The doubling of life expectancy over the last 150 years represents one of the most remarkable achievements of humankind. Yet rising longevity, combined with falling birth rates and an anti-immigration turn in UK politics, presents a long-term economic conundrum for policymakers.
While there has been a small uptick in fertility rates in England and Wales in the last couple of years, women now generally have far fewer babies than they did a century and half ago. Projections estimate that there will be one adult of pensionable age for every three adults of working age by 2045, a 20 per cent increase from today. This could create a growing economic imbalance between costs incurred by the state (for example in the form of social care) and income generated by the labour of present and future taxpayers.
It is essential, then, to make the best use of the skills of the whole workforce. Yet there are indications that we are at risk of underutilising the wealth of expertise held by older workers. While the number of over fifties in employment has grown over the last two decades, this group was more likely to be made redundant during the pandemic than younger workers and less likely to be re-employed—a “Great Retirement” to mirror the “Great Resignation”.
Immigration has often been seen as key to smoothing out demographic imbalances in the labour market, given that many immigrants move countries in pursuit of work. Indeed, since 1994 there have been more people entering than leaving the UK. However, an increasingly hostile political climate meant that the topic of immigration became a flash point at the core of the Brexit debate.
Subsequently, public attitudes appear to have mellowed. An Ipsos survey found that between 2015 and 2022 the proportion who want to see immigration reduced fell from 67 per cent to 42 per cent. Moreover, decisions about immigration aren’t simply a cold economic calculation: geopolitical crises such as the war in Ukraine can suddenly influence the public’s willingness to welcome refugees.
If the UK experiences ongoing labour shortages in the wake of developments such as Brexit and early retirement, policymakers might rapidly find themselves looking for more proactive responses to long-term demographic trends. A protracted period of rising inflation and sluggish productivity could further increase the pressure to jumpstart economic growth.
Citizens, of course, make far more than an economic contribution to society’s future, with the value of unpaid care and volunteering often going unrecognised by the state. With the right support, a longer lifespan might open up the space to combine the roles of employee and carer in creative ways. With this in mind, Sarah Harper issues a call for a new “Department of Citizen Contribution” to oversee a more fluid movement between periods of work, volunteering and caring.
Minouche Shafik identifies a pressing need to supercharge the package of support for families, to make the UK a far more hospitable climate for working parents and carers. On immigration, Sunder Katwala proposes the creation of a people-led commission to take a fresh, 360-degree view on the “hot potato” questions politicians would rather avoid.
The new demographics was published as part of Minister for the Future, bold new thinking on the long-term issues policymakers can't afford to ignore, in partnership with Prospect. Illustrations by Ian Morris.
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