Introduction

Population decline implies a decline in the size of the potential labour force. Assuming no changes in age-specific employment rates, a decline in the potential labour force will generate a decline in the number of people employed. Population ageing is an increase in the share of older people, and a decrease in the share of younger people, in the total population. It also implies ageing of the labour force. As a population ages, so will its labour force, with an increasing share of older workers and a decreasing share of younger workers. In this sense, population decline/labour force decline and population ageing/labour force ageing go hand-in-hand.

Problems

In most industrialised countries (taken here as North America, Europe, Russia, Japan, Australia and New Zealand), employment is concentrated in quite a narrow age range. For example, in Scotland, data from the 2001 Census indicates that of the total number of people employed (both part-time and full-time), about 95 percent of them are aged between 20 and 65. The situation is not much different in other industrialised nations. The problem of ‘lack of people of working age’ stems from the situation that if current demographic trends continue, the number of people in this key age group will plummet in most of these countries.

The scale of this change is illustrated in Figure 18.1, which shows the number of people aged 20–64 in industrialised countries in the period 1950–2050.