The changing face of the workforce

4.1. Key Finding

As P.J. O’Rourke once observed, age and guile beat youth, innocence and a bad haircut.

Older workers, who have so often felt marginalised in the employment market, will be in a much stronger position in 2020. The recession has vividly illustrated the value of experience while older workers have a more philosophical outlook on work which better equips them for a more flexible future.

There will be a huge increase in the number of these workers – as well as graduate workers – who will have to become more enterprising to get into the increasingly competitive working environment. In between these growing bands of old and young workers, a band of ‘sandwich-generation’ workers will face their own unique pressures, forcing employers to rethink their approach.

4.2. The changing graduate landscape

Graduate workers today: 6.62 million

Graduate workers in 2020: 9.06 million

74% of Britain’s teenagers want to go to university or college. In the immediate future traditional graduate destinations – finance and the public sector in particular – will recruit smaller numbers. This raises the prospect of graduates being displaced into other industries or struggling to realise the investment they’ve made in their own education.

Our forecast shows that, by 2020, the number of graduate workers will have increased by nearly 50% - a reflection of the demands of the knowledge economy. What this means is that a basic degree will be an entry-point into elite jobs in the knowledge economy rather than a mark of distinction. To realise a premium a degree from a top university or an MBA will be required.

4.3. A degree of change

Our forecast shows a steadily more qualified workforce - driven by the needs of a knowledge economy. Currently 70% of boys and 78% of girls aged between 11 and 16 would like to go to university or college. It makes absolute sense for them to do so; the graduate wage premium - across the OECD - has remained very stable. Looking at current trends, there is no indication that the situation will change. Indeed Professor Adrian Furnham believes that the wage premium around the ‘golden triangle’ of London, Oxford and Cambridge will increase over the next ten years as companies compete to attract the very best talent.

The current recession has had the effect of encouraging rather more school leavers into tertiary education as a means of deferring entry into a tight job market.

The recession will have an impact on graduate careers and recruitment. Finance and the public sector – both traditionally big recruiters - are likely to be employing fewer graduates in the next few years. This will have the effect of shifting people into other sectors such as the creative industries. Britain is a world leader in creative industries and the sector is an exemplar of the knowledge economy. The attractiveness of working in this area is such that graduates will have to be more enterprising to gain entry.

“Graduates going into that sector [creative and cultural] now are much more likely to be self-employed, more likely to be in temporary jobs, more likely to work part-time... ...the routes into that sector have become more diverse and there are some hints that there is a greater degree of entrepreneurialism going on.”  Ian Brinkley, The Work Foundation

Professor Adrian Furnham also foresees that change will be forced upon graduates.

“[Graduates] who have jobs will think of themselves as more fortunate... I think they’ll be forced to [accept being more flexible], I don’t think they’ll choose to. I think everybody wants security but I think security of every form will go down, so they’ll be offered a three year or five year contract which they might have to renew or apply for their jobs again.”

4.4. The sandwich generation

The so-called ‘sandwich generation’ are defined as people who have both dependent children and parents who require care.

Among people in the prime of their working lives – those aged 35 to 44 – one in seven is a member of the sandwich generation. This hard-pressed group have to deal with enormous time and cost pressures. With current policy aimed at keeping the elderly in their homes, and with a fast ageing society, the sandwich generation will inevitably grow.

Already 28% of UK workers find it difficult to fulfil family responsibilities because of the amount of time they spend at work. Sandwich generation workers will therefore force employers to increase the provision for flexible working simply because they are too valuable to lose, but increased flexibility may not be enough.

4.5. The greying workforce

Older workers today: 5.14 million

Older workers in 2020: 7.16 million

In 2020 there will be more older workers in the workforce. In 2000 the average age of a UK worker was 40. In 2020 it will be 44. One in five workers in 2020 will be 55 or older, according to the British Household Panel Survey. The demographics are well known but the events of the recession have served to highlight the value of experience very powerfully through the failure of corporate memory.

“One of the great shocks of this downturn was the realisation that hardly anyone, particularly in the senior reaches of companies, actually remembered what the last recession was like. This was particularly acute in government and the corporate sector... You’ve got no collective memory left in the organisation. I think a lot of firms have found that the loss of corporate memory from their older and more senior workers is quite a difficult problem”  Ian Brinkley, The Work Foundation

4.6. The failure of corporate memory

Alistair Darling commented recently on a cultural change within the Treasury, which saw fewer people around who had dealt with a recession before. The knowledge of how to cope with such a situation had retired from the organisation, leaving many staff unable to rely on past experience.

This year the average worker in the UK is 42 years old. In the last recession of 1990 / 91, these workers were 22. Many would have been on a gap year or still studying, and would have no experience of managing a company in a downturn. This could mean many companies were in the hands of ‘recession-novices’.

We’d argue that the recent recession has made business leaders appreciate the merits of retaining experience, placing older workers in a more powerful position than ever before. At the height of the credit crisis, much was made of learnings from previous recessions, with companies extolling a range of buzzwords from innovation to R&D. Retaining staff who have experienced a recession first-hand will be amongst the key learnings from this one.

4.7. Over 50 but not over the hill

A recent Consumer Attitudes to Saving survey shows among pre-retirees, 48% of workers said they would like to work either full or part-time after the usual retirement age.

In the data above, a third of retirees say they would like to continue working but feel frustrated at the lack of opportunities. We also see how many older workers feel that working on is a necessity.

Two thirds of our Delphi Panel agree that by 2020 we will have a problem with skills shortages. A lack of talent, in addition to a new found respect for experience, will likely create many more opportunities for older workers – a receptive audience for flexible, part-time and home based working. In the research conducted for this project, we found that older workers are much more willing to take a pay cut to receive the option of flexible working than younger workers. Only 8% of 16-24 year olds would be willing to earn less money in return for flexible hours. Among those aged 55 to 64 the figure rises to 19%.

4.8. Conclusions

The workforce of 2020 will be greyer than it currently is. An unintended consequence of the recession of 2008/2009 is an appreciation of the value of experience. This creates a scenario in which older workers will be able to stay active and supplement pensions while contributing in a powerful way. Graduates may have to become more entrepreneurial in their approach to job seeking and will get into employment in more diverse ways than has previously been the case. Finally the needs of the sandwich generation will force the hand of employers on offering greater flexibility.

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