Growing demographic pressure

Growing demographic pressure

These days we live longer than 50 years ago. With a global average of about five children and a life expectancy of 45 years in 1960, we are now at an average of two children per family and a life expectancy of 75 years. How will we deal with this growing demographic pressure?

 

The composition of the labor market changes

Each organization policy is therefore necessary to develop in a timely manner in order to replace these large amount of staff members with new employees. Here they encounter a long way and a long-term problem: the growth of new blood from people entering the labor market is declining. The labor market get less youthful influx at the front and aging at the back: the difference between the population of 50-65 years and the population of 0-15 years is increasing, especially in Europe, due to the aging baby-boom generation. As a result of changes in the population, the composition of the labor force also changes. Over again fifty years, the relationship between intake of new employees in the labor market longer living even more skewed. The demographic pressure is increasing.

 


Mega trend: growing demographic pressure

Source: World Bank, data visualisation: Yves Pilet

 

Note: the data visualisation above reflects the lowering fertility rate and rising life expectancy development of the last 50 years across the globe. As a result the demographic pressure on the working force increases to obtain the average economic growth of the years before. Press play to see this mega trend unfold.


Are employees really loyal?

In times of economic downturn, as we have seen reorganize frequently during the financial crisis, reorganize businesses in order to ensure the continuity of the company. Central to reducing costs. Since personnel determine a large part of the total operating costs, shrinking the workforce is often affected first. Employees know this and are therefore afraid to lose their jobs. The image of the company as an employer in the minds of employees, customers and other stakeholders is thereby adversely affected. The labor market has, as a result of the economic downturn, even a favorable perspective, unemployment is high, the number of vacancies is low and the future is uncertain for both the organization and the overall economy. The chance of finding a job with another employer is therefore smaller than in times of economic heyday. This results in loyal employees to their current employer, but not for the right reasons. This form of employee involvement I call 'unjust employee loyalty. Productivity goes down and will affect the financial performance of a company negatively. There is a chance that these people choose a more favorable labor market for another employer with a different culture and more perspective. Until that time, these loyal employees perform their daily work properly, but productivity will be lower and thus the financial performance of the company. In times of economic downturn, the prospects in the labor market so unfavorable. The chances of these employees in the labor market are by definition lower and thus lure in times of less favorable labor market unjustified loyalty from.

 

Hoping for better times

Some companies seek lesser economic times people still hold on to as long as the financial situation permits to hope for better times. This aspect, labor hoarding has the advantage for the company that it could limit the future recruitment costs of new employees and continues to the knowledge of the staff in the house. The disadvantage is that the workforce is not in proportion to the turnover. Productivity - measured as total revenue divided by the number of employees - each employee is thus by definition lower. Total operating expenses are covered by the relatively higher staff also higher. This results in a lesser financial performance.

 

The state of the labor market effects your employer brand

The reputation of a company is not only the interaction of the organization's brand, corporate culture, HR policies and employee and customer loyalty. The labor market also affects the reputation and can retard an employer brand, especially in lesser economic times. Unjust employee loyalty and labor hoarding illustrate that on the basis of the state of the economy and the labor market. The state of the labor market is indeed affect the employer brand. Indeed, it is a crucial reason for a company to strengthen the employer brand.

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