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Mind the age gap
Procurement insights

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Whilst there is a fear that an ageing population means fewer opportunities for those newer into their procurement career, this is a misconception that needs to be addressed. The increase in investment by employers in CIPS studies and further learning and development, and an increasingly mobile workforce across the UK opens up many career development opportunities for people of all ages who know where to look.

 
 
 

Ageing population & increasing opportunities

The world of work is changing, most notably in the area of workforce demography, as dramatic increases are expected in the number of economically active people aged 65 and over.

Particularly in countries with historically strong education systems, these highly skilled and experienced older workers will become prized company assets for employers, even more so in sectors that are weakened by skill shortages. Yet increasingly mature workforces – and this is a global trend – raise the concerns of how to draw in talent from Gen Y and Gen Z, when the traditional employment pipeline remains at capacity at the older end.

This is a situation for entire industry sectors to be concerned about, with potential repercussions for global economies. When skilled older workers eventually do retire, it threatens to create a skills vacuum that will take many years and a huge amount of investment to fill.

A survey carried out earlier in 2014 by The Economist Intelligence Unit, on behalf of business consultancy Towers Watson, polled 480 senior executives at companies across Europe. Almost three quarters (71 per cent) expected the number of their employees aged over 60 to increase by 2020, and 22 per cent expect it to increase significantly.

Technology giant Philips, which employs 15,000 people in the Benelux countries, has seen its average age increase from 41 to 44.3 years over the past decade. In 2007, 26 per cent of its staff were over 50. Now, that figure has increased to 32 per cent, while the proportion of its workforce under 30 has fallen from 8.8 per cent to 6.2 per cent.

A similar trend emerged at the carmaker BMW, which employs 79,000 people in Germany, with an average age of 42.7. By 2020 that will have increased to around 46, and over the same period, the proportion of employees over the age of 50 will grow from 25 per cent to about 35 per cent.

While in emerging markets the rapid improvements of education in recent years have made young talent hugely preferable to older workers, the European figures paint a rather worrying picture for the future of Gen Y employees. The concern is that they could struggle to gain access to positions where they can develop skills that are vital to their careers, their organisation, and ultimately the future of the industry in which they work.

The upward trend toward the use of older workers shows no sign of slowing, even in low-skilled work. In a recent Comensura Government Index between 2013/14, temporary workers in all groups over 34 years increased, most notably in the 45 to 54, 55 to 64, and 65-and-over age ranges, which increased yearover- year by 9.3 per cent, 8 per cent, and 12.1 per cent respectively.

However, Sarah Harper, a professor from the Oxford Institute of Population Ageing, believes the argument that older workers are preventing the progression and skills development of younger workers is outshone by the benefits of employing older staff.

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“Employers need older workers. The idea that they are just hanging around is a fallacy. People are well educated and can and want to stay working, and making a vital contribution to their organisation until well into their sixties and seventies. What’s more, because of their vast experience; they have learned how to do their job quickly and efficiently, and in many ways are more productive than younger people who are new to the job.”

Harper is equally vehement about the impact this has on younger people who are waiting to get their foot on the career ladder.

“Look at some areas of southern Europe, where youth unemployment is high and employment infrastructures are very poor. One solution would be for younger people to relocate to where the jobs are,” she says.

Finding work

Geographically, where there are areas of high youth unemployment, increased mobility among young job seekers may be a viable proposition. However, looking at the situation from an industry sector perspective – oil and gas – for example, the situation is more complex, and real examples exist of where demographic shifts damaged an industry.

Three decades ago, the UK’s heavy engineering and shipbuilding industries were the skills training ground for young people coming into the oil and gas industries. But as offshore platforms and onshore facilities processes became more automated, and traditional local yards gave way to overseas competition, fewer young people entered the industry and training dwindled.

Gary Ward, Hays Operations Director Oil & Gas CERoW (Continental Europe and Rest of World) says:

“Europe and the UK began exporting their skills to places like the Middle East – in the UAE, 90 per cent of the population is made up of imported skilled people – but that export of continental skills has since been replaced by cheaper skilled labour from India and the Philippines.”

The ageing oil and gas industry workforce is also an issue in regions such as Russia, South America and parts of the Far East, where higher salaries overseas have led to a shortfall in the skills required to satisfy local needs. While these countries are starting to produce their own graduates, they are also undertaking massive recruitment drives.

“The problem will hit the UK when we start building new power stations, which will require the same core oil and gas industry skills,” says Ward.

Without the skills at home, the UK would likely have to recruit such a workforce from overseas.

A ray of hope comes from research carried out in 2012 by a team at the Centre for Retirement Research at Boston College in the US, which explored in greater detail the perception of younger workers being squeezed out of skilled positions.

Entitled, “Will delayed retirement by the baby boomers lead to higher unemployment among younger workers?”, it used historical population data from 1977 to 2011 to determine the extent to which such crowding out exists in the US, and could find no evidence to show that the increasing employment of older people reduced the job opportunities of younger people.

One explanation for this comes from Jörg Dietz, Professor of Organizational Behavior and Associate Dean for Faculty at HEC Lausanne, the affiliated business school of the University of Lausanne in Switzerland, who believes that the extended presence of competent older workers can actually create jobs for others.

“We are talking about skilled labour here, but in my view, having these very experienced and skilled employees remain in the workforce for another couple of years would not be considered to have a negative impact on job opportunities for younger employees."

“The question we should be asking is ‘who is skilled?’ not ‘how old are they?’ As long as we retain and continue to develop competent people, they will contribute to the organisation’s success, and ultimately create new jobs.”

Sharing skills

"Of course, that solution relies upon continued market success, which recent years have shown to be far beyond the control of individual businesses. Employers can’t afford to ignore the problem of ageing," says Delroy Beverley, Director of Property Solutions at West Yorkshire-based social housing association Incommunities Group.

The group employs 1,200 people across a wide range of sectors, including building and construction, accounts, and ICT. Incommunities has a skills development pipeline in the shape of an active, if oversubscribed, apprenticeship programme, which it sees as offering a viable career path for all entering its workforce. However, relying on others’ development of skills is a risk, and Beverley, who is also Chairman of Bradford University’s School of Management International Advisory Board, believes that some organisations are in denial about the fact that people are staying in work for longer and how this will impact on their current and future skills requirements.

 “In many ways it is a conversation that employers don’t want to have, but rather than pretending that it is not happening, I see a solution in working with other organisations, across sectors within our local district.”

Such broad approaches could prevent industry or even nationwide shortages before it’s too late, and avoid the kind of talent drain experienced by UK North Sea oil and gas. He says:

“I am very much on the side of sitting down with other employers in other industry sectors in the region, to see what we can do to help each other. Older workers will retire at some stage, and you have to be in a position to replace those skills when it happens.”

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