Trend update: How fast is the workforce really greying?
We all know we have an ageing workforce, but do we truly have a handle on the stats? REBA's tame actuary, Matt Scott, fills in the gaps to help you plan your reward strategy in the years ahead.
The British workforce is getting older.
Figures from the Office for National Statistics has found that the proportion of workers over the age of 50 has increased by 27% over the last 10 years, with more than 30% of the working population now aged 50+.
This compares to just 26% 10 years ago and 22% 20 years ago, and presents problems for companies as they look to shape their workforce for the business challenges that lay ahead.
If you take the current rate of change and project this forward 10 years, the figures get even greyer, with the over 50s becoming the biggest cohort of workers in the UK, accounting for 37% of the entire workforce.
This is such an issue of concern for European businesses that one in seven executives sees the ageing workforce as a challenge today; rising to one in four who think it will be a challenge in 2020, according to a 2014 report from The Economist Intelligence Unit, Is 75 the new 65? Rising to the challenge of an ageing workforce.
But what problems does this ageing workforce create for British employers?
For one, increased health issues and sickness in older workers means that the cost of private medical and critical illness insurance cover will rise as the workforce ages.
While this increased cost may put some organisations off providing such cover, a report from the CIPD, Managing an Ageing Workforce, found that some employers, such as Herts County Council, are instead offering workers discounted rates as a voluntary benefit package – saving employees money and reducing the employer’s benefits bill.
Plugging the gap
It is estimated that between 2012 and 2022 12.5 million jobs will become available through people leaving the workforce, with an additional 2 million new jobs created as the result of an expanding jobs market.
Despite this, only 7 million new young workers will enter the workforce upon leaving education, leaving the UK with a shortfall of 7.5 million.
And as the workforce demographic changes, employers and employees alike will need to re-think their approach to retirement.
Businesses will need to start implementing phased retirement plans whereby workers approaching retirement age move to part-time roles before fully retiring from the workforce.
This will give employees the ability to manage their retirement savings to make old age more affordable, while employers will be able to ensure a steady handover when senior workers come to retire. (And guarantee they have enough workers to make up for the shortfall as a result of a lack of youngsters entering the fray.)
Building for the future
Nestle is one employer that has already responded to the threat of the ageing workforce after it found 15% of its skilled manufacturing team was facing retirement in the next 15 years, launching the Nestle Academy in 2012.
The programme aims to drive development in entry level talent to fill the gap in skilled workers looming on the horizon, and includes the use of degree level apprenticeships to provide a combination of on the job training and a university education.
That is sweet stuff from the food and confectionery manufacturer, but looking to the younger generations is not the only ingredient for managing an ageing workforce.
In 2014, Business In The Community (BITC) launched a new report, The Missing Million: Illuminating the employment challenges of the over 50s, which revealed that 1 million people aged 50 to 64 have been made ‘involuntarily jobless’ – a nice euphemism for forced out of their job once they were deemed too old to be useful.
And with the BITC report also finding that over a quarter (26%) of those aged 50 to 64 and not in employment would like to work if presented the right opportunity (flexible working anyone?), businesses with a culture open to more tailored working patterns can look to the older generation to help drive their business forward. This figure rises to 46% for those aged 50 to 54.
Diversity of gender and race has long been shown to improve business performance, and the diversity of the age of your employees can have a similar impact.
Having an age profile of workers that fits in with the ageing population of the country as a whole can help create empathy with the customer, leading to innovations that appeal to all ages of your customer base.
From boomers to millennials, today’s workplace is the first to have five generations all working together at the same time, and businesses would be wise to make the most of the grey hairs forming round the temples of their staff and give their business the (age) boost it needs.
This article was written by Matt Scott, REBA's tame actuary.
He safeguards the reward community from hours of online research, his superstrength is delivering the numerical proof you need to make your reward business case.
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