UK workforce monitor notes workforce projection mismatches

17 October 2017 Consultancy.uk

Migration continues to be an area of acute uncertainty for the UK, as Brexit threatens to make the nation a hostile environment for European emigrants. A new report highlights the effects that decreased net migration may have on various employment sectors, as the UK’s population ages.

Migration continues to be a point of fierce contention across political and social divides in the UK. For business groups, access to labour remains an important aspect of migration trends, with relatively large numbers of positions in various sectors currently filled by EU-nationals.

A new report from Mercer, titled 'Mercer Workforce Monitor: August Update', explores changes in net migration into the UK, as well as wider trends likely to affect the market in the coming decades. The trends are mapped according to various models based on possible outcomes of Brexit negotiations.

Workforce at risk

One of the key scenarios considered by the firm is the 100,000's scenario. This scenario sees the number of people entering the UK fall to 100,000. The effect of this migration model, coupled with the UK’s ageing population, is a steady decrease of people under the age of 30, with a net decrease of -279,000 by 2030. The number of people over 50, meanwhile, will increase by around 1 million. The scenario reflects wider public policy, and is one of the more likely outcomes of Brexit.

Other models proposed by the consultancy include the base model, which would see net migration fall to around 185,000 per year from 2020 onwards. One final option to consider is the great EU re-migration scenario, in which Brexit related vitriol, policy uncertainties and other factors result in a vast number of EU member-state citizens leaving the UK – the net effect of this scenario is -50,000 people per year from 2020.

The study notes that the effects on different sectors vary, based on their foreign born and 50+ population profiles. Transport & storage has a high number of both 50+ and foreign workers, at 36% and 24% respectively. Health & social care is also found to be heavily reliant on older and foreign-born workers, at 36% and 18% respectively.

Workforce at risk profile

Public administration & defence is relatively insulated from dependence on foreign born workers, at 11%, although its older worker count is relatively high, at 34%. Accommodation and food is the most dependent on foreign workers, at 28% of total, the food industry in particular having a relatively poor profile under UK workers.

Risk profiles

Based on ageing and foreign worker numbers, various risk profiles exist for different sectors. In the group deemed to be in risk profile 1, the major concern is a reliance on both foreign born workers – whose numbers could diminish drastically post-Brexit – and slightly less on an aging populations. The industry may need to consider ways of retaining older workers, where possible if migration becomes problematic.

In the two sectors of the second risk profile, dependence on both foreign and ageing workers mean many incumbents are acutely aware of their precarious position, in light of Brexit. Careful management will be required to bridge potential gaps in the availability of workers. Risk profile 3 companies, meanwhile, will need to consider their access to younger workers – who will be increasingly in demand – or else look to continue to retain older workers.

Workforce growth by industry.

The research also considered the likely effect of two scenarios, base case and great EU remigration, on workforce growth between 2016 and 2030. The headline result is that a mass withdrawal of foreign workers back to the EU would see declines across almost all industries. Only ICT and financial services & insurance see modest growth.

Gary Simmons, Partner at Mercer, commented on the report, “Our latest report shows that there’s clearly an exodus of people from the UK’s workforce, either through retirement or emigration. 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 others 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.”

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