Reducing migration levels into the UK will exacerbate the financial strains caused by the UK’s ageing workforce, according to research from Mercer.
The Mercer Workforce Monitor modelled various scenarios mapping the size of the UK’s workforce from 2015 to 2030 based on possible changes to current migration levels. In all scenarios, even as the population size increases, the UK faces at best very slow growth, or even shrinkage of the working population.
If there is no change to current trends then the total population will increase from 65.7 million in 2016 to 71.2 million in 2030, with the workforce increasing from 33.4 million to 35.1 million over the same period. While not a dramatic change, this does little to help with fixing the skills shortages in industries such as engineering, Mercer said.
However, if the UK experiences an outflow of EU and non-EU workers then the working population would shrink by 700,000 to 32.6 million while the overall population increases by 4.5 million from 65.7 million to 70.2 million. The inability of certain sectors of the UK economy to fill roles could be dramatic.
According to the consultancy, in the UK 3.4 million people will reach the age of 65 in 2030. Unless the country decides to make drastic changes to the funding of pensions, health and social care the smaller working population will be required to spend proportionally more of their income to care for older citizens.
Gary Simmons, a partner at Mercer, described the challenge posed by Brexit as being of “Herculean” proportions.
“We hope that our modelling is a wake-up call to the business community,” he said. “There is a tremendous opportunity for far-sighted organisations to begin determining and implementing clear plans in response. If they do not act now they could potentially find they do not have their share of the people and skills they need in future.
“The solution lies in analysis, automation and accessibility. Companies should analyse and understand the makeup of their workforce. They should look to increase retention of current staff and be accessible: employing sectors of UK society that might be under-represented in the workforce – such as women, disabled people, and the long-term unemployed. They should also be investing heavily in automation where possible, as well as improving employee productivity through training and skills."
