Increase immigration or work longer - it's one or the other

A protester confronts riot police during a rally in Nantes. The French appear to be tearing their country apart over President Macron’s unilateral decision to increase the pension age from 62 to 64
A protester confronts riot police during a rally in Nantes. The French appear to be tearing their country apart over President Macron’s unilateral decision to increase the pension age from 62 to 64

AS challenging as industrial relations might be in both Northern Ireland and across the UK more generally, the situation is not nearly as bad as in France.

The French appear to be tearing their country apart over President Macron’s (unilateral) decision to increase the pension age from 62 to 64. This seems bizarre to many of us given the lack of opposition here when the government made the decision to increase our pension age from its current level of 66 to 67 coming into effect in May 2026.

With each generation expected to live longer than their parents, the affordability argument for raising the pension age is well rehearsed but there is an equally important economic reason to increase the working age - demographics.

Growth in the working age population, currently defined as the number of people aged 16 to 64, is starting to flatline. Between 1980 and 2010 the working age population increased by 270,000, that is an average of 90,000 per decade. In the 2010s that growth fell to 15,000 and is forecast to increase by just 3,000 in 2020s.

The current challenges employers are facing filling vacancies have been brewing for some time, but it took almost a decade to become apparent. Although population growth largely stalled after 2010, the decade started with relatively high levels of unemployment as the economy was still suffering the effects of the financial crisis. As a result, when businesses needed to recruit there was a willing supply of labour to take up those positions.

That situation has now changed, we have a much tighter labour market and despite all the economic challenges over the last three years, business leaders continually cite an inability to find people with the right skills as their number one issue.

Unfortunately for employers, this is the new normal. Older people are leaving the labour market at the same rate as younger people are entering, a big difference from previous generations when each younger generation was larger than the previous.

That leaves policy makers and politicians with a big problem to solve. Fortunately, there are solutions, not that they are universally popular to all constituencies.

The first is to increase levels of immigration, if we are not increasing our working age population then perhaps we should open our doors to people from other parts of the world.

At this point the Brexit issue is typically raised. The ending of free movement of people from across the EU created major headaches for some employers, particularly in sectors such as agri-food and hospitality.

Although Brexit, for some, was about reducing migration, the irony is that overall UK immigration levels have not fallen significantly.

The pandemic obviously restricted the movement of people, but more recent data suggests that the UK is attracting at least as many immigrants as before. A very significant reduction in the number of EU nationals moving to the UK, has been offset by a broadly equivalent increase in the number of non-EU migrants, many from Asia.

With minimum salary levels and the bureaucracy now associated with recruiting overseas workers, the type of migrant coming to these islands has changed and they are most likely higher qualified. This has both advantages and disadvantages for different sectors but given Northern Ireland’s unique position with access to both the UK’s internal market and the EU Single Market, a strong case could be made for a restored Executive to have the ability to set its own regional migration policy.

Migration policy is currently a ‘reserved matter’, so the power is retained by Westminster, but perhaps the groundwork for the devolution of this power should start sooner rather than later.

Moving on to the second solution, one our French friends would almost certainly oppose, is to raise the pension age and therefore increase the size of the working age population.

In 2021 there were approximately 180,000 people aged between 65 and 74 in Northern Ireland, a number which has doubled since 1951. Many of this group could still make a very significant contribution to the labour market and alleviate many of the current skills gaps businesses are struggling to fill.

Whilst I do not under-estimate the political challenge in selling an increase in the working age to the electorate, politics (and life) is about choices.

I would suggest that the prospect of having to work for another five years would focus minds and perhaps welcoming more migrants to these shores would be the much easier sell.

:: Gareth Hetherington is director at the Ulster University Economic Policy Centre