3.4.3 The South West has a lower than average working age population share. In 2009 the working age population made up 63% of the total population in the region, compared to the UK average of 65%.The regional average is depressed by the higher proportion of older people in the region.
3.4.4 This pattern is also confirmed by the age structure of the economically active (see Figure 3.4.1). In 2009/10, around 31% of economically active individuals were over 50 compared to only 27% nationally. The South West has lower representation in the middle age ranges (20-49), although interestingly, the region has a marginally higher number of economically active teenagers than the UK average. This in part reflects a healthy level of flexible, part-time working opportunities for young people in the region.
Figure 3.4.1 Age Structure of the Economically Active Population: July 2009 - June 2010
Age Structure of the Economically Active Population: July 2009 - June 2010 (Fig 3.4.1) Source: Annual Population Survey, NOMIS
3.4.5 Population projections produced by the Office for National Statistics (ONS) suggest that by 2033, 27.0% of the South West’s population will be over 65 compared to 19.4% in 2009. The growth rate for the over 65s is anticipated to be the highest of all the age groups in the region. Old age dependency ratios are used to assess the impact of an area’s changing age structure on its ability to support those ‘dependent’ on the working age group (effectively, those aged over 65 as a proportion of the working age population). In 2008, three of the five local authorities in England with the highest dependency ratios were located in the South West. This is expected to continue until at least 2033. In 2033, West Somerset is predicted to have the highest percentage of the population over the age of 65 (43%) in England.
3.4.6 It is a common assumption that an ageing population will reduce economic activity rates in a region. The South West currently has high activity rates, however, and McVittie (2005) found that applying regional age-specific activity rates to the ONS population projections suggested there will be no significant change in the overall activity rate within the region in the period up to 2028. McVittie (2005), Economy Module Simulation ‘Demographic Ageing' .
3.4.7 Older people, however, are more likely to work part-time than those individuals in the middle age ranges. The ageing population may have an impact (albeit small) on the distribution of work and, therefore, on total economic output in the region.
3.4.8 While older workers may have fewer formal qualifications than younger workers, they possess a large pool of skills and knowledge that can benefit the economy. It will continue to be a challenge for employers to match the skills and working patterns of older workers to ensure that these skills are translated into productivity gains. Furthermore, over the next 15-20 years nearly 25% of the current economically active population will reach retirement age. Although an increasing proportion of those reaching retirement age are likely to continue working (and the retirement age is set to increase), many older workers will leave the labour market. As these people exit the labour market, they will take with them their skills and experience. Replacing these skilled workers is a key challenge for the region.
