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The Actuary The magazine of the Institute & Faculty of Actuaries

Ageing population presents 2025 ‘workforce crisis’ for UK businesses

Falling migration caused by Brexit, combined with an ageing population, will create a “perfect storm” leading to severe shortages in the UK labour market by 2025.

Decline in workers ©Shutterstock
Decline in workers ©Shutterstock

That is according to new research by consultancy firm Mercer, which anticipate that Britain’s available workforce will increase by just 2.4% in 2025, down from a 9% rise in the 10 years prior to 2015.

This will be the first time in half a century that the overall population increases faster than the workforce, which is expected to create long-term structural challenges for the economy.

“There are going to be big winners and losers in the battle for workers,” Mercer partner, Gary Simmons, said.

“If businesses don’t take action now they will face significant costs and be left in a poor position to take advantage of the productivity enhancements promised by robotics, digital and machine learning.”

Mercer predict that the health and social care sector will need an additional 710,000 workers to meet the demand of an anticipated two million extra over-65s in the UK by 2025.

However, this will leave just 111,000 additional workers available to drive the growth of all the other industries, with the total workforce only predicted to rise by 820,000.

The projections also suggest that there will be 300,000 fewer workers under the age of 30 over the next eight years, while there will be one million more aged over 50 as a result of falling net migration and ageing baby-boomers.

This is expected to have a particular impact in London where the economy is heavily dependent on young and migrant labour, with the capital’s under 30 population set fall by a quarter.

“Young workers don’t grow on trees. The answer lies in realising that diversity and inclusion practices and policies are needed not just because it’s the right thing to do,” Simmons continued.

“Companies need to think both urgently and creatively about how to attract a more diverse group of people, including the over 50s and particularly parental leave returners in order to tap into that wider talent pool.”

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