‘Reserve army’ can defuse demographic time bomb

‘Reserve army’ can defuse demographic time bomb
[27 August 2006 - The Sunday Times - Business - UK] Britain’s labour shortage can’t be solved by immigrants alone. It is better to use over-fifties who want to work, writes Christopher Smallwood ... Britain's working population is growing at an astonishing pace. The Bank of England calculates in its latest Inflation Report that in the 12 months to the end of May, it expanded by some 450,000, no less than 1.6%, in a single year. The figures are spectacular, but even before the latest surge of immigration — largely from eastern Europe — Britain’s workforce has been growing strongly for years. Much of this growth has reflected important demographic changes that have had a bigger economic impact on the working population over the past decade than migration. They may well continue to be more important over the next decade. “Net” immigration (inflow minus outflow) has added about 1m people to the workforce since 1997. The net numbers are much smaller than the figures for immigration alone because the numbers leaving the country have also been increasing, and are now running at about a quarter of a million a year. Over the same period, however, the number of older people staying on at work or returning to it rose by 1.5m, contributing half as much again to the working population. What is more, there is no sign that this trend will weaken any time soon. A recent report by the TUC showed that more than a third of the economically inactive people in the country aged between 50 and 65 want to work. Although we are accustomed to think of Britain as a relatively fully employed country, this proportion is the second highest of 15 EU countries. It amounts to a “reserve army” of 1m people, and it is from this pool that much of the growth in Britain’s workforce has been drawn. More