Population Projections for England and Wales - Assignment Example

Institution : xxxxxxxxxxx Title : xxxxxxxxxxx Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2001 Using the latest available population projections for England and Wales, outline the likely implications for the future size and structure of the labour force. Introduction Global population balance is rapidly changing; a situation that is expressing great fears over population pressure on the available resources. Population increase and decline has more often than not been a subject of distress and anxiety for many centuries that even the growth pattern of relatively small populated nations of England and Wales have for long now been a subject of heightened controversy at various times (Marsh, 2003). Future population size and composition have always had an impact on labour force projections. This means that changes in the size as well as the average age of the labor force are products of both the demographic changes, which modifies the size in addition to the age structure of a working-age population, and changes in the labour force pattern participations. Labour projections are therefore motivated by the reality that the size as well as future labor force compositions are important parameters to be considered when conducting the assessments of long-period socio-economic trends. Labour characteristics in the future have therefore significant implications towards a number of issues that range from productive capacity of a given economy to the sustainability of social security as well as the pension systems. A set of labor projections represents best estimates of future labor forces derived from the present demographic as well as activity rate trends (Madouros, 2006). Labour force projections in England and Wales published during the past few years have always been inconsistent with the published data derived from the Labour Force Survey (LFS).This follows various demographic revisions carried out. However, current projects have concentrated on coming up with labour force projections for England and Wales that are more consistent with the published Labour Force Statistics. The estimates are normally projections and do not rely on forecasts on future economic conditions. They are in this case produced by employing various econometric representation techniques that reveal future patterns of age or sex that are specific to labour market activity rates as denoted by trends in the past. Labour force projections in England and Wales are commonly based on two major components including; population projections and economic activity rate projection. Population projections are purely demographic effects and as a result, size and labour force composition depends much on various population changes in England and Wales. Additionally, the general activity rates are more often than not influenced by the relative movements of people between various age groups (Madouros, 2006). Given the increasing growth in the population level of England and Wales, household numbers in England are bound to grow up to 27.8 million by 2031, a 6.3 million increase over the estimates carried out during the year 2006.This makes for approximately 252,000 households for every year. The estimated change in age structure of England and Wales’ population, for instance, is revealed within the household projections, with 53% of the households being those headed by individuals of ages 65 and above. This indicates that by 2031, approximately 32% of the households will normally be managed by individuals of 65 years and above as compared to 26% in 2006 (Housing Statistical Release, 2009).Changes in size and average age of labour force are products of both demographic changes, which modifies the size in addition to the age structure of a working-age population, and changes in the labour force pattern participations. A few decades ago, changes in the participation patterns of labour force have played a significant role in the modification of patterns of labour force ageing (Office of National Statistics, 2010). Population ageing and labour market identify a number of potential issues as well as consequences including: Increasing Pressure on the Wage Costs of Employers According to Dixon (2003), there is a clear relationship between age and what an individual expects to earn. Employers’ costs on labour will therefore tend to increase as a result of labour force ageing if the present earning disparities by age continue to be maintained. The impacts on unit labour costs however will be dependent o whether the average productivity increases with ageing of the labour force. An ageing work force may seem to be more productive given the fact that older labourers tend to be having many years of prior working experience. However, Dixon (2003) argues that there exist evidences that positive relationships between ageing of the labour force and earnings are to some extent the results of various organizational pay policies that are intended to encourage the retention as well as reward performance, more willingly than the pure productivity effect. Organization pay structures which unconditionally reward their labourers or employees tend to increase their wage costs in the event of workforce ageing, which in most cases puts them under pressure in their intentions of making several adjustments. And since labourforce aging has been in existence for a long time in England and Wales, it is possible that many firms will be forced to make several increment adjustments in their organizational pay structures. The slow as well as the gradual nature of labourforce ageing therefore calls for plenty of time so that firms or organizations are able to make several adaptations.Alternatively, Dixon (2003) suggests that ageing of firm labour forces may as well bring about offsetting sources of the labour cost savings to various employers, for instance lower returns and lower non-attendance (Dixon, 2003). Decreasing Pressure on the economic activity levels At present the participation rates of the prime-aged as well as the younger adults are way above that of the older adults. This has drawn more concerns, especially that the older workers have increased their labour force share which consequently could drastically affect the total population of older workers not at work, along with the aggregate activity levels (Cabinet office, 2000). The decreasing trend experienced in the rates of the older men activities in the past twenty years have culminated into much research on the reasons behind early labour market withdrawal (Disney, 1999). The results from the research show that various complex factors are at work. The early retirement frequency as well as early labour force withdrawal has been affected by the improvement in the levels of pre-retirement savings along with the advancement of pension schemes which permit members to withdraw pensions even before attaining the required age for state pension. Also, the increase in the provision of benefits of social security to the workers who experience disability or poor health conditions, along with the shifts in the occupational and the industrial employment structure that have resulted in a reduced skill demand from older manual workers, have contributed significantly to this. While the demographic changes can not be to blame for these trends, the ever increasing older workers share will definitely raise the importance of retirement decisions and participation of labour force as great policy issues. Older men participation rates right from 1990s have been stable. Various commentators are divided over the possibility of the adult (50-64 years) activity rates to increase or decrease in the decades to come. Others claim that the increased longetivity, as well as reforms to pension schemes and other programs of social security tailored to decrease the incentives and chances of early retirement, are able to increase a person’s effective working life in addition to creating future participation rates that are high (OECD, 1998).As well, others claim that the developed countries like Britain are likely to experience continuous lower participation rates among individuals aged fifties, because of the increasing real incomes along with the preferences for early retirement (Landis & Mackellar, 2000). Decreased voluntary mobility in work as well as lower enterprise turnovers Workers have been known to alternate work as well as employers quite frequently as opposed to their counterparts, the older ones, who mostly have steady and unwavering relationship with employers. As a result, average voluntary job-separation rates reduce with age, as the average tenure rises. Through the British household panel survey data, Wadsworth, Gregg and Knight (1999) approximate the annual rate of separation for the workers above 49 years to be 10% lower compared to that of workers from 25-49 years, with that of workers below 25 years doubling this. Workforce with a larger older workers’ share implies that the rates of quitting will fall as the average tenure increases, while other things remain the same (Boersch-Supan, 2001). Groot and Verbene (1997) analyze the possible reasons for age variation in the voluntary separations. Among the major reasons is that several employers, mostly in big firms, employ a system of remuneration which rewards mainly seniority and tenure as a way of promoting the development and preservation of skills that are firm-specific, on top of reducing the costs of turnover. The moment employees have worked for their employers for quite enough periods to receive tenure benefits or seniority-based system of payment, they are subjected to higher leaving costs. As well, the work the older employees do is more often their best job match, as they might have arrived to this after various job changes in their previous working lives. Also, job changes might necessitate geographical mobility, always deemed as costly, while the older workers do not have much time left in workforce to recover such costs whether through much earnings or through some job-related benefits. The factors leading to decreased job mobility within the older working groups are viewed as likely to continue in future, though the age difference magnitude could change. A reduction in the job mobility, incase such occurred, could likely have varying consequences, both good and bad. Turnover costs, together with recruitment costs and costs of initial training, will decrease. This will beneficially impact on the overhead costs of labour along with profitability. As well, it will consequently lead to the overall inflexibility of labour market. Adjustments to technological changes as well as product market changes rely on worker movements across various firms as well as between various geographical regions. The countries having a considerable mobility in labour market are better suited for technical change adjustments as well as labour demand shifts. Increased involuntary job loss, particularly with older workers Going by the reality that older workers seem less mobile; a decline in the voluntary attrition levels may force certain employers to employ the use of redundancy in adjusting the size of the organization work or labour force. Additionally, as older workers begin to contribute a large share of the labour force in England and Wales, they may have to bear the greatest share of the impacts as well as costs coming along with their redundancy that is more often than not purported with their ageing days. According to Dixon (2003), brings to light the fact that there are several evidences in England and Wales indicating that older workers seem to be adversely affected presently by involuntary job losses as compared to their younger counterparts. Although the older workers less possibilities of being displaced from their respective jobs as a result of redundancy, firing or through the stoppage of a given contract, they are much at a greater risk of long-period unemployment due to job loss. In any case they are re-employed, older workers go through situations whereby their average earnings are reduced as compared to their young or middle-aged counterparts. To some extent this reveals the fact that older workers have been naturally working through their jobs for longer periods of time, and therefore have high specific skill levels and experience. On the other hand, job displacements results in a fall in earnings especially in situations where the returns that are to be accumulated from job experience get lost due to the individual taking over and who has no experience. Clark et.al., (1980) argues further despite the fact that there are quite a number of other factors influencing the cost incurred as a result of job losses, the constructive relationship between age, term and the extent of the earning losses linked to displacements appear to carry on even in the future, going by the fact that older workers will go on experiencing cases of job losses. Ageing of the accumulated Knowledge and Skills of the labour force According to Dixon (2003), Knowledge as well as skills that individuals within the labour force have significantly influence the productivity levels in addition to developing a foundation through which creativity and productivity can be improved. A gradually maturing work force will tend to have higher levels of working experience and this could have constructive effects on the firms or organizations productivity level. Alternatively, labour force skills depend a lot on the accumulated knowledge acquired prior to entering a given labour market, or during the earliest stages of workers’ careers. According to Lutz et.al., (2010) there is high possibility of risks that the accumulated skills coming from basic education as well as training will get increasingly out-of-date as the ages of the various participants in the labour force increases. This will thereafter pose negative impacts on innovation as well as the general productivity of various organizations. Simultaneously, changes within the age structures will possibly imply that the labour market will become more dependent on mature as well as older workers in order to meet emerging expertise needs. On the other hand, few adults obtain new formal qualification once they get past the age of 25.According to Jackson (1998), present rates of those undertaking job-related training are going down with age, though the age differences appear to be less evident than those taking part in the formal education. Labour force survey in the year 2002, for instance, found out that 49% of employees who were aged between 50-54 confirmed they undertaken job-related training in the past one month prior to the survey as compared to 57% of employees aged between 25-29.This implies that several firms financing a number of job-related training do not view the older workers as unsuitable for training and that older workers too feel unwilling to undertake such trainings (OECD, 2001). This is however not shocking since financial incentives to obtain new qualifications steeply go down as individuals’ age increases. Older workers therefore encounter elevated opportunity costs when they take on education that involves time away from their work places since the earnings they are forced to relinquish are higher. The shorter remaining working life period of the old workers also shrinks the period through which they are able to acquire benefits. This is in the form of increased wages or better job opportunities (Thane, 2000). Implications on migration In view of migration, two principal population projection variants, with their basis on the low as well as high future migration levels, are put into the activity rates that have been projected. Going by the rate of activities among individuals aged between 16 up to 64, any rise in the future migration levels leads to higher projected rate of activity for the individuals falling under the age group. This is due to the fact that the immigrants arriving in the country are often between 15-34 years, therefore, are often very likely to contribute to labour market, hence increasing the overall rate of activity. Considering the rate of activity between individuals aged above 16, a higher future migration level is related to a higher rate of projected activity. According to the demographics, higher migration levels in part offsets population ageing, with a majority of the immigrants being of younger ages. Hence, higher future migration consequently leads to a youthful population having higher chances of becoming active hence increasing the overall rate of activity (Larmon et al., 2009). The migration variant might look surprising that it greatly influences the rate of activity in individuals aged above 15, as compared with that of working age individuals. The proper explanation to this is that the rate of activities in the age groups where many of the immigrants fit in is a little bit higher compared to the activity rates of the working age (providing little positive influence of higher migration in the future), but much greater than the activity rates of individuals aged 16 and above (creating a greater positive influence of higher migration in the future). Generally, these migration variants plainly indicate the beneficial migration influences, according to demographics, by offsetting in part the population ageing processes. The population projections have great significance to the labour force projections (Wright, 2010). Implications on life expectancy Considering life expectancy, there are two population projection variants: the scenario of higher life expectancy, as well as that scenario of lower life expectancy. Through incorporation of the variants of population projection in the activity rates that have been projected, there is a possibility of examination of the labour force projection’s sensitivity to varying future life expectancy levels. Going by the rate of activity among individuals aged between 16 up to 64, who are also the working age according to the present definition, there are slight effects (Grundy, Stuchbury, & Young, 2010). This is due to the fact that changes in assumptions on life expectancy influence mainly the population segment exceeding 59 years and 64 years. Considering the rate of activity in individuals aged above 15 years, various assumptions about life expectancy influence projections of labour force seriously. Basically, life expectancy that is high has an association with lower rates of projected activity in people aged above 15 years. This is since, under normal conditions, life expectancy that is high implies a greater population proportion in age groups who are older. While the contributions in the labour market by the older individuals are below average, the total rate of activity in people aged above 15 years declines (Young et al., 2010). Conclusion Population of the working-age along with the labour force has been steadily rising right from the 1980s.The labour market has also adapted following various significant changes within the age structures of labour force. Latest available projections on labour force of England and Wales suggest s that the ageing process will persist at a much similar speed to that which was experienced in the 1990s, meaning there will extensive time that will be able to allow the participants of the labour market and various instititutions in England and Wales to be able to adjust along with the changes. However, there is an indication that labour force ageing may as well accelerate should the past tendency towards early retirement is invalidated. What is distinctive as revealed by the demographic changes is the fact that older workers will be able to form a lager part of the work force as compared to the recent past.This asserts that both the experiences as well as the outcomes of the older workers will have a mounting influence on the general performance of the work force. References Boersch-Supan, A, 2001, Labour Market Effects of Population Ageing, NBER working paper, No.8640. Cabinet office, 2000, winning the generation game: improving the opportunities for people aged 50-65 in work and community activity, London: Cabinet office. Clark, R.L & Spengler, J, 1980, The Economics of Individual and Population Aging, Cambridge Surveys of Economic Literature, CUP Archive. Disney, R., 1999, why have older men stopped working? In Gregg, p., the state of working Britain, Oxford: Manchester University press. Dixon, S, 2003, Implications of Population Ageing for the Labour Market Groot, W. & Verberne, M., 1997, Aging job mobility and compensation, Oxford Economic papers, 49:380-403. Grundy, E., Stuchbury, R. & Young, H., 2010, Households and families: Implications of changing census definitions for analyses using the ONS Longitudinal Study, Population Trends, 139:64–69. Housing Statistical Release, 2009, Household Projections to 2031, England. Jackson, S, 1998, Britain’s population: Demographic Issues in Contemporary Society, Routledge. Larmon, E. et al., 2009, the methods and materials of demography, Bureau of the Census (U.S). Landis, F. & Mackeller, M., 2000, the predicament of population ageing: a review essay, Population and development Review, 26(2), 365-97. Lutz, W & Samir, K, 2010, Dimensions of Global Population Projections: What do we know about Future Population Trends and Structures? Retrieved on November from http://rstb.royalsocietypublishing.org/content/365/1554/2779.full Madouros, V, 2006, Labour Force Projections. Marsh, D, 2003, The Changing Social Structure of England and Wales 1871-1961, International library of Sociology, Volume 1 of The International library of sociology: Race, class and social structure, Routledge. OECD, 1998, Work-force ageing, OECD Employment outlook 1998, pp. 123-51. Office of National Statistics, 2010, National Projections: UK population to exceed 65m by 2018, Retrieved on November from http://www.statistics.gov.uk/cci/nugget.asp?id=1352 Organization for Economic Co-operation and Development (OECD), 2001, Investment in Human Capital through Post-compulsory Education and Training, Economic Outlook 2001, Paris, OECD. Thane, P, 2000, Old Age in English History: Past Experiences, Present Issues, Oxford University Press. Wardswoth, J., Gregg, P. & Knight, G., 1999, The cost of job loss. In Gregg, p., The state of working Britain, Oxford: Manchester University press, 249-58. Wright, E., 2010, 2008-based national population projections for the United Kingdom and constituent countries, Population Trends, 139, 91–114. Young, H. et al., 2010, Self-rated health and mortality in the UK: results from the first comparative analysis of the England and Wales, Scotland, and Northern Ireland Longitudinal Studies, Population Trends, 139: 11-36. Read More

They are in this case produced by employing various econometric representation techniques that reveal future patterns of age or sex that are specific to labour market activity rates as denoted by trends in the past. Labour force projections in England and Wales are commonly based on two major components including; population projections and economic activity rate projection. Population projections are purely demographic effects and as a result, size and labour force composition depends much on various population changes in England and Wales.

Additionally, the general activity rates are more often than not influenced by the relative movements of people between various age groups (Madouros, 2006). Given the increasing growth in the population level of England and Wales, household numbers in England are bound to grow up to 27.8 million by 2031, a 6.3 million increase over the estimates carried out during the year 2006.This makes for approximately 252,000 households for every year. The estimated change in age structure of England and Wales’ population, for instance, is revealed within the household projections, with 53% of the households being those headed by individuals of ages 65 and above.

This indicates that by 2031, approximately 32% of the households will normally be managed by individuals of 65 years and above as compared to 26% in 2006 (Housing Statistical Release, 2009).Changes in size and average age of labour force are products of both demographic changes, which modifies the size in addition to the age structure of a working-age population, and changes in the labour force pattern participations. A few decades ago, changes in the participation patterns of labour force have played a significant role in the modification of patterns of labour force ageing (Office of National Statistics, 2010).

Population ageing and labour market identify a number of potential issues as well as consequences including: Increasing Pressure on the Wage Costs of Employers According to Dixon (2003), there is a clear relationship between age and what an individual expects to earn. Employers’ costs on labour will therefore tend to increase as a result of labour force ageing if the present earning disparities by age continue to be maintained. The impacts on unit labour costs however will be dependent o whether the average productivity increases with ageing of the labour force.

An ageing work force may seem to be more productive given the fact that older labourers tend to be having many years of prior working experience. However, Dixon (2003) argues that there exist evidences that positive relationships between ageing of the labour force and earnings are to some extent the results of various organizational pay policies that are intended to encourage the retention as well as reward performance, more willingly than the pure productivity effect. Organization pay structures which unconditionally reward their labourers or employees tend to increase their wage costs in the event of workforce ageing, which in most cases puts them under pressure in their intentions of making several adjustments.

And since labourforce aging has been in existence for a long time in England and Wales, it is possible that many firms will be forced to make several increment adjustments in their organizational pay structures. The slow as well as the gradual nature of labourforce ageing therefore calls for plenty of time so that firms or organizations are able to make several adaptations.Alternatively, Dixon (2003) suggests that ageing of firm labour forces may as well bring about offsetting sources of the labour cost savings to various employers, for instance lower returns and lower non-attendance (Dixon, 2003).

Decreasing Pressure on the economic activity levels At present the participation rates of the prime-aged as well as the younger adults are way above that of the older adults. This has drawn more concerns, especially that the older workers have increased their labour force share which consequently could drastically affect the total population of older workers not at work, along with the aggregate activity levels (Cabinet office, 2000).

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