December 18, 2015
Challenges ahead as resource pool declines
Job candidates are increasingly going to have the pick of the market and will be able to choose the job they want and where they want it. Why? Because the resource pool is rapidly shrinking as increasing numbers of people come up to retirement age.
According to a 2015 Global Growth Model study by the global management consulting organisation Mckinsey&Company, there will soon be a substantial, global decline in the numbers of people working. The research found that there were three times as many workers as retirees in the period 2005-2015. That will no longer be the case in ten years’ time. Instead, Mckinsey puts that ratio at 1:1 by 2025. It predicts that the labour force will contract by 11% in China by 2050 and that the contraction in continental Europe will be even more dramatic. This will be in sharp contrast to the preceding decade, when the working-age population outgrew the retirement-age population.
This demographic shift is going to put candidates in the driving seat, enabling them to cherry pick which job they would like and for the organisation of their choice. It could also precipitate severe skills shortages.
Mckinsey predicts that the unfolding situation could have a serious impact on the potential for growth in many economies within the next ten years, unless organisations change their working models. It says employers need to encourage and facilitate older workers to stay in employment, boost the numbers of women in the workplace and make greater use of immigrant labour.
All of this has major implications for the HR profession, across all strands of HR, whether it’s L&D, recruitment, reward and retention, employee benefits… It will be critically important for organisations to be able to attract, develop and retain the right talent. HR will obviously have a key role to play here.
There is a lot that HR can do. It can help organisations achieve Employer of Choice status. Employer brand is increasingly important for several reasons. Firstly, if employees are in the driving seat then they can afford to be picky about who they want to work for. Secondly, employees are increasingly making that choice based on values – they want their employer’s values to be in line with their own values. Thirdly, employees will want to know that their career is going to be developed and that there is a clear, tangible career path ahead.
HR needs to foster a strong resource pool and know what skills are in demand and what will be in demand in the coming years. It’s all about effective, forward-thinking HR that has business needs and employee needs at its core.
It is a good time for HR to be considering how to make the best of current and future demand. Not only are we at end of one year and beginning of another, but the latest ONS Labour Market Statistics indicate that the UK’s job market is showing healthy signs of recovery after a blip earlier on in the year. Employment has increased by half a million and unemployment is continuing to fall – it fell from 110,000 to 1.7 million in the last three months. It is the first time that unemployment rates have dropped to pre-recession levels.
HR needs to enter 2016 in the right mindset in order to capitalise on this growth and attract the best talent.