Britain faces labour crisis by 2025, report says

Britain faces a labour crisis by 2025 caused by a Brexit-induced migration slump and an ageing population, according to a report by human resources consultants Mercer.

The UK workforce will increase by 820,000, or 2.4%, by 2025 – a sharp slowdown from an average 9% increase in the decade to 2015, Mercer estimated. The result will be that the overall population increases faster than the workforce for the first time in half a century.

There will be 2m more people aged over 65 in eight years' time, requiring 710,000 extra workers in health and social care, Mercer calculated. If those jobs are filled there will only be 110,000 workers to meet demand in other industries as they grow, it said.

In the 10 years to 2015, health and social care expanded at a similar rate but higher net migration made 2m workers available for other sectors. The composition of the workforce is predicted to change greatly by 2025, presenting further problems for employers, the report said. The number of workers aged under 30 will drop by 300,000 and there will be 1m more workers aged over 50.

This shift will be particularly stark in London, where the economy relies heavily on young and migrant labour. London’s resident population of workers under 30 will fall by a quarter and the number of over 50s will rise by the same proportion, the report said.

Mercer advised companies to start preparing for scarce labour by making themselves more attractive to potential and current employees and widening their search for future employees. Businesses should ensure all groups in society feel welcome and make themselves attractive to over 50s and parents returning to work.

Gary Simmons, a partner at the firm, said: “There are going to be big winners and losers in the battle for workers. Companies basing their recruitment strategy on a steady stream of young school leavers and graduates are in for a shock. With the under 30s group set to shrink considerably companies need to look beyond their usual sources for new skills and talent.”

Other options to cope with a shortage of labour include filling gaps with automation, moving business to places with more workers and rethinking strategy, Mercer said.