Http:// Based on: Skillsnet project on Medium-term forecasts of occupational skill needs in Europe An ageing society and the significance

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Based on: Skillsnet project on Medium-term forecasts of occupational skill needs in Europe

An ageing society and the significance

of replacement demand-- Working group I --

Ben Kriechel ROA, Maastricht University

Ben Kriechel – Maastricht University<[email protected]>

Overview

• Introduction• What is replacement demand?• Main elements of occupational RD

– Participation rates– Age structure– Migration

• Conclusions


Introduction: Demography

Source: Eurostat

Population EU25

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

2005

2010

2015


Introduction - Demographics

•Overall, average age of working population in EU is increasing

• Institutions will have to adjust to new composition

• Adressed in e.g. Lisbon Agenda

• Implications for skill-need analysis


What is replacement demand?

• Imagine a firm producing with a homogenous workforce;

• Workers of the firm can be divided up into age groups that they belong to;

• Simplest example of replacement demand is retirement: – Workers leave the company as they reach

retirement age.



Age composition

15-24 25-34 35-44 45-54 55-64



• Retirement is not the only reason for the outflow of workers: – Early retirement;

– Family obligations (chidren, taking care of parents, etc.);

– Sickness, disability;

– Migration;

– Switching to another firm, industry, sector;


What is replacement demand?Gross outflow

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

15-24 25-34 35-44 45-54 55-64

%

% Male

% Female



• Moving from the example of the firm to skill need type replacement demand: – Within firms there are various occupations

attached to positions;

– For occupations there are specific skill needs;

• Doing a similar analysis as before for the firm now looking at a single occupation.



Differences for occupational replacement demand :

• Stepping-stone character of some occupations;

• Occupation specific institutional setting.



Occupation A

15-24 25-34 35-44 45-54 55-64

Occupation B

15-24 25-34 35-44 45-54 55-64

A

Occupation A Occupation B


Replacement demand estimation

• Estimation of net replacement demand by occupation;

• Net flows are estimated using cohort-component method;

• Flow characteristics are estimated separately by gender, age specific effects are included;

• Overall participation rate by age and gender are included in the prediction;

• Demographic development of population / occupation;


Replacement demand estimation

Main data sources:

• Labour force survey by country (Eurostat)– Occupation demographics;

– Flow coefficient;

• Participation rate (E3ME)– Institutional setting;

• Population forecast (Eurostat)

• (Migration)


Data availability

European Labour Force Survey: - 25 countries- At least annual data- Age-cohorts (5 years)- ISCO, ISCED, NACE- Gender


Participation Rates

P a rtic ipa tion 2 0 0 5

BEDK

DEEL

ESFR

IEIT

LXNL

ATPT

FISW

UKCZEN

CYLV

LTHU

MTPL

SISK

NOCH

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9

BE

DE

ES

IE

LX

AT

FI

UK

EN

LV

HU

PL

SK

CH

Co

un

try

%

2005

Source: E3ME


Population forecast

Source: Eurostat

Population EU25

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

2005

2010

2015


Migration% of total population

-4

-3

-2

-1

0

1

2

3

4

5

6

7

Source: Eurostat (2006) Statistical Yearbook 2006, Chapter 1


Replacement demand: results

• Aggregate results of replacement demand by country

• Results depend on historical trends as reflected in the (LFS) data;

• Results should change if significant institutional or policy changes occur (changes in participation);

• For skill-need analysis individual occupations / skills are at the core of the analysis.


Results: Annual Replacement Demand 2005-2015

Re p lace m e n t De m an d b y C o u n tr y

A TBE

CYCZ

DEDK

EEES

FIFRGR

HUIE

ITLT

LULV

NLNO

PLPT

SESI

SKUK

0.000 0.005 0.010 0.015 0.020 0.025 0.030 0.035

Source: IER/ROA/CE


Conclusions

• An ageing society implies that a larger proportion of workers will be employed within older “age cohorts”;

• This can lead to increased replacement demand in some occupations;

• Leading if unaddressed to shortages in the labour market;

• Policy that changes the institutional or legal circumstances of (early) retirement and participation can directly influence the level of replacement demand;

• But such measures may only postpone rather than solve skill-shortages.

Documents

Http:// Based on: Skillsnet project on Medium-term forecasts of occupational skill needs in Europe An ageing society and the significance