there are an increasing number of people aged over 50, and rising labour force participation amongst older age groups.
Chosen excerpts by Job Market Monitor. Read the whole story at Avoiding the demographic crunch: labour supply and the ageing workforce – Policy Reports – CIPD.
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