June 26, 2015
A demographic time bomb means employers must act to avoid a cliff-edge loss of skills and talents by 2035, a new study by the CIPD has revealed. There are currently 9.4 million workers in the UK today who are over the age of 50 and while the employment rate of older workers has increased significantly in recent years, there is still a 64 percent drop in the employment rate between the ages of 53 and 67. New research from the CIPD and the International Longevity Centre-UK (ILC-UK), the independent think tank on longevity, ageing, and population change, warns the UK could face serious skills shortages over the next 20 years. Unless organisations start improving how they recruit, develop and retain older workers it is estimated that the UK economy will struggle to fill one million jobs by 2035, even taking into account the mitigating effect of migrant workers.
As a result, the CIPD is urging organisations across all sectors to take steps now to reap the benefits of a more age diverse workforce, rather than fall victim to a mass exodus of skills as their workforce ages.
The health and social work, education and public administration sectors are most at risk of skills shortages. This is because they are not only highly reliant on older workers (around a third or more of their workforces are over 50), but also struggle more than other sectors to remain attractive places to work for older workers. The report also found that the manufacturing, construction and transport and storage sectors all have at least a third of workers aged over 50 and typically see at least a 50 percent fall in the number of people employed between the ages of 45-49 and 60-64.
Ben Willmott, Head of Public Policy at the CIPD, said: “2035 may sound far off but the reality is that organisations need to get to grips with the ageing workforce challenge today or face skills shortages that will affect their ability to grow or deliver key services in the very near future.
“The findings in this report suggest too many employers are sleep-walking towards a significant skills problem that risks derailing their business strategy if not addressed. Not enough organisations are thinking strategically about workforce planning or even know enough about the make-up of their workforce.
“Employers need to recognise the value that older workers can bring to their organisation when recruiting new staff, continue to invest in people’s training and development at different stages of their careers and think about how they can transfer older workers’ knowledge to other parts of the business when they do retire. In addition it is increasingly in employers’ interests to think about how they can support the health and wellbeing of their staff and provide more flexible working opportunities to allow older workers to downshift and benefit from more gradual transitions into retirement if that is what they want.”
The report outlines five essential components that should form an organisation’s strategy to address the aging workforce challenges:
- Ensuring they have inclusive recruitment practices
- Improving the capability of line managers
- Investing in training and development
- Supporting employee health and wellbeing
- Moving towards more flexible working
Minister for Pensions, Ros Altmann, said: “The analysis in this report can help us understand the challenges that the next 20 years present much more clearly.
“Employers need to realise what they stand to lose if they fail to give opportunities to older staff. Not only could they miss out on the wealth of experience that having a diverse workforce can offer, but they also risk losing a large chunk of their workers – and valuable skills – over a short period of time, as this study shows.”
Ben Franklin, Head of Economics of Ageing at the ILC-UK, said: “Population ageing is not some distant event enabling us to bury our head in the sand. It’s already with us, affecting every corner of our lives, and the UK’s workforce is no exception. This report clearly shows that some sectors will face an exodus of staff in the short to medium term and that they, along with all other sectors, must develop robust strategies to support longer working lives, and to drive up productivity growth into the middle of this century. This means investment in people and capital”
“Population ageing does not have to be a by-word for economic stagnation, and with the right mix of resolve and innovative thinking, employers can help shift the UK’s path towards a prosperous yet sustainable future.”
Click on the link to download: Avoiding the demographic crunch: labour supply and the ageing workforce from the CIPD website.