The changing character of the workforce

Over and above the changes in population trends, there have also been a number of social changes in recent years, which infl uence the way in which people participate in paid work. A major area of change in many Western economies is the point at which people join and leave the labour force. Patterns in joining and exit times give an indication of how long people will be available for employment. In many countries the amount of time spent in full-time educa-tion has increased and consequently the average age at which new entrants join the labour force has also increased. This applies to both compulsory education and participation in vol-untary further and higher education. In the UK the recent expansion of participation in higher education means that the entrance to the workforce has been delayed. Furthermore, the Edu-cation and Skills Act 2008 has increased the minimum age at which young people in England can leave education or training to 17 from 2013 and 18 from 2015. This development has important implications for employers who have traditionally recruited school leavers, since 16-year-olds will no longer be eligible to undertake full-time employment. The counter side to longer periods of time spent in education is of course that the workforce is more highly educated and this may infl uence the amount or nature of training that employers need to offer to new entrants to the workforce. This may also impact on wage levels.

At the other end of the age spectrum we have witnessed a trend over a number of years of early retirement from paid employment. Figure 2.3 shows the average age at which people exit from the labour force across EU countries. Although there is some variation in normal retirement age between the countries, these fi gures show that for the EU the average age for exiting the labour force in 2006 was 61.2. Consequently, many people in the EU are no longer in paid employment during their sixties. Early exit from the labour force may be through choice, to pursue an alternative lifestyle, but it may also be as a result of discrimination, where

Figure 2.3 Average exit age from the labour force, 2006 (in years).

Note: No data for Belgium, Cyprus, Hungary, Luxembourg, Poland, and Slovakia.

Source: European Foundation for the Improvement of Living and Working Conditions (2008) Annual Review of Working Conditions in the EU 2007–2008. Luxembourg: Offi ce for Offi cial Publications of the European Communities.

64.3

THE CHANGING CONTEXT FOR SHRM 29

an older worker is unable to gain or retain employment. This, however, is an area where we are likely to see further change in the future. It is likely that we will see some increase in the average age for exiting the labour force. A number of countries, including France and the UK¹, have increased their normal retirement ages. This move has been in response to increased life expectancies (discussed above) and the resulting fi nancial costs associated with long periods of retirement. In this vein the EU’s Lisbon Strategy developed in 2000 set a goal of achieving a 50% rate of employment amongst older workers across the EU. Employers who wish to attract and retain older workers need to think about strategies for the group. The end-of-chapter case study presents the approach adopted by Centrica to managing older workers.

Changes to time spent in education and retirement age refl ect more general changes to lifestyles which have implications for employment. In the past the so-called ‘age-differentiated’

model of employment was prevalent, where a linear approach to life course is taken— education followed by work, followed by leisure. More recently, however, we have seen a trend towards combining these activities in an age-integrated model (Riley and Riley, 1994). For example, students in full-time education may work part-time, or older workers may reduce their com-mitments to ease themselves into retirement (Loretto et al, 2005). The age-differentiated and age-integrated models of life course are depicted in Fig. 2.4.

Taken together these trends suggest that in some countries the numbers available and willing to work may decline and this may result in labour shortages. Faced with the inabil-ity to recruit the right numbers and qualinabil-ity of staff, employers may opt to export jobs or to import labour. Under these circumstances, factors such as average wage costs and em-ployment rates in different countries need to be taken into account. Average wage costs and levels of employment may inform decisions about whether to export jobs to a par-ticular country. Employment levels will also help employers establish the likelihood that they will be able to persuade people to migrate from their home country for work else-where. For example, in recent years high levels of unemployment in Poland have infl u-enced the willingness of Polish workers to move to other countries in the EU for work.

Leisure time

Leisure time

Work

Age Age differentiated Age integrated

Old

Middle

Young

Work

Education

Education

Figure 2.4 Life-course structure.

Source: Riley, M.W. and Riley, J. (1994) Age integration and the lives of older people. The Gerontologist, Vol. 34, pp. 110–115.

1 By 2020 the age at which the state pension is payable will increase to 66 years old in the UK.

Whether or not an organization has the fl exibility to export jobs will depend in part on the nature of its activity. For example, a manufacturing company may have considerable geographical fl exibility, especially if its product is easy to transport. Equally, back-offi ce and call centre activities may be amenable to being offshored. However, businesses that are more location specifi c (e.g. retail, hospitality), may have less choice over the location of their workplaces, and instead may respond to labour shortages by importing labour.

There is of course a dynamic element here. As labour migrates from a country there will be an impact on employment rates, and as a result in the longer term this may reduce the numbers of people who are willing to move country in search of employment. Similarly, as labour becomes scarcer in a country, average wage rates are likely to increase and as a result the country may become a less attractive source of labour.

In the EU there has been signifi cant migration as countries have opened their boundaries to economic migrants. For a number of European countries a signifi cant proportion of the workforce population is made up of migrant labour. Eurostat (2010) reports that 6.4% of the EU population in 2009 were not living in their country of citizenship. Overall, more than a third of these are citizens of other EU countries. Figure 2.5 provides details of the composition of the population for EU countries. The distribution, however, is not even, with 75% of mi-grants in the EU residing in France, Germany, Italy, Spain, and the UK. See the case study below for an example of how labour migration patterns in one part of the world can infl uence business in another.

Non EU-27 countries Other EU-27 countries Nationals

Belgium Bulgaria Czech Republic Denmark Estonia Ireland Greece Spain France Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden United Kingdom Iceland Norway Switzerland

Croatia Turkey

EU27

100%

75%

50%

25%

0%

Germany

Figure 2.5 Composition of the population of EU countries.

Source: Eurostat (2010) Europe in Figures, Eurostat Yearbook 2010. Luxembourg: Publications Offi ce of the European Union.

Critical Refl ection

● Consider what types of business activities best lend themselves to offshoring.

● What might be possible impediments?

● Consider what types of business activity might be best able to make use of migrant labour.

● What factors might employers need to take into account when employing migrant labour?

THE CHANGING CONTEXT FOR SHRM 31

Case study 2.1 How labour migration patterns in China affect the availability of the ‘must have’ Christmas toy in Europe

‘This year we think Buzz Lightyear is going to be very big. . .’, predicts Gareth Davies Marriot, manager of Hamley’s toyshop in London.

Each year toy retailers face the challenge of spotting the ‘must have’ Christmas present toy and ensuring that they have suffi cient stocks to satisfy demand.

However, this year it is anticipated that retailers will face an additional challenge to getting suffi cient supplies and the source of this is rooted in labour migration patterns in China. A signifi cant proportion of the toys sold in Europe and North America are made in China, particularly in the southern coastal provinces of Guangzhou, Shenzhen, and Zhuhai. In the past these factories have relied on a steady stream of cheap, migrant labour from other parts of China where work has been less available.

However, as a result of government policy to support development in other inland regions in China, the supply of migrant labour to these areas has started to dwindle. Apparently, three million Chinese workers didn’t return to the toy factories in southern China following the Chinese New Year holiday in 2010. As a result the factories have had to reduce production. This means that, not only are they producing fewer toys, but also they will be less able to respond quickly to the changing forecasts of toy retailers, who want to ensure that they have suffi cient supplies of that ‘must have’ toy.

‘Last year we would have been able to react to customer demand in September and still have goods on our shelves in time for Christmas . . . this year we would probably have needed to have ordered in July in order to get stock in on time’, acknowledges Alan Simpson, Managing Director of retailer Toytown.

Source

Adapted from http://www.bbc.co.uk/news/business-11757618.

Activity

Consider other circumstances where patterns of labour migration may have implications for organizations.

In addition to the changes identified above, it has also been observed that people who have entered the workforce in recent years, the so-called Generation Y, approach work with a different attitude and a different set of expectations (Cates and Rahimi, 2003). The term Generation Y has been used to describe those people born between 1978 and 1994 who are now entering the workforce. Generation Y, it is argued, are distinct from Genera-tion X (1962–77) and the ‘baby boomers’ generaGenera-tion (1945–61) with whom they share the workplace. Commentators suggest that Generation Y’s attitudes and values have been shaped by the environment in which they grew up—one of technological advancement and economic prosperity—and as children experienced ‘being on the move’ and constant stimulation. Observers suggest that they are concerned with issues such as CSR and work–life balance and with what they will gain from employment, such as marketable skills and rewards which are based on meritocratic principles. They are not seen to be loyal to employers and do not expect to stay with one employer (Barr, 2004). These fac-tors suggest that employers may need to take a different approach to the management of Generation Y.

Critical Refl ection

● What issues might Generation Y raise for the recruitment and retention of younger workers?

● What issues might arise for other members of the workforce (Generation X and baby boomers) if employers shape their employment policies and practices to fi t with the needs of Generation Y employees?

● What might be the consequences of not doing this?

● Is Generation Y a Western concept, or might it also be applicable in other parts of the world?