The fact that the workforce is shrinking at both ends – not enough young people joining the labour market and too many older people leaving it – means that the entire burden of growth falls on productivity which has been widely recognised as stagnating. European Commission working paper reveals that a sustained economic recovery in Europe may be jeopardised by a rapid downturn in workforce growth.
Research from the European Commission[i] has revealed that the long-term economic health of Europe is at risk, due to a shrinking working age population. The discovery of what McDonald’s has called the “Workforce Cliff” has helped shaped the business’ European HR strategy for 2014 and beyond. The formula for good economic health: 1 percent employment growth + 1 percent productivity growth = 2 percent GDP growth will not be realised because the EU will not be able to sustain annual employment growth of 1 percent beyond 2019. McDonald’s Europe, which employs 425,000 people in 38 markets in Europe together with its franchisees, has concluded that the “Workforce Cliff” presents a range of tough challenges for the business. Different EU member states will reach the cliff edge at different times. For example, in Germany, it is only two years away. In the UK, workforce growth won’t turn negative until 2023.
David Fairhurst, Chief People Officer McDonald’s Europe and Commissioner at the UK Commission for Employment and Skills said: “If more businesses like ours can find ways to get more of the working age population into jobs, the edge of the Workforce Cliff can be pushed back by as much as ten years. To achieve this, employers need to tackle three key areas: firstly, make sure that more of our young people have the experience they need to enter the world of work; secondly, make the jobs we offer as compelling as possible for older workers and finally, put more energy into investing in the training and education of our people.”
McDonald’s Europe is working to address the challenges presented by the “Workforce Cliff” in a number of different ways. For example: Younger workers – In Sweden and Italy, McDonald’s has run youth employment campaigns which have been praised by the Prime Ministers of both countries. In the UK, McDonald’s has recently run “How to get hired” events in partnership with JobCentrePlus and Learndirect giving young people free career coaching, advice on interviews and CVs. Older workers – McDonald’s has run recruitment campaigns targeted at older workers in the UK and Germany as well as some other “first wave” Workforce Cliff countries such as Poland.
Training – McDonald’s invests more than €120million in training across Europe each year. 31 of our 38 markets offer nationally-recognised qualifications to give employees the opportunity to enhance their skills as they earn, ensuring they benefit whether they pursue their career at McDonald’s or elsewhere. In France, where 80 percent of McDonald’s restaurant managers joined as crew members, we held career open days where 3,000 job seekers were shown the career progression they could expect at McDonald’s.
David Fairhurst continued: “The severity of the youth employment crisis is widely recognised but not many people realise that keeping older workers in the labour market will also be crucial if we want to push back the Workforce Cliff. CEOs simply won’t be able to staff their businesses if these challenges aren’t addressed. It’s a problem that affects all industries and all economies in Europe – it will just manifest itself at different times and in different ways. We’re asking governments to work with employers so we can share best practice and identify the policies that are most successful at pushing back the Workforce Cliff. We need to make sure the findings inform future policy approaches to minimise this structural threat to the European economy. If we react appropriately now, we will ensure that the economic recovery is not undermined unnecessarily.”
[i]Growth potential of EU human resources and policy implications for future economic growth. European Commission Working Paper 3/2013, Jörg Peschner and Constantinos Fotakis