Scotland with an ageing population: economic and
demographic challenges we should have met by 2031
Introduction
It is now well established that Scotland is facing a declining and ageing population
and this has been widely discussed and debated in recent years. Speculation and
reactions have ranged across many dimensions of public and private concern,
including pensions, the size of the workforce, the capacities of the health and social
services, and so on. One of the advantages we face in this context is that demographic
changes in Scotland tend to happen slowly and so reasonable plans can be put in place
to address such challenges. This is allowing the Parliament, Government and civic
society to consider what policies and strategies are suitable for the future health and
well-being of the Scottish economy and people.
And we are not alone in exploring these issues.
Scotland – A European Country
Although it was initially believed around the turn of this millennium that we were in a
unique position in having to confront these changes, the reality is that most other
countries are anticipating comparable transformations and so many are conducting
similar exercises in looking into the future. However, in our favour is that we were
one of the first to recognise the implications of demographic change, have a long
history of living with emigration and - more locally - depopulation, and, critically, as
a society we are willing than most to embrace some quite radical measures to
overcome issues raised by decline and ageing.
Wider Contexts
As the impacts are going to be felt across many aspects of life in Scotland and
beyond, and these are being dealt with by a number of authors in this collection, this
paper is going to focus on the economic effects of demographic change, though it will
necessarily cover some other related areas. It cannot be exhaustive either, as the
science of futurology at the best of times is inexact and often the forecasts should be
heavily qualified with caveats, assumptions, etc. Also, as Scotland is part of wider
political organisations, and the European Union (EU) and United Kingdom (UK) in
particular, both of which reserve significant powers over relevant policy and strategic
matters, the discussion has to be aware of changes and concerns elsewhere. Very
importantly for Scotland, however, and as will become clear, the evolving
demographic issues facing Scotland are quite different from those in the rest of the
UK and in particular parts of the EU, but are much closer to being experienced by
some of our other neighbours. Policy initiatives and lessons from the Nordic countries
especially will be of interest here, but references also will be made to experiences and
lessons from wherever they appear relevant.
Structure
In the next section we will be looking at the population changes expected to happen in
Scotland in some detail, and then comparing and contrasting them with changes in the
world, Europe, EU and UK. Some of the proposed direct policy responses to these
demographic developments will be examined. Next, expected and forecast changes in
the economy – sectors, labour markets, supply and demand - will be explored, with
links made to the interactions with the population changes. The opportunities and
potential advantages will be considered as much as the problems and difficulties, this
is deliberate as too much of the debate to date has been couched in terms of the latter
as if greater longevity and better health are not to be welcomed and celebrated. How
people can and should be encouraged to continue to play full and active roles in
society and the economy will be covered in the following section. Some specific
lessons from elsewhere will be introduced in the penultimate section before some
concluding comments are made.
As this paper is meant to contribute to the wider debate on the future of Scotland, and
to the ageing dimension especially, references will be provided in a bibliography
though they will be kept to minimum within the text itself.
Demography
Stable Population
What is most remarkable about the evolution of the population profile of Scotland
over the last century is it is unremarkable! It is almost the same now as it was in 1951,
has hardly varied since and is not expected to change much till the 2030s (Figure D1).
Indeed if we look backwards to the 1920s, there is a similar flat profile, yet this
patient is far from dead. Underneath this there have been some very interesting flows
and structural changes at work, and many of these will shape the next half century or
more. Births and deaths happen every day, and the last 80 years have seen major
improvements in health and well-being for all ages. This has led to people living
longer as their general standards of living have risen over the decades. In the period
since 1960, this has been associated with a fall in the average number of children born
to each woman. There are a host of reasons for this and it is one of the developments
in society that we do not totally understand, but we do expect these long term and
well established trends in birth and death rates to continue in to the foreseeable future.
Migration
The other major component of population change is migration, and that has been
particularly important in explaining Scotland’s demographic history over the last one
or two hundred years. While much is made of brain drains and depopulation, the
picture has been quite varied over the years. At times internal movements have been
dominant, with people deserting remote rural Scotland for the cities, moving to the
North East and Edinburgh as their respective economies boomed, and leaving the old
industrial towns as traditional heavy industries declined. For much of the last century
Scotland lost significant numbers of people through migration to England and
overseas; during the last decade this has been gradually reversing with both return
migration and very recently migrant numbers from central and eastern Europe –
especially Poland. What will happen over the next 20–25 years will be dependent on
further economic changes – in-migration is driven by job opportunities - but within
Scotland on where new houses are planned and developed. As will be shown later,
although population will eventually start to fall slowly, there will continue to be more
households being created than disappearing.
Forecasts
Given our understanding of what has been encouraging migration into and out of
Scotland in recent times, the best estimates of population change in the next quarter
century suggest that from a total of 5.09 in 2006, numbers will gradually rise to 5.13
million by the end of the next decade before declining to 5.07 in 2031 (Table D1).
These minor adjustments to the population total do not point to a crisis, and if
migrants are encouraged by economic potential and policy to come to Scotland then
stability looks assured for the coming decades. However, below these aggregates are
some significant structural developments (Table D2). The proportion of children
(under 16) will fall from 18% now to 15.7% in 2031, with 126 thousand fewer than
today. As family sizes have been reducing from the early 1960s there have been
impacts on succeeding generations so that the proportions in the working age cohorts
will decline from 62.7% in 2006 to 58.5% in 2031. This will mean 7.5% or 242
thousand fewer potential workers than now, with an ageing workforce. To put this in
context, however, if by the end of this period all areas in Scotland could achieve the
same participation rate as rural Scotland and the prosperous suburbs of the Central
Belt enjoy now, then this decline effectively would all but disappear. The most
dramatic changes will be felt in terms of the older groups with most of the increase by
a third or 324 thousand in those of ‘pensionable age’ (which is 65 for men, 60 for
women until 2010; between 2010 and 2020 pensionable age for women increases to
65) amongst the over 75s; their numbers will rise by 70% to reach 652 thousand.
Therefore, one in eight people will be over 75 by 2031.
Dependency Ratios
Considering these changes in terms of the projected numbers of dependants per 100 of
population of working age, these are expected to remain fairly stable until 2021 and
then to increase from 60 to 71 (Table D3). While the ratios of children and of those
between pensionable age and 75 to working age adults should be between 47 and 49
for much of this period, the numbers of those over 75 will almost double from 12 to
22. This is widely perceived as representing the greatest challenge to the economy and
society. While there is a long period of grace ahead when Scotland can seek to raise
economic activity rates by addressing the barriers to employment faced by many older
workers, by those in successive NEET groups, and by others disadvantaged in the
labour market, and can encourage new migrant workers and return migrants, there are
both limits on these strategies and there are outstanding issues with the position and
status of the very old in society.
Households
A critical but often neglected dimension of demographic change concerns the
formation, dissolution and evolution of households. The smaller family sizes referred
to above, the enhanced mobility of people within and outwith Scotland, as well as the
ageing of society all impact on the development of households. So while the number
of people is expected to be hardly changed by 2024, current predictions suggest there
will be 11% or 300 thousand more households than in 2006 (Table D4). The
projections are available in some detail from 2004 to 2024 so, as similar trends are
anticipated for the remainder of the 2020s, we can analyse household changes for the
next twenty years and expect them to continue thereafter. So, between 2004 and 2024
the number of households is forecast to grow by 13% although the ‘private household
population’ (i.e. excluding those in communal establishments) is expected to be static.
The proportion of one person households is predicted to rise by 47% for men and by
33% for women, and by almost 300 thousand altogether (Table D5). From about a
third in 2004, one person households will make up 42% of all households by 2024.
The number of two person households is believed to rise also, with two adult
households increasing by 21% (to account for 32% of the total) and lone parent
households by 44% where there is one child and by 21% where there are two or more
children (together making up 8% of the total). In contrast with these expansions, there
are expected to be 25% fewer households with three or more adults (down to 6% of
the total), while the former “typical” family household of (at least) two adults and
two or more children will account for only one household in eight having declined by
31% over the two decades.
Changes within Scotland
Geographically, it is being estimated that there will be quite varied patterns of change
across Scotland: continuing past trends the population is expected to redistribute away
from the remote rural areas, islands and old industrial towns towards the east and to
an extent the commuting areas around the cities. By 2024, single adult households are
expected to represent over half of the total in the cities of Aberdeen and Glasgow, but
only about a third of those in the suburbs of these two cities and Edinburgh. All parts
of the country, however, will face significant increases in the importance of people
living alone. Similarly, larger households of two or more adults with one or more
children are expected to decline over the coming two decades but at appreciably lower
rates in commuting areas, Edinburgh and some areas that could be described in terms
of ‘retirement communities’. In Aberdeen and Dundee and certain other areas
suffering from general decline, there expected to be high rates of decline in these
traditional family households. Looking at the age of the head of household, there are
not expected to be significant rises in Edinburgh or Glasgow. In particular, while it is
anticipated that there will be a rise of over 50% in the number of households headed
by people over 75, Glasgow is actually forecast to see a 7% fall in their number and
there will be relatively small increases in Edinburgh, Dundee, Aberdeen and the old
industrial communities of Inverclyde and West Dunbartonshire.
Age of Head of Household
One implication of these changes will be that the average size of a household will
have fallen by 11% from 2.22 to 1.97, with the cities, islands and remote rural areas
tending to be lower than this average (Table D6). Behind these changes are the ageing
of the population and other social developments. The number and proportion of
households headed by all groups over 55 are expected to increase, and someone over
‘pensionable age’ will be head of almost a third of homes by 2024 and those aged
over 75 will be head of one sixth. Interestingly, people under 35 will become heads of
household in increasing numbers for the next decade before their numbers start to
diminish again as population decreases start to dominate household formation.
Against these rises, the number and proportions of households headed by people
between 35 and 55 will fall by about 5% eventually to account for only one third of
the total. These forecasts imply that about a quarter or a fifth of each age group below
‘pensionable age’ will be living alone by 2024, but that substantially higher
proportions of those over 75 and especially women (70% of the over 85s) will be the
only persons in their households (Table D7). These changes will have profound
implications for individuals and families, whether they are living together or not, and
for society and service providers alike.
Recent Migrants
As argued above, most of the factors driving future population changes – births,
deaths, household composition - are already in place and these are distinctly stable in
historical terms: the predictions and projections are fairly robust, therefore, against a
century of stability in Scottish demographic trends. A critical difference concerns
migration into and out of Scotland, which in this particular national context has been
strongly influenced by opportunities available here, with regard to movements into the
country, and by opportunities elsewhere where emigration is concerned. That is, pull
factors tend to dominate rather than the push of poverty, unemployment or other local
factors. Recently, but continuing a reversal of the net losses of people in the twentieth
century, there has been strong net immigration to Scotland, especially by migrant
workers from the new member states of the European Union and from Poland
especially. It is not expected that these flows will continue to the same extent, but
many parts of Scotland have been benefiting from these inflows of workers, with
increased populations or a stemming of decline, moderation of the ageing process and
a more balanced structure overall. Nevertheless, policy decisions at UK and European
levels are likely to constrain further significant inflows in the near and medium
periods, and the UN amongst others cautions against too much reliance on
replacement migration to address ageing and decline. There are complex issues and
impacts to be considered here, but having welcomed so many Poles into Scotland it
should be expected that many of those will stay here, will encourage their families
and compatriots to join them and to continue to offer much to the economy and
society.
Global Decline
When the Scottish Executive introduced a national debate over demographic change,
encouraging immigration and continuing residence by students (through the Fresh
Talent Initiative) and migrant workers (through active participation in UK-wide
recruitment of labour from Poland and other EU countries) and addressing ageing
through strategic developments (including the ‘Strategy for an Ageing Scotland’), it
was reacting to projections of decline and ageing that were extreme if not unique in
Europe. The reality, it has become clear, is that Scotland is in fact absolutely typical
of countries in the EU, Europe and the developed world. By the middle\ of this
century, Japan and virtually all the countries of Europe are expected to decrease in
population size. The population of the geographical continent of Europe is set to
decline by 100 million from 730 million, Japan, currently 127 million, is projected to
fall to 105 million by 2050. These changes will impact more strongly on some
countries than others so, for example, the population of Italy, currently 57 million, is
projected to decline to 41 million and the Russian Federation is expected to decrease
from 147 million to 121 million between 2000 and 2050. By the year of the most
recent Enlargement (2004), the European Commission was recording general patterns
of underlying decline across the EU15, with only large scale in-migration into the
largest four countries offering some apparent stability but all these member states
were to have entered an era of falling populations by the third or fourth decade of the
century. Similarly, six of the ten Accession countries were already in decline on entry
and these falls were set to continue into the foreseeable future. The only exceptions
across Europe would be the micro-states, and to an extent England which would face
decline later than elsewhere because of in-migration from outwith the continent.
Global Ageing
And all of the developed world is having to face the challenge of populations which
are ageing as well as declining and these twin developments ‘will require
comprehensive reassessments of many established policies and programmes,
including those relating to international migration’ according to the UN. They forecast
a doubling in the proportion of people over 60 from 11% to 22% in the world as a
whole, with a rise in numbers from 688 million in 2006 to 1968 million in 2050. The
developed countries should expect an increase from 20% to 32%, though all regions
of the world would see rising numbers and significance of the over 60s. Much of the
increase in developed countries would be amongst the eldest with a rise from 19% to
32% in the proportions of those over 60s who are 80 years or more. In Europe, there
would be a rise from 21% to 34% in the over 60s, and eventually 28% of these would
be over 80. Southern European countries should anticipate over 40% of their people
being over 60 by 2050, with other European regions following these trends. Life
expectancy at 60 does not vary greatly across the continent and is not expected to go
up much in the near future but the median ages of all European countries are forecast
to increase as a result of these various changes, typically rising from just over 40 to
close to 50 years old.
European Dependency
In addition to the decrease in population size, then, the countries of Europe are
undergoing a relatively rapid ageing process. The ratio of the population aged 15 to
64 years to the population aged 65 or older, the ‘Potential Support Ratio’ is one way
to measure the dependency of those over a particular age on those of working age –
which itself is not necessarily stable nor fixed. Given the expected ageing of these
national and continental populations, this ratio would fall from 4 to 2 between 2006
and 2050, with little variation across Europe.
Scotland - European not British
Scotland, then, is a typical small European country and therefore can learn from the
experiences and strategies of these comparable nations. It is not like England,
however, (which is expected to continue to expand by another 6 million to reach
almost 57 million by 2031, and then to continue to grow to be 61.4 million by 2074)
(Table D8), nor is Scotland close to the US (forecast to grow from 290 million now to
354 million in 2031 and to 477 million in 2074). Yet these are the two sources of so
much of our social and economic policies and interventions; it is imperative that the
needs of the Scottish economy and society are based on analyses of sensible and
reasonable comparisons and not on those facing such markedly different demographic
futures. The long term patterns underpinning these developments are highlighted most
obviously from an historical perspective: over the past 140 years, Scotland’s share of
the population of the UK (as currently constituted) fell from 12.5 per cent in 1861 to
8.6 per cent in 2001, and is projected to decline to 6.1 per cent by 2071.
Demographic and Economic Change
As will be seen later, the paths of development of Scotland and the Nordic countries
and Ireland in particular have diverged markedly over the last century, confirming
that significant population shifts are nothing new and reflect long term differentials in
economic growth rates (Figure D2). Demographic and economic change are
inextricably linked - improve performance in the latter and some of the population
issues can be revised to the mutual benefit of the country, migrants and all age groups.
To address this agenda, once we have looked at what economic developments we can
expect in the next twenty years, it should be possible to return and consider what our
near neighbours are doing to face the challenges set by an ageing and declining
population.
Economics
Forecasts or Speculation?
If forecasting the future of Scottish demographics is difficult then predicting the
economic future is even more problematic. Before trying to look forwards a quarter of
a century, it is informative therefore to just think back an equal time to the industries,
jobs and occupations of 1981, not least because by the end of the millennium most of
the traditional industries that dominated then had all but disappeared, and their
careers, skills, linkages and trade with them as a consequence.
Deindustrialisation
At a local level, by the mid-1970s, something like 100,000 jobs had disappeared from
the East End of Glasgow over the previous decade alone. But the basic industries that
had defined the economies of Glasgow, Clydeside and Scotland from the early part of
19th century - coal, steel shipbuilding, heavy engineering and textiles - were still
dominant. And at that time in the 1970s there were plans for future: a massive
integrated steel plant around Ravenscraig, new coal mines, a deep water harbour on
Clyde with petrochemical works and oil refineries, innovative ships, steel and
concrete oil rigs. It was a time of hope as well as change.
Traditional Families
What was it like in those days - thirty years ago? Housing in the old industrial areas of
those days tended to be based on the traditional family. The man/father at work. The
woman/mother looking after home and family and children. And all lived in council
housing. Usually there was one adult working in each family once the first child had
been born. There were little opportunities for savings because these industries were
highly cyclical, owner occupation was exceptional and there was no spare money - no
collateral for loans to start new lives.
Communities and Dereliction
Within just ten years, by the late 1980s, there was a very different picture. All the
deep mines had gone, only one steel works was left, most engineering was in decline
and hardly any textiles remained. Unlike previous recessions these industries were
now gone for good. It was an unprecedented collapse of industries, and of the
communities they depended on and which depended on them, over a very short
period. These were dominated economies: one industry towns and villages and
neighbourhoods. Once the jobs in these industries had been taken away, there were
often no local alternative jobs. Large areas of land were left derelict by this - with half
of the 1985 derelict land still unrecovered in 2004.
Mass Redundancies
This decline was achieved through redundancies - mass job losses, with thousands at a
time being told they were no longer needed, their skills rendered useless. Men and
women were thrown on the scrapheap. And so were their communities.
History Matters
These massive changes have been experienced over a very short period, trying to
forecast forward over a similar period therefore raises significant questions over the
direction never mind the strength of the developments into the future. We now
consider these changes in more depth as it should help the analysis of the likely future
scenarios if we can understand better the recent past and what forces and drivers have
been influencing the Scottish economy over the last quarter century.
Restructuring
As is clear from the Table (E1), between 1981 and 2001 the primary sectors lost 53
thousand or 34.7% of jobs and manufacturing lost 184 thousand or 36.8% its initial
employment. Together these sectors saw their share of Scottish employment decline
from 28.1% to 16.4%, and this expected to decrease further by 2008 to 13.2%. Before
the end of the current decade, therefore, all the indications are that two-thirds of the
primary and manufacturing employment of 1981 will have disappeared in less than
thirty years. Construction tends to vary year on year, following business cycles
influenced by public sector investment plans and private consumption confidence and
expectations. Employment in construction has fluctuated between 160 and 186
thousand in the past twenty years and similar patterns can be expected into the future.
The services sector has more than taken up the slack in the labour market created by
this restructuring: with 457 thousand more jobs in 2001 than in 1981. The public
sector recorded growth of over 27% over that two decades, with most of that being in
education and health, while private services expanded by almost a third (32.2%). The
services are expected to continue to grow this decade and account for four out of five
jobs by 2008, 53.3% in the private services and 27.2% in the public domain.
Some of these major developments since 1981 and into the near future have been
caused by out-sourcing, contracting out, redefinitions of jobs and so forth, but
generally there have been profound structural changes which have given Scotland a
very different economy. Along with these changes have been moves to a labour force
which has a better balance between men and women, and between local labour
markets across the country.
Employment Forecasts
Recently Futureskills Scotland has published labour market projections to the period
to 2014 (Table E2) and some of their conclusions suggest:
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a slight slowdown in the rate of growth of employment in Scotland compared
to previous years;
modest growth in the number of jobs;
considerable demand for employees to fill jobs which become vacant;
a continued transfer of jobs from primary and manufacturing to services but
at a slower rate than in the past;
a continuation of the recent trends of growth in professional and service
orientated occupations and decline in skilled trades and elementary
occupations, again at a slower rate; and
a closing of the gap between male and female activity rates by 2015.
Rural and Urban
These results are consistent with several other medium term forecasts and point to a
continuation of the past trends since the early 1980s discussed above.
 all of the growth in employment in Scotland over the last two decades has
been in non-rural Scotland;
 but in contrast, rural Scotland has experienced a slight decline in employment
and employment in rural Scotland is expected to remain stable at just over
300,000.
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All of the projected increase in employment is expected to be in non-rural
Scotland where the number of jobs is forecast to increase from 2.22 million in
2004 to 2.24 million by 2009.
Gender
The balance in employment between men and women has changed significantly over
the last two decades so that now 52 per cent of all jobs are held by men and 48 per
cent by women, these shares are expected to stay constant into the future. The
increased participation of women has been faster in rural Scotland where women
traditionally comprised a low proportion of the workforce (38% in 1981 and 45% in
2001), so that there are now few differences. Generally, but especially in rural
Scotland, these rapid changes have been driven by an increase in the number of parttime jobs over this period, most of which are held by women.
Replacement Demand
A critical insight has been offered by such analyses into the dynamics of the labour
market, with their focus on both ‘replacement demand’ for workers as well as new job
openings. This explains why attracting potential employees and trainees to careers,
jobs and opportunities in declining sectors is still important in the short and medium
term. So, in the five years to 2009, for example, across Scotland, 489,000 new job
openings requiring new employees will arise (Table E3). This comprises an
anticipated 21,000 jobs that arise from growth in the economy and a further 469,000
new job openings which will arise because some workers will retire, die or otherwise
leave the labour market. In all industries – including those in which employment is
expected to contract – the number of new job opportunities is predicted to be large
due to the scale of replacement demand – the need to replace workers who leave the
labour market. Nevertheless, it is forecast that almost 60 per cent of job openings will
occur in just four industries – Other business services, Retail and distribution, Health
and social work and Education.
Occupational Change
Also, the anticipated number of job openings for new employees over the next five
years is large for every occupational group. The most highly skilled occupations, such
as Managerial and Professional jobs, will account for almost half of all job openings.
However, there will also be substantial job opportunities in lower skilled jobs. There
has been a general move to raise the skills required in many sectors over the past two
decades, and the rapid growth in Professional and Personal Service occupations will
continue. Alongside the demise in certain sectors, a decline in Skilled Trades,
Operative and Elementary occupations has occurred over the same period and again
this is likely to continue with the expected fall in manufacturing. It is anticipated that
total employment will continue to be concentrated in professional and service
orientated occupations; nevertheless, although total employment in Elementary
occupations is expected to decline, these occupations will still account for a large
share of the total number of jobs in Scotland.
Qualifications
It is projected that by 2009, one-third of the Scottish working age population will
have higher education qualifications, and this proportion will rise further as
participation in higher education has reached 50% in recent years. If participation in
higher education continues at the present rate, it is projected that 36 per cent of the
Scottish population will be qualified to SVQ level 4 and above or equivalent by 2009.
Redundancy and Ageing
There of course has been an age dimension to these developments. The decline of
traditional industries was affected through the large scale closures of plants which
employed hundreds if not thousands on one site. With tightly knit labour markets and
communities, this impacted on these areas especially during the 1980s and 90s, with
several still not fully recovered. The progressive movement of redundant workers
onto first the unemployment register, then invalidity and incapacity benefits, was
followed by higher proportions of their partners, neighbours and then later generations
into inactivity. Older men and women without qualifications have tended to withdraw
from the labour market to a greater extent than other workers, but there has been a
worrying upward trend in inactivity amongst progressively younger groups across this
country, as elsewhere, with lack of skills and other barriers often explaining this. The
importance of qualifications, allied with soft skills, are proving key to levels of
employability. There is nothing in the forecasts available which suggests that these
trends will not persist into well into the future.
Skill Shortages
Surveys of Scottish employers repeatedly demonstrate that there are very few skills
shortages or hard to fill vacancies but that as many as one in five workplaces reports a
skill gap – not having the skills necessary for your post. Such gaps can be explained
mainly through weaknesses in the softer skills such as organisational and planning
skills, customer handling and problem solving; and affect around 9 per cent of
employees. Given the ready recruitment of migrant workers into low paid and low
skill jobs, it is no coincidence that these reported skill gaps disproportionately affect
posts which require lower levels of skills or qualifications. The sectors which are
affected most by skill gaps, therefore, are hotels and restaurants and parts of the
public sector, though the care sector has also been identified as having similar
difficulties. This notwithstanding, other low paying sectors have been able to rely on a
plentiful supply of further and higher education students (about 70,000 students in
Glasgow alone, for instance, are available for part-time work throughout the year)
who are looking for flexible hours, undemanding jobs offering wages alone – there
are no pretensions of establishing a career in such employment. This is relevant to the
discussions of older workers as, first, the numbers of Scottish students available for
such jobs will fall with declines in their age cohorts meaning other sources of such
labour will need to identified and, second, the economy will become increasingly
dependent on these sectors for export demand (e.g. tourism, global contact centres)
and home consumption (personal services, health and care sectors).
Future Glimpses
From 2.3 million jobs in 1981, to 2.5 million in 2004, by 2014 total employment is
expected to reach 2.57 million, with 50,000 new job opportunities compared with
2004. The need to replace workers who leave the workforce is expected to provide
920,000 job openings. The projections by Futureskills for these aggregate changes are
consistent with a view that the near future will see continuations of past trends: albeit
at slower rates of change than previously. Another attempt to foresee where we might
be in the second quarter of this century has been undertaken by the Scottish
Executive’s “Futures Forum”. They have included an application of the GLIMPSES
model: Globalisation; Life Course; Individualism; Media & Technology; Politics &
Government; Shape of Society; Employment; and Sustainability. Amongst its
interesting discussions and speculations, it is consistent with many of the predictions
of the other institutions referred to here regarding life styles and the economy, with
ongoing change and disruption at the level of the individual, family and community.
Reflecting a considered view of the recent changes discussed in this section, they see
greater continuity than change – with a good degree of improved job stability,
longer tenure, and less flexible employment contracts than might have been expected
in view of the immense sectoral shifts and changes in workforce composition.
Whether their view that the improvement of business conditions since the 1990s and
increases in public service funding are sustainable, and so that the longer term view
this has allowed many organisations to take will be maintained, remains to be seen.
Migrant Workers
It can be speculated that although migrant workers from Poland and eastern Europe
generally are to be welcomed, the failure to use their skills and attributes in an
efficient way is a missed opportunity. Not only should they be recruited to more
productive employment and so raise GDP but also the market is allowing the low
skill, low profit, labour intensive caring, food processing, tourism and related
industries to avoid upgrading investment in people and resources. Addressing the
sustainability of the Scottish labour market does require a more long-term view with
invest and reward for the workforce, but readily available minimum wage labour does
not encourage such movements.
2020 – 2030 Forecasts
Over a longer period into the future, that is well into the 2020s, it becomes much more
difficult to predict what is likely to develop. The massive restructuring since 1981
confirms this, and 2031 is as far away as that year is from 2006. However,
replacement demand becomes less appropriate as an indicator of the need for
flexibility in the labour market the greater the time horizon; indeed, ‘flexibility’ itself
has become increasingly important for the operations of the skills, training,
employment and service markets over the past quarter century. All indications are that
this will continue well into the future also. With these trends as background: in terms
of gender, age, occupations, industries, qualifications and participation, it is possible
to begin to speculate on how the labour market may develop into the period when
other forecasters sensibly dare not tread!
A New Economy
How individual sectors, occupations, enterprises and skills develop in the longer term
is more reliant on factors which are subject to national and international influences
and these in turn are at greater degrees of risks and uncertainties. Scotland is now far
less dependent on the fortunes of specific sectors which are open to either the
idiosyncrasies of the markets for capital investment goods (the outputs of many of the
traditional industries) and Scottish consumer goods and services. The demise of the
heavy industries and their dependence on world markets means there are now
significant differences from the position of the last two centuries before 1988, and this
has brought an end to Scotland’s overexposure to global business cycles.
Comparative Advantages
But, even since the end of the 1980s there have been subsequent changes. The
retrenchment of electronics, which had come to dominate the Scottish economy in
terms of investment, exports and contribution to GDP, has uncovered the underlying
strengths and weaknesses of the Scottish economy. And it is around these that debate
and discussion of the future of a Scotland with an ageing population must be based. A
strong case can be made that these fundamental comparative advantages are
embedded into the social and political culture and infrastructure of the nation.
Therefore, their health and appropriateness for the future development of the Scottish
economy becomes critical to the discourse on what strategies should be adopted and
applied to face the challenges posed by ageing and demographic changes.
Summary of Demographic and Economic Background
Stability, Flexibility and Diversity
Scotland’s demography is continuing to present a flat profile for at least the next two
or three decades, although there will be structural ageing of both the population and
the working population. There is no crisis and with recent in-migration we can raise
some dispute over Jack McConnell’s view that this nation’s declining population is
st
“the single biggest challenge facing Scotland as we move further into the 21
century”. As a nation Scotland has shown remarkable resilience and adaptability in
addressing the loss of the very basis of its industrial structure over the last quarter
century, with more people in employment than ever before, low unemployment and
net numbers of people coming here for the first time outwith a period of recession.
Although it is inherently risky to predict very far into an uncertain future subject to
varying factors (of ‘Globalisation; Life Course; Individualism; Media & Technology;
Politics & Government; Shape of Society; Employment; and Sustainability’), there
seems to be a consensus that the trends of the recent past can be expected to continue
into the 2010s and 2020s, and perhaps beyond. Its economy is performing reasonably
well, and to a greater extent than before the society and community are reflecting its
geography – diverse, multicultural, cosmopolitan and flexible. These are
characteristics which are to the fore in successful economies and societies across the
globe. The nation therefore appears to have the fundamentals necessary to recognise,
identify and challenge the evolving issues of the next two decades.
Inclusive and Cohesive?
If Scotland is to chart a path successfully through these twenty years, however, it also
needs to be aware of the threats posed by a failure to promote and achieve inclusion,
cohesion and social solidarity – including, and crucially given demographic change,
between the generations.
Participating in Society
Divided Scotland?
Over the next quarter century Scots are likely to experience even more changes in
their family circumstances and in particular live a greater part of their life alone.
Although we be living for longer, the real threat is that more years of ill health will be
experienced. Rather than a healthy active later life, the additional years are more
likely to be a time of suffering from chronic disease and mental ill-health problems.
With our divided communities, with many still trapped in the outfall from the
deindustrialisation and worklessness of the 1980s and 90s, an even wider gap is
developing in terms of health outcomes and behaviours depending on where in
Scotland people are born and grow up. There is a direct link between the achievement
of a long, active and healthy working life and a happy and lengthy retirement.
Looking to how these can be promoted for all and so how an inclusive and cohesive
society can be realised for all citizens presents the greatest challenge facing Scotland
in the 21st century we would argue, rather than a simple focus on the size of he
working population. We now turn to consider what are the economic barriers to
meeting this objective.
Age Discrimination?
Although economic activity rates are at an all time high, there is still a strong
declining trend after 50 with increasing numbers of workers taking early retirement or
spending several years on incapacity benefits before retiring (Figure P1). As older
workers assume progressively higher proportions of the potential workforce so this
exclusion will become critical to the ability of the Scottish economy to provide
services to all its population, raise sufficient public finance to fund health and
education for all, to improve its productivity and performance, etc. And, if men and
women in Scotland in the future could attain the traditional levels of labour force
participation of men over 50, then it would go a significant way to closing the
demographic gap in the size of the workforce after 2030. Removing the barriers to
continuing economic activity therefore becomes the priority, and removing poor
employer attitudes and (mis-) information regarding older workers is an essential
element of this.
Impacts of Workforce Ageing
According to Futureskills Scotland: as well as lower levels of economic activity the
potential effects of workforce ageing should not be exaggerated, are relatively small
but include:

increased employer costs – though these are neither inevitable nor without
society compensations;

reduced labour mobility and reduced voluntary levels of staff turnover – again
there are often compensations to employers in savings on recruitment costs,
retention of skills and experiences;

ageing of the stock of knowledge and skills – which can also be interpreted as
retaining and enhancing embedded knowledge and experience

ill health and disability within the labour force – though the data on this are
not as conclusive as might appear, with the encouragement of older workers
onto incapacity benefits distorting figures and analyses.
Retention and Recruitment
So as well as having small impacts, it should be noted that these are contested or
double sided arguments. While there has been much attention on barriers to
recruitment into work, more significant should be attention on retaining workers in
the labour market. It is clear that for all age groups a period of detachment from the
field of work can generate negative behaviours, employer attitudes, loss of self esteem
and confidence and the erection of other barriers to re-engagement. Later we shall
explore what is being done to address both direct and indirect and sub-conscious
discrimination against older workers.
Continuing Activity
Also part of the solution to poverty and financial distress for older people, for
allowing them to continue to lead active and involved lives and to contribute to
society and the economy across several dimensions of life should be greater flexibility
over retirement. Already, a significant proportion of the labour force is now working
past State Pension Age and this is likely to be encouraged in the future as people
enjoy longer healthier lives. Often financial hardship is an important reason to
continue working, with those groups of men and women with the highest probability
of labour market participation being those with outstanding mortgages on their
properties, one of the reasons that the UK has higher rates of working among older
men and women than most of continental Europe. Working past state pension age has
become more prevalent in other countries such as the USA and Japan and is likely to
be a future trend in Scotland and the rest of the UK. By contrast, one half of men and
one third of women now retire before state pension age and this is likely to be
progressive: each cohort of men appears less likely to remain in employment at older
ages so these trends cannot simply be explained as a consequence of the downturn in
the economy during the 1980s and 1990s but rather are part of an ongoing process.
Because they are becoming embedded into the economy and culture of the workforce,
not least within public sector employment, there is a greater imperative to pro-actively
reverse these trends before the higher participation rates are a necessity.
Ageing and Restructuring
Although to a degree industrial restructuring can explain the current low rates of
many regions and rural area, the shrinking employment share of those aged over 50
has taken place in both growing and declining industries, confirming that this problem
will not disappear as the workforce moves into newer sectors over time. This suggests
that age discrimination against older workers appears deeply embedded in the
cultures, policies and practices of some organisations and industries. However,
service sector employers generally exhibit a more positive orientation to older
workers, and this should increase the range of employment opportunities for this
group both now and progressively into the future. Getting it right early rather than
panicking in the decades to come should offer a better solution in the long run.
Employer Attitudes
Within wider European Union priorities for inclusion, the government have legislated
against age discrimination in employment and vocational training, with acts to address
both age and disability discrimination. In a flexible labour market, lifelong learning
will become increasingly important but there are a number of barriers to older people
gaining training such as previously interrupted learning, lack of current opportunities,
lack of local provision, cost of courses, accessibility and transport, confidence about
ability, perceived lack of necessary qualifications, previously interrupted learning,
lack of local provision and a lack of relevant and interesting courses. Employers also
(often wrongly) tend to view older workers as not in need of training and disinterested
in personal development opportunities. As a result, older workers (who tend to have
fewer formal qualifications in the first place) can be less likely to be provided with
training opportunities. Some of these barriers will diminish over time as the
proportion of graduates – who have a much higher propensity to be offered and to
gain from training throughout life – increases in the workforce, but this will threaten
to deepen divides between those with further and higher education qualifications and
the 50% who do not. Other barriers will still be affecting most older workers,
however, and these will require specific attention if they are not to be obstacles to
continued involvement in economic activities.
Caring and Employment
Moving into the 2020s and beyond, to an even greater extent than now caring
responsibilities are likely to have an increasing impact on the working lives of many
older workers. Already one in six employees have eldercare responsibilities and of the
six million carers in the UK, it is thought that half are aged between 50 and 64. As
parents and elder relatives live longer, average family size reduces and fewer young
people are available for recruitment into the caring sectors, so these demands will
increase. Many of the barriers facing older workers, and not least caring - though this
will tend to become increasingly gender blind as the proportion of lone children rises,
impact more severely on women. However, it is unclear if there is greater
discrimination against older males or females in many of the growing sectors of the
labour market. Again, there are strong reasons based on inclusion and cohesion for
ensuring that markets are open and free from discrimination and all barriers to
participation are removed: future demographic time bombs should be but an excuse
for accelerating their importance.
Health
Reflecting good practice elsewhere, the Scottish Executive are supporting a general
approach of promoting a healthy working life. They appear to limit this, however, to
the period up to the statutory pension age. Removing this qualification would go
much of the way to confirming that Scotland was progressing towards a society which
discounted age, as well as gender, race, disability, religion, skin colour, as reasons for
exclusion. So, revising their philosophy by replacing ‘work’ with ‘activity[ies]’ as
appropriate, the pursuit of a healthy working life comes to mean ‘continuously
providing [omitted: working-age] people with the opportunity, ability, support and
encouragement to be active in ways and in an environment which allows them to
sustain and improve their health and wellbeing. It means that individuals are
empowered and enabled to do as much as possible, for as long as possible, or as long
as they want, in both their working and non-working lives. A healthy working life
depends upon far more than the absence of disease or infirmity. It demands that
individuals maximise what is sometimes called “functional capacity”; our physical,
mental and social capacity to make a positive contribution to society and gain the
maximum satisfaction and consequent benefit from our life. This involves improving
people’s [omitted '] fitness for the activities they choose, equipping them to undertake
such activities and adjusting expectations of fitness, as the activities available or
personal circumstances change. This is as much about having appropriate skills,
knowledge and being able to be active in a safe and supportive environment that does
not cause unnecessary stress or strain, as it is about physical wellbeing.”
All Age Inclusion
Then addressing the needs of people as workers, volunteers, tourists, consumers,
pensioners becomes the objective of the strategy for an ageing Scotland by making
age irrelevant to considerations of inclusion.
Lessons from abroad and other cultures
Healthy and Active Lives
The economy and community have a common interest, therefore, in ensuring that
people are able to live healthy and active lives for as long as possible. Well-being and
happiness are both promoted by better access to opportunities for volunteering,
leisure, caring, domestic duties, civic responsibilities and work. Such an approach to
healthy and active living is increasingly promoted by some of our closest neighbours
in Europe through a number of strategies and means. We can learn from these without
disrupting the underlying culture that has given Scotland its own capacities to adapt to
the massive changes of the last twenty five years, to welcome migrants, refugees and
asylum seekers and, over a much longer period, to retain its own identity and
nationhood which have made the rest possible.
Contraction or Convergence?
Work by Dutch colleagues across Europe and beyond suggests that the standard
model of later years (Figure P2) implies reaching a statutory retirement age (if not
before given redundancy), giving up work completely, and then progressively
withdrawing from other areas of life entirely. This compares with their preferred
model where flexible working, retirement, volunteering, and other activities are
stressed and encouraged so that involvement and inclusion are prolonged for as long
as the individual and community consider reasonable. Such a pattern should lead to a
healthy life expectancy beyond the usual model, avoiding the cliff edge or guillotine
retirement, where the scrap heap beckons regardless of personal or economic
capacities, experiences, needs.
Flexible Lifestyles
The idea of flexible lifestyles has been embraced readily within the Nordic countries,
where economic activity rates are already high, work-life balance appreciated,
women’s participation and involvement in civic life better established, inclusion and a
cohesive society promoted. Again, these are the most successful economies and
societies in the world, they have a clearer social contract between state, citizen and
enterprise with a public fiscal and expenditure philosophy to achieve coherence and
inclusion. Addressing the demographic issues of ageing and decline, and the not
unrelated dimensions of potential spatial divides, are much easier in that context than
in an unbridled market system or one dominated by the needs of a state with a
population that is forecast to continue expanding for many decades.
Finnish Progress
Proposals from Finland based on multinational studies and dialogues are designed to
establish such approaches more deeply within society. Interestingly, Finland was
faced with similar problems to those Scotland will have to confront in the future.
They made promoting health and functional capacity and raising the retirement age
their first priorities. Demonstrating what can achieved, even within a fairly short time
scale, ‘employment among the ageing population was successfully improved and the
retirement age began to rise as a result of legislative amendments and improved
efficiency for action programmes’. Nevertheless, the dependency ratio continues to
deteriorate, globalisation and international competition is growing and even there
regional and social differences are increasing. However, and reflecting the position in
Scotland because of a common awareness of the challenges, ‘after ten years of hard
work, [they] are better prepared to cope with the challenge of an ageing population.
Nevertheless, work in this area must continue’. In particular, ‘implementation
problems have come to the fore’. Strategies and policies are being developed which
address the same challenges as we face here, as the demographic and economic
contexts are comparable these offer solutions that can be modified for Scottish
circumstances. That they are based on international studies and dialogues strengthens
the power of their significance for Scotland.
Better Worklife for All
In setting out a strategy acceptable to the private and public purse, moving ‘Towards a
Better Worklife’ which is both healthy and without functional limitations is an
objective which can be pursued with a number of changes to society, the workforce
and the workplace. First, all stages of life once again should be seeking to support
parallelism of life’s phases so that training, work, leisure time, building families and
solidarity between the generations becomes the norm rather than being undertaken at
different ages (Figure P3). Second, more attention needs to be paid to the future
demands of mental and social well being, including what is required for the
workplace. This means providing part-time work for those for whom this is
compatible with their financial requirements, support for those for whom their
working life has not been not without physical and mental stress, and the opportunity
for shorter careers for those who have shorter life expectancies. In many ways this
suggests that a flexible retirement system is required which recognises that life has
not been fair to some and those who are best able to continue working should be
encouraged to do so, for the sake of the community.
Work-Life Balance
Third, workhours are already very long in Scotland while for many incapacities,
unemployment and early retirement have reduced their employment activities to an
undesired zero hours. Reduced work hours should be pursued more aggressively
including for those where ‘exclusions’ have been agreed – they often lead to negative
long term impacts on health and well-being. Age management is part of this, with
shortening hours an element of the package towards a flexible retirement. Justice in
retirement planning and entitlements is vital to the social acceptance of change, with
consideration of the needs for sectors and SMEs especially important. Given the
government has identified the demographic challenge as critical to Scotland’s
development, the interests of all social partners need to be addressed. The Finns
propose adjusting the indirect workforce costs of older employees accordingly.
Similar actions to include others disadvantaged in the economy should be introduced
at the same time so that one group of workers or the inactive are not substituted for
another.
Planning Ahead
The recommendations to implement their plans for the ageing EU are made: covering
shift work and ageing; public policy programmes; actions for new management at
workplaces; and for a better worklife for all ages. These are consistent with the needs
of the Scottish economy and society, whether they are compatible with other parts of
the UK is far more debatable.
Conclusion
Adaptable Scotland
Over a very short period in historical terms, Scotland has adapted successfully to a
massive restructuring of its industrial base so that it now has more people in
employment than ever before, higher output and incomes, and stability in many areas
of economic life. This confirms a culture and society which can look at forthcoming
demographic and economic challenges with a good deal of confidence. Scotland has
also welcomed a record number of migrant workers without significant difficulties
and so warded off the declining of the population for another few years. The economy
is now more obviously based on knowledge and advanced skills and qualifications,
with some of the very highest rates of graduates in the world. Its future demographics,
however, are still on a very different trajectory from those in the rest of the UK
necessitating different strategies and objectives.
Divided Scotland
Also, for many in Scotland the evolution of the past quarter of a century has left them
living in poverty and deprivation with few hopes or aspirations for the future. There
are powerful reasons and existing policy objectives that demand the removal of these
divides is prioritised. Social inclusion and cohesion marks out successful economies
and societies and, by raising their attractiveness to mobile capital, high quality and
creative labour and to migrant workers and potential return emigrants, promises to
address the demographic challenges indirectly.
Flexible and Inclusive Scotland
Flexibility in work, volunteering, caring, civic society and retirement - especially for
the older age groups, but also for others who are disadvantaged in the labour market,
is being pursued in Scotland’s nearest neighbours - the Nordic countries in particular.
Based on an explicit social contract which is agreed across society, depends on proper
funding of public services but also encourages empowerment of all citizens, this is
demonstrating what can be achieved in a small independent country within the EU.
There are opportunities to follow their lead and so to meet the challenges faced by a
Scotland with an ageing population. But there are certain pre-conditions: a fairer tax
system – currently the UK has a regressive system where the poorest 10% pay more
of their meagre incomes in tax than the richest 10%, to fund enhanced services based
on ability to pay; active policies which promote inclusion and flexibility and which
seek to change the labour market culture from one of excluding from jobs and training
on such grounds as age, gender, race, disability. Adopting this model of social
inclusion, in the context of the many comparative advantages Scotland already enjoys
and others which has yet to exploit more fully, suggests that the demographic and
economic challenges can be faced with a good deal of confidence.
Selected Bibliography
Commission of European Communities (CEC) (2005) Green Paper “Confronting
Demographic Change: A New Solidarity Between the Generations”, Commission of
the European Communities, Brussels, Com(2005) 94 final.
Danson, M. (2003) ‘Regional Problems, Regional Policy and Regional Well-being –
What Have We Learned in Recent Years?’, in “Restructuring Regional and Local
Economies Towards a Comparative Study of Scotland and Upper Silesia”, edited by
G Blazyca, Aldershot: Ashgate.
Danson, M. (2007) ‘The Demographic Context’, in S Vickerstaff, W Loretto and P
White, The Future for Older Workers: New Perspectives, Policy Press, Bristol, 2007.
Droogleever Fortuijn, J. and van der Meer, M. (2003) ‘Daily activities of older adults
in urban and rural areas in six European countries’, paper presented at the Regional
Studies Association Seminar Series on Demography and Ageing “Demographic
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http://www.futureskillsscotland.org.uk/web/site/home/Reports/NationalReports/Repor
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Edinburgh.
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