1. http://www.roa.unimaas.nl/ 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

2. Ben Kriechel – Maastricht University Overview Introduction What is replacement demand? Main elements of occupational RD – Participation rates – Age structure – Migration Conclusions

3. Ben Kriechel – Maastricht University Introduction: Demography Source: Eurostat

4. Ben Kriechel – Maastricht University 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

5. Ben Kriechel – Maastricht University 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.

6. Ben Kriechel – Maastricht University What is replacement demand?

7. Ben Kriechel – Maastricht University What is replacement demand? 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;

8. Ben Kriechel – Maastricht University What is replacement demand?

9. Ben Kriechel – Maastricht University What is replacement demand? 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.

10. Ben Kriechel – Maastricht University What is replacement demand? Differences for occupational replacement demand : Stepping-stone character of some occupations; Occupation specific institutional setting.

11. Ben Kriechel – Maastricht University What is replacement demand? A Occupation A Occupation B

12. Ben Kriechel – Maastricht University 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;

13. Ben Kriechel – Maastricht University 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)

14. Ben Kriechel – Maastricht University Data availability European Labour Force Survey: - 25 countries - At least annual data - Age-cohorts (5 years)‏ - ISCO, ISCED, NACE - Gender

15. Ben Kriechel – Maastricht University Participation Rates Source: E3ME

16. Ben Kriechel – Maastricht University Population forecast Source: Eurostat

17. Ben Kriechel – Maastricht University Migration Source: Eurostat (2006) Statistical Yearbook 2006, Chapter 1

18. Ben Kriechel – Maastricht University 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.

19. Ben Kriechel – Maastricht University Results: Annual Replacement Demand 2005- 2015 Source: IER/ROA/CE

20. Ben Kriechel – Maastricht University 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.