Mercer’s Workforce Monitor showed that the UK’s workforce grew in 2016-17 but only because of an increase in EU and non-EU workers. The study shows retirement, opting out (i.e. due to caring responsibilities) or emigration were responsible for some 143,000 UK-born employees leaving the UK workforce. That loss was offset only by the entry of around 147,000 EU-born workers and around 232,000 Non-EU workers. In sum, the UK’s workforce grew by an estimated 234,000 over that time period.
As well as highlighting the role of migration in the UK’s economy, the report analyses the related risks of demographic change taking place in the UK’s workforce. From Q1 2016 to Q1 2017, the number of workers over 50 in the UK economy grew by 230,000, the under 35’s grew by 50,000 while the number of workers aged 35-49 shrunk by 48,000. According to the analysis, if net migration into the UK levels off at 100,000 per year from 2020, the number of under 50s in the workforce will fall by 200,000 by 2025; the over 50s would increase by over 1 million while the number of under-25s in the population would fall by 100,000. Apprentices and graduates numbers will be less.
“Our latest report shows that there’s clearly an exodus of the UK-born employees from the UK’s workforce, either through retirement or emigration,” notes Gary Simmons, partner at Mercer. “It also shows that immigration is no longer filling the gap and the nation’s pool of younger workers is shrinking. This will impact companies in different ways. Organisations which have a younger workforce will have to think hard how to retain this group but also need to develop a fundamentally different approach in how they attract other types of workers – or get ready to pay huge salary premiums. Companies employing older workers who possess experience and deep organisational knowledge need to create working environments that capitalises on that but also equip them with new skills to ensure profitability.”
Mercer’s August update also provided a deeper dive into the impact of migration and ageing and specifically, at major employment and economic sectors: health and social care, construction and the financial and insurance services industry.
Health & Social Care
It’s well known that the sector faces vast challenges. The report highlights that 35 per cent of employees in this sector are over the age of 50 and 18 per cent are foreign born. The number of EU nationals registering as Nurses in England dropped by 92 per cent in the last 6 months of 2016 and 2,700 EU-born nurses left the NHS in 2016 compared to 1,600 in 2014. One in three nurses are due to retire within the next decade and one in three GPs plan to retire in the next five years. Meanwhile, applications to university nursing and midwifery courses fell by 19 per cent (11,530 applications) in the 12 months to March 2017. The private healthcare sector faces equal challenges.
“It’s difficult to see how the industry will weather this storm,” said Julia Howes, workforce planning specialist at Mercer, “unless they combined all five lines of defence particularly retaining their UK workforce and maintaining access to non-UK labour forces, automating and ceasing provision of some services.”
The report cites the Federation of Master Builders stating that of 15 key trades and occupations, 40 per cent show skill shortages at their highest point since 2014. One third of the workforce is over 50 and the industry will need to recruit 1.5 million workers to fill that gap. In London, more than half the workers are from outside the UK. The shortage will have significant impact on infrastructure projects like HS2, London’s SuperSewer and the Government’s Home Building plans.
“Much of the work is manual so this industry must address new ways of working – drones, automation, 3D printed homes, virtual planning – as well as diversifying the workforce, accessing professionals in other sectors to build their employee base and capture the value that older workers can bring,” said Julia Howes. “Retaining talent is also essential as are new training programmes."
Financial and Insurance
The report shows that the sector employs over 1.3 million people in the UK and traditionally uses buying power to attract younger staff. However, morale is low: one third of banking employees are intending to leave their position within the next 12-24 months and the technology sector has replaced it as career of choice. The attractiveness of the Financial Services sector has waned and it can no longer buy what isn’t there. Digitisation is also disrupting the sector and companies are reconsidering their employee value proposition given industry scandals and declining pay. While employee levels are not as high as other sectors, the sector is at risk of overseas competition.
“Rebuilding morale to attract and retain existing staff and diversifying the workforce are top priorities,” said Julia Howes. “Automation is already being adopted but the digital transformation needs to be more profound as this sector still lags behind. Relocation of some services and the adoption of more flexible working for employees are also inevitable but will require a huge cultural shift in many firms.”
With migration levels expected to continue to fall, Mercer has developed a Workforce Response Plan which helps organisations analyse the profile of a company’s workforce to assist it in responding to demographic and migration-related challenges.