Overview | The effects of prejudice | An ageing, shrinking workforce | The economic impact

The economic impact

	95 per cent of 55-65-year-old men were working in 1975. In 1999 the figure was closer to 60 per cent. By 2010 only 17 per cent of the workforce will be aged 18-24, while almost 40 per cent will be over 45. (Labour Market Survey 1999) The availability of permanent staff has deteriorated at the fastest rate for nearly three years. (REC 2000)

The impact of an ageing population is graphically described in two EFA publications: 'The Macroeconomic Costs of Ageism' (1998) and 'Ageism: too costly to ignore' (2001).

According to the latter, contraction of the UK workforce due to ageing, falling birthrate and other factors, such as 'disguised unemployment' *, will have serious consequences, which could include lower GDP (gross domestic product) and a declining standard of living. By 2025, for every two people employed there is likely to be one person older than 50 who is either retired or inactive.

Writing in Ageism: too costly to ignore, Sean Rickard says: 'If we do not succeed as a society in reducing the numbers of people over the age of 50 who are not actively engaged in the economy, then we are likely to suffer a cumulative annual loss of GDP, and an associated fall in living standards, that is increasing in value each year…the economy has at its disposal an enormous untapped resource of human capital in those aged 50 and above.'

The urgency of the problem is recognised by the Commission on Global Ageing: 'The challenges of global ageing are fundamental, unprecedented and potentially destabilising …The major social crises of the 21st century will be the by-product of labour shortages.' **

And the UK Government acknowledged the issue in a recent major report. 'Winning the Generation Game' *** set out the agenda for addressing age, employment and inactivity issues, and set specific deadlines for achieving measurable results within Government.

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How will businesses be affected?

As the workforce ages and contracts, skilled workers will increasingly come at a premium. Businesses that fail to respond, by broadening their search for talent to include a range of age groups, will put their future growth and profitability at risk, while missing out on the benefits that age diversity can bring.

Although slowdowns in the economy will release skilled people into the jobs market, the effect will be temporary. When the economy recovers, demand will become even more intense as employers scramble to regain lost ground.

This view was given credence by International Data Corporation research published in September 2001. Although the IT sector was then experiencing a slump, IDC predicted that the sector would face an acute skills shortage as the industry recovered rapidly during 2002.****

The underlying message is that economic slowdowns are short-lived, while population decline is long-term.

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