CIPD Report suggests “Demographic time bomb” as 30% of the workforce to retire by 2035

25th June 2015

The most recent survey by the CIPD suggests the UK is facing a “demographic time bomb” as 30% of the workforce retires by 2035 which is likely to leave the country experiencing severe skills shortages throughout the next 20 years if businesses continue to approach workforce planning in the manner they currently do.

Older workforce needs considerationThe research has been carried out by the CIPD and the International Longevity Centre-UK (ILC-UK) and suggests the UK is very likely to experience workforce challenges over the next 20 years due to aging population and population change. The research was based on analysis of the Office for National Statistics’ (ONS) Labour Force Survey Q1 – Q4 2014.

The CIPD is now urging businesses to change their attitudes towards the age of members of their team and to encourage age diversity which will help prevent a skills exodus as the population, in which almost one in five is over the age of 52, continues to age and where there has been a drop of 64% of the number of number of people aged between 53 and 67 who are in work.

The report argues that unless businesses start to think about how they employ and retain older workers, the business community is likely to be unable to fill around 1 million jobs by 2035, and that’s taking into account the effects of migration on the workforce.

The industries that are currently most at risk from this time bomb are health, social work, education and public administration which have an older worker demographic (with 1/3 of workers in these sectors being over 50). The report argues that construction, transport and manufacturing also have a workforce demographic in which a third is over 50 and which a relatively large number of people leave the respective industry between the age of 45 and 64.

20 years may seem like a long distant future for businesses to consider, however we’re alreay seeing the impact of skills shortages in a number of industries. Construction has been particularly hit by skills shortages in the years following the recession, with reports of bricklayers earning over £1,000 a week to meet demand and where bodies such as the Chartered Institute of Building has been voicing concerns for the industry since 2006.

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 argues five key areas to manage and retain an aging workforce:

  1. 1. Ensuring they have inclusive recruitment practices
  2. 2. Improving the capability of line managers
  3. 3. Investing in training and development
  4. 4. Supporting employee health and wellbeing
  5. 5. Moving towards more flexible working

As flexibility will be key to a modern workforce there will be more HR management pressures placed on industry. Flexible working adds to the issues surrounding absence management as well as sickness and lateness management. Absence management software such as that available from HRonline will become an increasingly important tool to HR professionals.

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.

“Ensuring all employees and new applicants are considered on their merits is vital, especially given the demographic challenges that our economy faces. I hope employers will remain open-minded to recruiting and training older staff, as well as considering the benefits of flexible working. This is important for older workers but it is also important for the future of our economy.”

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.”

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