Blog: Prioritise the 3 R’s for over 50s - recruit, retain, and retrain

Blog by Tom Ockendon, Project Co-ordinator, David Hume Institute

18th May 2022

Mass exodus of over 50s contributing to UK labour and skills shortage

The past two years have turned many people’s lives upside down. The way we lived, worked and played were upended by the pandemic and only now are we starting to understand some of the longer term effects. Shortages in the labour market have prompted grand theories like ‘The Great Resignation’, later downgraded to ‘The Great Contemplation’, but now might be better referred to as ‘The Great Retirement’.

One of the most important economic statistics emerging post Covid is the number of over-50’s dropping out of the labour market. This is reversing a trend for older people staying in the workforce longer that dates back to 1971.

It’s hard to begrudge people choosing to work less as they approach older age, if this is a conscious choice. Many people of all ages have evaluated what really matters in life since covid. There is also some information we don’t yet fully know on the impact of long-term sickness and clinical vulnerability amongst older workers. However, this trend is significant and affects us all, and for some leaving the labour market might not be a choice. 

Older workers bring a wealth of knowledge and experience, and maintaining a diverse workforce is crucial for organisations that want to be innovative and resilient. 

Although the connection between older workers leaving the labour market and rising inflation might not be immediately apparent, it almost certainly exists. The Bank of England recently announced they expect inflation will top 10% by the end of the year and the UK economy contracted in March, boosting fears of a prolonged recession. 

Since the end of 2019, a third of inflation has been caused by domestic factors, including labour shortages. Between the end of 2019 and 2021, 522,000 left the labour market and those aged 50 or over contributed 94% to the overall change. As the furlough scheme came to an end in 2021, redundancies were highest for the age group 50-64 and many of those made redundant have not returned to employment.

Those from the professional occupations, particularly men educated to degree level or equivalent, were more likely to leave the workforce between the ages of 50 and 64 between 2019 and 2021. On the flip side, as the state pension age increased from 65 to 66, those found to be working for longer were disproportionately women, those with lower levels of education, and those living in the most deprived areas of the country. Potential diverging retirement ages for different groups within society bring issues of fairness and equality. This matters as it is long established that more equal economies have higher productivity.

What can be done to address this trend? We need to value what older workers can bring to the table, challenge assumptions about ageing, and invest in older workers with training and development to ensure we do not lose people that want to work. Some older workers might benefit from more targeted support to stay in the workplace.

We also need to better understand how pension policy could be making the problem worse. This includes whether the ability to access defined contribution pensions from the age of 55 has played a part in enabling older workers to step out of the labour market and whether some of them might need to rethink in the context of stock market volatility and high rates of inflation. On top of this, the loss of older staff as a result of taxation rates, often perceived as punitive, for those workers who have reached their lifetime pension savings allowance could be making the problem worse. This is especially a problem in the NHS as the BMA have highlighted.

Moving forward, as our population ages, we need to be thinking about 3 R’s for over 50s - retain, recruit, and retrain. Making the most of our highly skilled and experienced workforce for longer will be essential to ensure a prosperous, inclusive and fair Scotland.

Blog: Scotland’s declining population – a crisis looming?

Blog by Eric Hildrew, Communications Lead, David Hume Institute

28 April 2022

Image credit: Photo by George Clerk from iStock 28.04.2022

As demographers, you might think Esther Roughsedge and Michael Anderson deal firmly with hard facts, however as they were keen to stress at our recent event on Scotland’s changing populations, predicting future population size is a practice laced with uncertainty. In the 1930s, it was estimated that Scotland’s population by the first quarter of the 21st century could be as low as 1.5m (fewer than now live in the central belt alone), though thankfully methods of projection have also improved since then.

So the headline of recently released figures from National Records Scotland – that Scotland’s population will peak at 5.48m in 2028 before declining, making Scotland the only UK nation to forecast a downturn – should be treated with caution. If accurate, a 1.5% decline would put Scotland in the company of Italy, Slovenia, and Finland (all predicting similar reductions) but significantly more stable than either Iceland (predicting 30% growth in population) or Latvia (23% decline).

Graph courtesy of National Records Scotland.

What is more certain is that whether births, deaths, and migration combine to decrease or grow Scotland’s overall population, the age profile of the country is going to change dramatically. In just 23 years’ time, Scotland is expected to have almost a quarter less children and almost a third more over 65s. The proportion of working age people is also expected to decline, particularly in the 30-and-under age-range.  The Scottish Government established a population taskforce in 2019 to investigate barriers to having children in light of the country’s steadily declining birth rate, but current estimates don’t predict a significant change in this trend is on the horizon.

To complicate this picture, we don’t know exactly how these changes will be distributed across our towns, cities and rural areas, but we do know that population decline will affect some areas more than others, with west, south west Scotland and the islands likely to see steeper a drop than central and eastern areas. On a more granular level, specific council areas are likely to see significant decline while others nearby grow, creating markedly different pressures and life experiences for residents. 

Graph courtesy of National Records Scotland.

These changes have huge implications for local, national, and UK governments. From the size of Scotland’s tax base and the UK Government block grant, to education, housing and social care provision, matching resources with demand will be an ongoing challenge. Much like climate change and inequality, population change is an underlying structural issue which outlives any  election cycle or immediate crisis. 

Scotland’s slow but steady population growth this century has been fuelled not by babies but by migration, specifically (until Brexit) from the EU though also from the rest of the UK. Other countries have tried incentivising couples to have more children, but there is little evidence to suggest this approach works. Uncertainty about future circumstances such as home ownership and job security is unlikely to be assuaged by modest cash incentives or tax breaks. 

Instead, an effective adaptation strategy will need to reconsider outdated attitudes to ageing and older people, ensuring that they stay economically and physically active for longer as well as being offered better options to combat loneliness, isolation, and declining health. The delivery of effective social care must be seen as an investment, not a cost. 

Scotland has been shaped by outward and, more recently, by inward migration. As the trajectory of our population growth begins to diverge from that of other UK nations, so must our ability to implement a devolved migration policy which fits the needs of our labour market and which encourages movement of labour to those parts of Scotland most affected by population decline in the years to come.

Population change is inevitable, but its consequences are not.

Blog: Population projections and policy - think local, think global!

Blog: Sarah Wotton, David Hume Institute

6th February 2020

Scotland’s population is at its highest level ever and it is projected to grow by 3% in the next 25 years. What does this mean for Scotland?

The audience at our Firestarter event, in partnership with National Records of Scotland (NRS), heard yesterday future projections are estimates informed by past patterns continuing.

Dr Esther Roughsedge, Professor Michael Anderson and Rannvá Danielsen discussed past trends and how they have led to significant regional differences in population which policy makers need to consider.

Scotland has one of the lowest fertility rates in Western Europe. For many years the number of births in Scotland has roughly equalled the number of deaths, though there are now more deaths than births each year. In recent years, migration has been the only source of Scotland’s population growth. 

In November, we heard from Professor Graeme Roy that the working age population is critical to our ability to fund public services.  Migration provides a higher proportion of our working age population than in the rest of the UK (rUK). 

Professor Anderson explained that in fact Scotland currently has a larger ‘working age’ share of the population than it did in 1981.  It is the ageing profile of our population which makes continued working age migration critical to Scotland unless alternative methods can be found to fund public services or the public services provided change.

The discussion focussed on the regional variations within Scotland and comparison to rUK.  For example, over the next 20 years the population in Midlothian is projected to grow by around 25%, whereas the population of Na h-Eileanan Siar is projected to fall by around 11%.  The audience were interested in whether there is depopulation of some areas, for example Edinburgh City Centre, due to short-term lets and how this might affect future service provision such as public transport.

The West Coast and Island groups, which represent one third of all Scottish council areas, are projected to have declining populations until 2041.  However, within this, the Isle of Mull is an outlier.  With a third of the population now born in England or Wales (a high proportion of whom are older migrants), Professor Anderson reflected on the transport connections to Oban having significant influence on relocation, especially in early retirement. This pattern is resulting in Mull’s population evolving rather differently to nearby islands of Tiree and Islay which have had declining populations. 

Scotland is projected to have a 23% increase in people of pensionable age by 2043.  As the population ages, more of us are living alone which means that household numbers are increasing even faster than the rise in population alone.

The East of Scotland and areas surrounding Scotland’s cities are projected to have very rapidly growing populations due to inward migration trends.

About one third of migration to Scotland is from the rest of UK. There are now far more English people migrating to Scotland than vice versa.   

Polish is the most common non-British nationality in Scotland and Edinburgh has the highest proportion of Poles anywhere in the UK due to historical links with the city. However, net migration from other countries can fluctuate rapidly, and recent patterns could change as a result of Brexit.

The Seafood processing and catching sectors in Scotland are heavily reliant on migrant workers, especially for unskilled to semi-skilled work.  These sectors have more EU and non-EEA workers than the UK average and are reliant on this workforce, especially the processing sector. 

On surveying the processing industry, the biggest influence on the need for overseas recruitment was the unwillingness of local people to work in fish factories which were seen to be ‘wet and cold’. 

Policies focussing on attracting and sustaining migrants will be critical for industries like food processing.  

From the discussion it was clear, Scotland’s populations are changing quickly.  Increased awareness of the regional differences within Scotland and comparisons to the rUK will help anyone thinking about future public policy approaches in Scotland.  

The David Hume Institute would like to thank our speakers, NRS and Seafish for their support with this event.   Slides from the speakers are available here.

Image credit: Sharing thumbnail image - photo by Susan Murray.