Future working aged population size

[The Ham]

I've made reference to the fact that we're likely to see a squeeze in the percentage of the population who are of working age (and potentially the actual number of working age) before (see quotes at the bottom of this post from another thread), however there's now talk of cash strapped Brits investigating heading down under which could further impact this (personally I'd look at New Zealand before Australia if I were to do it, but others would likely disagree

Newspaper headlines: Tory election 'woes' and police probe 'Beergate'

The front pages focus on the elections and the investigation into whether the Labour leader broke lockdown rules.

www.bbc.co.uk

Cash-strapped Britons are heading Down Under to beat the cost of living crisis ushering in a new generation of "Ten Pound Poms" according to the Daily Star's appropriately upside down front page.

Now such a squeeze is likely to cause issues, some easy to identify (such as it being harder to recruit those providing services to those who have retired or that those still working are going to each have to support a greater number of economically inactive people), however it could cause other issues which aren't easy to identify.

For example with less workers, is that going to push house prices up as there's fewer people to build then or make them fall as there's less demand for them?

It's likely to result in a lot more automation of services, now whilst this will mean good jobs for those supervising the systems it could make entry into any work much harder.

Now for some it's likely to mean higher pay, however that could push more to move away and is likely to make it tougher for those on a fixed income as higher pay for many is likely to have an inflationary impact (for me, where my pay had been rising faster than inflation and with a reasonably long fix on my cheap mortgage deal, that can be a good thing as my debts are falling fast, however not so good if that's not your situation).

What should the government be doing about this or do you not see it as an issue?

Whilst the number of people attempting to arrive in the UK visa vista had increased significantly the total number of asylum applications (and the vast majority coming by boats are seeking asylum) is broadly stable varying between about 30,000 and 45,000 for the last decade.

As such the way to stop people coming here by boats is to provide a way for them to claim asylum in another location.

Given that between 1986 to 2022 net migration per 1,000 people had varied between 0 and 7.7 people (i.e. never more than 1%) and currently sits at 2.52 (0.25%).

However we need this to be a little positive as in 2016 18% of the population where over 65, this compares to 15.8% of the population in 1991. That may not sound like a big shift, however you have to bear in mind that the population has grown in that time, meaning that the total number i has grown a lot from 9.1 to 11.8 (+29.7%).

Now the predictions are that those over 65 will continue to grow as a percentage of the overall population.

Now I don't know about you, but most people want to retire soon after they turn 65 (in comparison to the 65-85+ age band, not meaning before their 66th birthday) and as such quite a lot of these will be economically inactive.

As such whilst it may not be popular amongst some groups were do need to allowing some to come here so that we have a future population of working age to deal with us in our old age.

Now whilst there's some big numbers thown about with regards to housing asylum seekers, in part this is down to the fact that there's been no long term policy to create suitable housing for those the government needs to support.

If that was the case, then rather than having to host them in hotels (potentially costing £50/night, so over a year costing £15,000 to £19,000) they could have been housed in social housing costing (say) £400,000 to buy today, and then being nearly free in 25 years time (cost is that of a large 3 bed house on the open market about an hour from London, whilst in London that would be much higher in most other cities around the country it would be cheaper). However most social housing stock would have been built up over the last 25 years and at a much lower cost (for instance or home has doubled in value in the last 12 years) and so would be "repaying" that investment faster.

However within that 3 bedroom house you could fit a family of 6, which isn't something which you can do in a single hotel room.

Of course if there had been a good policy on providing housing for those the government needed to support, those who currently live in the UK would also have easier access to social housing when they needed it. Meaning that there would be less anger from those feeling that their needs are being overlooked in favour of those who have only just got here.

Taking our house as an example, if the government brought it, rather than us, and a family on benefits moved in but then their circumstances improved so that they could pay the market rent they would only need to live in it for about 15 years to repay the investment (even allowing for agent fees).

The problem is that too often things are seen as a subsidy rather than a future investment.

For instance when a child has an education, the idea is that child then uses that education so that they can get a job; in doing so repaying the investment made in them.

Now asylum seekers should have a much quicker pay back period on the investment made to them compared to a child, not least as the length of time required to invest in them is likely to be much shorter.

Now where it really gets good is when we have highly qualified asylum seekers, for example doctors, who we can (say, with a year or two of training to ensure that they meet certain standards) being into employment much faster and for a much smaller investment than training a doctor through university.

As such, what we should be doing is going out and looking for those high quality, highly trained people who would bring near immediate benefits from the investment in approving their asylum case.

The problem is that the prevailing view is that anyone extra in the UK is a bad thing for the country and so we should be stopping everyone from coming here.

Taking my argument to its (extreme) conclusion we should go out to the world looking for high quality asylum seekers and aid then in getting here, in doing so massively improving the country. As we've then left the lower quality asylum seekers, we could highlight just how great it country is by having all these asylum seekers but leaving the rest of the world with those who need much more support. Taking it one step further, as the priory would be to see high returns from our investments the policy of relocating people to Rwanda would be focused on those UK people who were have invested a lot in and are seeing little return from. As it would be cheaper to house them in Rwanda than in the UK.

That would act as an incentive to get off of benefits and this save the country a lot of money.

(For clarification I don't believe that should be the case and is taking the argument to an extreme example, but almost the polar opposite to where we currently are. However our thinking should be closer to this way of thinking than it currently is).

Around 2002 there was a large spike, however either side of that the numbers are fairly stable (a few higher, a few lower but mostly 25,000 to 40,000) from 1990 through to 2020, as such (unless we eased things off a lot around the turn if Millennium) how easy it is to apply hasn't appeared to make a significant difference to overall numbers.



Not really, which is why I said small amounts. Clearly if we attract 1 for every 1 reaching 65 that's going to be a problem. However, so is not attracting anyone given that in current trends that by 2066 the prediction is that 25% of the population will be over 65.

Assuming 10% are under 18 that's about 1/3 of the population inactive economical. That's hardly likely to be sustainable either.

Yes people being attracted now will need support in the future, however with a failing birth rate there isn't the children from the native population to replace them.



Note I'm talking about Asylum seekers, not general immigration. As such those people are leaving anyway and are most likely to those who can afford to pay significant sums to people traffickers.

Also which is likely to be cheaper, providing education to an 18 year old for 7+ years or to an already trained doctor for 2 years to confirm suitable training? Not only can you get doctors faster, but you'll also need to provide them with less training overall. For example in the same time it takes you to train 2 doctors from scratch you could train 15 from overseas.




Then the majority aren't speaking loud enough that they would be happy with SOME more asylum seekers to be accepted in a reversal of the current policy of making it "toxic" for them.

 

[deltic]

The number potentially emigrating is tiny and the levels of immigration into the country remain high. Despite its rhetoric we have a pro-immigration government.

 

[najaB]

The number potentially emigrating is tiny and the levels of immigration into the country remain high.

Though, immigration levels will fall if/when the economy goes into recession.

 

[Magdalia]

I'd suggest that discussion of this is better deferred until we can see the results of the 2021 census later this year. Then we will have a much clearer picture on whether it is a concern or not.

 

[david1212]

Directly the issue is only partly the size of the working age population as a proportion of the total. Equally important are employment and earnings. These determine the direct income to the state from tax & NI, support paid out by the state and spending. The latter directly generates VAT income to the state plus creates employment both at the point of sale / delivery of service and in the supply chain of products.

Whatever may be said about immigration I do not see the UK population even stabilising never mind falling. The effect on the state finances could though be the loss income from those who emigrate being significant greater than that generated by those who arrive. One reason for this would be the proportion of those who emigrate being skilled against those who arrive being unskilled or low skilled.

With costs increasing ahead of both income and investments those with plans for early retirement may well have to defer for at least a year or two. Similarly some who reach state retirement age may choose to carry on with some work if only part-time. So long as there are sufficient jobs for those leaving education also to find employment this would increase the proportion of the population who are working.

 

[brad465]

The number potentially emigrating is tiny and the levels of immigration into the country remain high. Despite its rhetoric we have a pro-immigration government.

That's because our current economic growth model cannot be sustained without an increasing supply of workers to produce and sell stuff, as well as buying/consuming things themselves, but I can guarantee almost everyone opposed to high levels of immigration doesn't realise this.

 

[Enthusiast]

I'd suggest that discussion of this is better deferred until we can see the results of the 2021 census later this year. Then we will have a much clearer picture on whether it is a concern or not.

I don't think that will help particularly. There are vast numbers of people in the UK who will not participate in any official surveys such as a census. The government has no idea how many people there are in this country and if their estimates were correct within a couple of million I would be very surprised.

That's because our current economic growth model cannot be sustained without an increasing supply of workers to produce and sell stuff, as well as buying/consuming things themselves, but I can guarantee almost everyone opposed to high levels of immigration doesn't realise this.

I realise this (and I'm also opposed to high levels of immigration). I also realise that such a model is unsustainable. You cannot continually add unlimited numbers of consumers to an economy where supply is ultimately limited by various constraints. the country is already seeing the results of this folly. Too many people are chasing too few goods and services and there is abundant evidence to support this. The sooner this is realised - and a more realistic and sustainable model is devised - the sooner the lunacy will stop.

 

[Magdalia]

I don't think that will help particularly. There are vast numbers of people in the UK who will not participate in any official surveys such as a census. The government has no idea how many people there are in this country and if their estimates were correct within a couple of million I would be very surprised.

Yes, there is an element of non-compliance, but it is not vast. When the 2022 census results are published, the statisticians will say how big they think non-compliance is, and what they have done to estimate for that. They don't just count who fills in a form.

The census is much much better than anything else, anecdotes on a web forum do not make data.

But, for nearly 10 years now, the UK population estimates have been projections forward from the 2011 census, calculated using births and deaths, where the data is good, and net migration, where the data is not good. The decennial census is particularly important when net migration is high.

Where the census is particularly valuable is what the statisticians love to call "the population broken down by age and sex". The census is the only data collection that gives good estimates of that, providing the answer to the OP's original question about population of working age.

 

[Snow1964]

It’s much more complicated than at first glance, because working age tends to be binary in the statistics, either working or retired.

I am 57 and I know people who have cut their work, semi-retired is probably a good term. Now working just 2 or 3 days a week, or doing contracts or projects where they have gaps between them.

Some are even drawing some company pension, as bit of top up cash, where they have multiple company pensions (years ago many pensions were based on age 60 and there are options to draw down reduced amounts from age 55 upwards). None of these will get state pension until 67.

There is also the way state pension requires 35 years of National Insurance contributions, if people work more than 35 years the amount of state pension doesn’t change (even though still pay NI contributions, so the pension part of NI is becomes just a rip off extra tax)

So there is this grey area of 7-12 years (ages 55-67) where a number of people (and it seems to have increased post lockdowns) are semi-retired. Clearly the nearer you get to 67 the higher the proportion are fully retired. I have no idea what fraction within this group are part or fully retired, but lets say it’s 20% each, but that is probably equivalent to reducing the working age group by 4-5 years from its theoretical age 19 (after leaving school) to 67 (state pension)

I don’t think the census asked any questions about working hours between pension draw down age 55 and state pension age 67 and just asked simple question of are you working or retired etc. The questions were too clunky to cope with phased reduction of working hours per week, so I suspect census stats won’t nail down an answer as they won’t be able to pro-rate the 12 years between 55-67 accurately.

 

[Magdalia]

It’s much more complicated than at first glance, because working age tends to be binary in the statistics, either working or retired.

You are right. But knowing the population of working age has to be the starting point. Labour market analysts will want to estimate participation rates but they can't do that without good estimates of the working age population.

 

[brad465]

I realise this (and I'm also opposed to high levels of immigration). I also realise that such a model is unsustainable. You cannot continually add unlimited numbers of consumers to an economy where supply is ultimately limited by various constraints. the country is already seeing the results of this folly. Too many people are chasing too few goods and services and there is abundant evidence to support this. The sooner this is realised - and a more realistic and sustainable model is devised - the sooner the lunacy will stop.

Indeed, the problem is that boosting GDP is the gold standard of political success right now and it declining/stagnating is seen as politically toxic, when actually it should be the other way round. In the last few years I have seen more people slowly but surely coming round to this logic, but we are not yet at the tipping point where GDP suddenly becomes a toxic measure politically. I think strong arguments that might convince more people are how increasing housing developments/concreting over the countryside, and higher immigration levels happen because politicians want/feel a need to boost GDP. I reckon if we cease growth, immigration will drop without stringent controls as demand for workers would also drop.

 

[AntoniC]

I am 56 this year and have worked full time since I became a Civil Servant at the age of 22.
As I was a member of the Civil Service Classic Pension scheme I can choose to fully retire OR partially retire now and lose approx 20% of pension income.
Or I at 60 I can retire and get a 100% pension but have to wait until I am 67 to get my State Pension.
My current plan is to partially retire at 60 (go to working 3 days a week) until I am 67 and fully retire at 67.
I appreciate that I am lucky to have been a member of such a good Pension Scheme and thats why I have no objection to contributing towards my pension , after having 22 1/2 years of not having to contribute.

 

[Cloud Strife]

I am 56 this year and have worked full time since I became a Civil Servant at the age of 22.
As I was a member of the Civil Service Classic Pension scheme I can choose to fully retire OR partially retire now and lose approx 20% of pension income.
Or I at 60 I can retire and get a 100% pension but have to wait until I am 67 to get my State Pension.
My current plan is to partially retire at 60 (go to working 3 days a week) until I am 67 and fully retire at 67.
I appreciate that I am lucky to have been a member of such a good Pension Scheme and thats why I have no objection to contributing towards my pension , after having 22 1/2 years of not having to contribute.

Knowing nothing about these pension schemes, do you get anything extra from the pension if you defer it beyond 60?

 

[Magdalia]

Indeed, the problem is that boosting GDP is the gold standard of political success right now and it declining/stagnating is seen as politically toxic, when actually it should be the other way round. In the last few years I have seen more people slowly but surely coming round to this logic, but we are not yet at the tipping point where GDP suddenly becomes a toxic measure politically. I think strong arguments that might convince more people are how increasing housing developments/concreting over the countryside, and higher immigration levels happen because politicians want/feel a need to boost GDP. I reckon if we cease growth, immigration will drop without stringent controls as demand for workers would also drop.

Be careful what you wish for.

The Government's three most important sources of tax revenue are income tax, national insurance contributions and value added tax (VAT). The yield on all three is hugely dependent on a healthy economy, with people working and spending. GDP is the "gold standard" because it indicates that tax revenues are coming in and the government has money to spend. That includes the NHS, public support for the railways, and @AntoniC's pension. If we cease growth, where does the money come from to pay for these things?

 

[AntoniC]

Knowing nothing about these pension schemes, do you get anything extra from the pension if you defer it beyond 60?

If I partially retire at 60 , I can continue to contribute to my Occupational Pension until I fully retire at whatever age I decide to retire.
Obviously if I fully retire thats the end of contributing to my pension - also once I fully retire I am guaranteed my occupational pension no matter what happens - I hope the same applies to my State Pension !.

 

[Snow1964]

Knowing nothing about these pension schemes, do you get anything extra from the pension if you defer it beyond 60?

Yes, most company pensions operate a scale of adjustment depending on how many years early or late you take it. It is not the same each year so might get say 75% if 3 years early, 85% if 2 years early, 93% if year early, 108% if year late starting etc (examples, not actual rates)

I believe you can also defer starting state pension a few years and get enhanced rate per year, it is roughly 1% added for each 9 weeks you defer. So you get £185 per week at normal retirement age, but nearer £196 per week if you wait a year (assuming you have the 35 years NI from working)

If you don’t work, but are raising children, or your spouse is and you earn over £50k, then important to keep claiming child benefit, even if you are taxed to pay it back as it counts towards the 35 years needed for a pension, if opt out then spouse unlikely to get their full state pension, because the benefit also gives you pension year credits. If you don’t have each the 35 years your state pensions get reduced.

 

[AntoniC]

With the Civil Service scheme you lose 5% of your pension payment , for each year you choose to retire early upto a maximum of 5 years.
The earliest you can normally retire is 55, so for me being 56 this year, if I was to go at 56 , I would lose 20% (4 x 5%).
I am not planning to do this.
I also get a tax free lump sum of approx £22k when I retire

 

[The Ham]

Indeed, the problem is that boosting GDP is the gold standard of political success right now and it declining/stagnating is seen as politically toxic, when actually it should be the other way round. In the last few years I have seen more people slowly but surely coming round to this logic, but we are not yet at the tipping point where GDP suddenly becomes a toxic measure politically. I think strong arguments that might convince more people are how increasing housing developments/concreting over the countryside, and higher immigration levels happen because politicians want/feel a need to boost GDP. I reckon if we cease growth, immigration will drop without stringent controls as demand for workers would also drop.

The issue isn't necessary that we are getting a rising population, rather that a lot of the population growth is down to there being significant numbers over 65/over 80 (pick whichever metric you like).

As such, whilst having excessive immigration does cause issues, there's likely to be a need not to have none either (as there's likely to be different issues with that too).

The current perception I have is that there's a significantly loud group of people saying that we should be significantly limiting immigration.

The point I'm making is that that's not a helpful policy to follow with our current population. Much as I would suggest that allowing everyone in also wouldn't be a helpful policy to follow either.

 

[Howardh]

It’s much more complicated than at first glance, because working age tends to be binary in the statistics, either working or retired.

I'm one who is neither, until I get my state pension I'm currently living off my savings/self-funding and one pension I got at 60. I don't intend to work again (unless something attractive comes along) and my status is absent from many a form!

 

[Merle Haggard]

I usually restrict my posts to railway items but perhaps someone can answer my GDP puzzle.

If the increase in G.D.P. (over a period) is the same as the increase in population is the individual better off? I would think not; is that so?

 

[Snow1964]

I usually restrict my posts to railway items but perhaps someone can answer my GDP puzzle.

If the increase in G.D.P. (over a period) is the same as the increase in population is the individual better off? I would think not; is that so?

Gross Domestic Product is a value, so if prices go up, it will go up.

For comparisons between countries, would normally use GDP/capita (divided by size of population).

So in your example looking at average individual would be same GDP (income) per person

If I partially retire at 60 , I can continue to contribute to my Occupational Pension until I fully retire at whatever age I decide to retire.
Obviously if I fully retire thats the end of contributing to my pension - also once I fully retire I am guaranteed my occupational pension no matter what happens - I hope the same applies to my State Pension !.

In some cases won’t be able to contribute more without getting hefty tax charge.

Basically only need 35 years NI contributions to get full state pension, if you keep contributing don‘t get any more so extra contributions are effectively throwing money in the bin.

Salary related pensions had a maximum, if your scheme was 1/60 of salary for each year worked then can’t exceed more than 40/60th, so if worked more than 40 years would have to stop contributing.

There is also the maximum pension pot (about £1m) which is easy to exceed when there is inflation. If your pension is final salary a simple tax test of 20 times pension is made (the rate is historic, when interest rates were much higher, should be nearer 30 times nowadays). A person wanting a pre tax private pension of about £2500 per month from age 60 will have a pension pot approaching £1m

If you start to draw any pension, basically limited to £4k contributions per year (to avoid you recycling tax free lump sums into more tax free pension contributions)

Obviously I have simplified it a lot, the pension and tax rules are complicated and if you are likely to be near any of these thresholds you need to review it properly.

 

[Merle Haggard]

Gross Domestic Product is a value, so if prices go up, it will go up.

For comparisons between countries, would normally use GDP/capita (divided by size of population).

So in your example looking at average individual would be same GDP (income) per person

Thank you, confirms that, in the case I quoted, the individual is no better off. Only better off if increase in G.D.P > increase in population.
But the justification for increasing population is sometimes said to be that it has the effect of increasing G.D.P..
Over the last few years, how much ahead of population growth has G.D.P. growth been ? (i.e., the difference between G.D.P. growth and population growth).

 

[Magdalia]

Gross Domestic Product is a value, so if prices go up, it will go up.

For comparisons between countries, would normally use GDP/capita (divided by size of population).

So in your example looking at average individual would be same GDP (income) per person

GDP is an index at constant prices: it is a volume measure not a value measure. The effects of changing prices are removed, and in a very sophisticated way.

But GDP is not adjusted for changes in population. GDP per head of population does that and it is useful for comparing different countries.

GDP per head is also useful for comparing the same country in different years, especially if the population is changing rapidly, but that does need good population estimates. When the 2021 UK census is published the UK GDP per head figures will be revised to take on the new information. That will be a good time to compare 2021 with 2011 and 2001. I wouldn't be looking at trends in UK GDP per head between 2011 and now until after the 2021 census has been published.

 

[AntoniC]

Gross Domestic Product is a value, so if prices go up, it will go up.

For comparisons between countries, would normally use GDP/capita (divided by size of population).

So in your example looking at average individual would be same GDP (income) per person


In some cases won’t be able to contribute more without getting hefty tax charge.

Basically only need 35 years NI contributions to get full state pension, if you keep contributing don‘t get any more so extra contributions are effectively throwing money in the bin.

Salary related pensions had a maximum, if your scheme was 1/60 of salary for each year worked then can’t exceed more than 40/60th, so if worked more than 40 years would have to stop contributing.

There is also the maximum pension pot (about £1m) which is easy to exceed when there is inflation. If your pension is final salary a simple tax test of 20 times pension is made (the rate is historic, when interest rates were much higher, should be nearer 30 times nowadays). A person wanting a pre tax private pension of about £2500 per month from age 60 will have a pension pot approaching £1m

If you start to draw any pension, basically limited to £4k contributions per year (to avoid you recycling tax free lump sums into more tax free pension contributions)

Obviously I have simplified it a lot, the pension and tax rules are complicated and if you are likely to be near any of these thresholds you need to review it properly.

I wish I had a job that would get me anywhere near that £1m pension pot
In the Alpha pension scheme I accrue at 1/60th per year (compared to the 1/80th) I got under the Civil Service Classic Scheme.
Also my pension is linked to Consumer Prices Index so it goes up every year.
I realise that I will be lucky to have 2 pensions when I retire , some people will retire on just the State Pension.

 

[Merle Haggard]

I wouldn't be looking at trends in UK GDP per head between 2011 and now until after the 2021 census has been published.

That answers my question (post 22) in the sense that it's worth waiting.

At the root of my original post was the question whether increasing the population made everyone better off, as measured by per-capita G.D.P.. It could, if every addition to the population made a bigger contribution to G.D.P. than the existing ones but I don't see why that would necessarily be the case.

That's because our current economic growth model cannot be sustained without an increasing supply of workers to produce and sell stuff, as well as buying/consuming things
themselves, but I can guarantee almost everyone opposed to high levels of immigration doesn't realise this.

Which would suggest our current economic model model is chasing higher total national G.D.P. not better living standards for the individual. Or have I missed something?

 

[yorksrob]

Given the amount of automation were supposedly about to see, this should enable a smaller working population to generate the economic activity to support society.

This is of course dependant on the fruits of automation being distributed adequately across society, and not snaffled up by private owners of industry with their snouts in the trough.

 

[Magdalia]

At the root of my original post was the question whether increasing the population made everyone better off, as measured by per-capita G.D.P.. It could, if every addition to the population made a bigger contribution to G.D.P. than the existing ones but I don't see why that would necessarily be the case.

It isn't necessarily the case. You are right that GDP per head only increases if, taken as a whole, the additions to population make bigger contributions. But with inward migration, that's what usually happens, because, in their country of origin, migrants are usually amongst the "sharpest pencils from the box", with the "blunter pencils" left behind.

Which would suggest our current economic model model is chasing higher total national G.D.P. not better living standards for the individual. Or have I missed something?

When population is stable, GDP is a good proxy for material living standards. When inward migration is increasing the population, it still works, if the migrants are "sharp pencils".

Given the amount of automation were supposedly about to see, this should enable a smaller working population to generate the economic activity to support society.

This is of course dependant on the fruits of automation being distributed adequately across society, and not snaffled up by private owners of industry with their snouts in the trough.

The impact of automation is not spread evenly across the economy or the population. Health and social care are good examples of this.