Fewer inhabitants equals fewer workers. A very simple equation. Yes, but how many fewer workers? In this Note the North East Foundation offers the most recent estimate made in Italy. It does this for all the northern regions. It is the second analysis of the four-part miniseries on the dimensions and consequences of demographic ice age, and on alternative measures to mitigate its impact.
The time horizon chosen is 2040, as done in the first note on population. In terms of demographic trends, it is a close deadline and on which the reproductive choices that will be made will have little impact, because those born today will not have reached the age of sixteen by then, still a school age (even more so if we observe the lengthening of the education in a knowledge economy context). So they are people who will not yet become employable.
Le forecasts on the number of people employed they are, like those on the population, net of internal (i.e. mainly from the southern regions) and international (increasingly from Africa) migratory flows, in order to isolate the consequences of the behavior regarding the birth rate of the northern populations. Only in this way, in fact, is it possible to carry out the clarity operation which is the aim of these four notes from the North East Foundation. An operation which is necessary to make families, businesses and administrations, both central and local, aware and to consciously adopt the policies, private and public, necessary to mitigate the impact of demographic glaciation.
The transition from the expected population (in decrease of 2,3 million throughout Northern Italy in 2023-2040) to expected employment is not automatic, but passes through three stages. The first stage is from the total population to the working age population. The second stage is determining the percentage of people of working age who will actually work. And finally, the third stage is the application of this percentage to the number of people of working age; only this last stage does not require special hypotheses, but is a normal calculation.
Working age it is established at an international level, as a regulatory and statistical convention, and is included in the 15-64 age range. Therefore, in the first instance it would be enough to know how many people there will be in 2040 aged in this range. However, prolonging one's studies delays entry into the job market and pushes one to move the scale upwards.
The choice falls on 20-64 years, also for reasons of simplification of the estimate. Because what is of interest here is having a highly probable order of magnitude, rather than a precise but much more random number.
People of working age decreased by 3,2 million
The result is disarming: people of working age dropped by 3,2 million in Northern Italy between 2023 and 2040, equal to a fifth of those in 2023. A number significantly higher than the decline in the population for a simple reason: the cohorts entering that age are much smaller than those leaving, and for the latter the working phase ends, not life. 70% of the decline occurs in the next decade, not only because there are seven years left of this but because the effects of the birth rate decline will be felt more.
The strongest drops were in Lombardy, Veneto, Piedmont and Emilia-Romagna
The ranking by absolute size of loss is headed by Lombardia (-1,1 million), followed by Veneto (-588 thousand), Piemonte (-530 thousand) ed Emilia Romagna (-519 thousand). In proportion to current values, however, in the lead is the Liguria (-26%), then in that order Friuli-Venezia Giulia (-23%), Piemonte e Valle d'Aosta (-22% both) e Veneto (-21%). However, it is a very worrying picture.
Large regional differences in employment rates: Alto Adige in the lead, Liguria in the rear
How many of those people of working age will actually be employed? The second stage of the estimate consists in establishing the percentage of employed people in the working age population, which is called the employment rate. The least arbitrary hypothesis is to keep the current employment rate constant for ages 20-64. In the North the employment rate is higher than average Italian, but there are no small differences; among the highest in the Province of Bolzano, at 79,6%, and the minimum of Liguria, at 72,2%, makes 7,4 percentage points which is equivalent to 62 thousand fewer employed people in the coastal areas, while if the whole of the North conformed to Alto Adige there would be almost 800 thousand additional employed people. Veneto is aligned with the average.
AAA 2,4 million workers wanted. Lombardy and Veneto most affected
The North East Foundation's calculations on the number of employed are based on the employment rate of the 20-64 age group, the same used to estimate the working age population in 2040.
There will be in 2040 2,4 million fewer workers than today in Northern Italy. The greatest losses will be recorded in Lombardia (-804 thousand), Veneto (-442 thousand), Piemonte (-378 thousand) and Emilia-Romagna (-390 thousand). On the other hand, they are the regions with the highest employment levels, being also the largest physically and economically. The perspective changes if we evaluate the decline in percentage terms: ahead of everyone Liguria (-26%), then Friuli-Venezia Giulia (-23%) And Valle d'Aosta (-22%). Veneto is doing a little worse than average (-21%). The best performances, however negative, are of theSouth Tyrol (-13%) and del Trentino (-16%). In fact, the higher past birth rate allows a greater number of people to enter working age to compensate for the exit of the older cohorts, which are in any case larger.
Let's keep in mind that both the estimates on the working-age population and on the employed are overestimated, because by mechanically moving the younger cohorts forward by 17 years, it is taken for granted that no person will die, while the mortality rate is not zero at no age and rises as individuals age. By construction, however, it is not possible to indicate how much this overestimation amounts to. Here it is sufficient to point out that the actual picture will be uglier than painted.
Instead, the hypothesis of keeping the employment rate constant at current levels is dictated by the desire to highlight what will happen if behavior does not change, but also by the lack of public availability of statistics on the labor market at regional level, divided by cohorts of five-year population.
The lengthening of working life attenuates the decline somewhat
This assumption leads to an underestimate of the people who will be employed. In fact, today there is already a large difference between the employment rates of 35-54 year olds and those of 55-64 year olds. The difference can be traced back to cultural and institutional factors. On a cultural level, the division of roles between genders has greatly penalized (and in too many ways continues to strongly penalize) female employment; in more recent generations this gap in roles has greatly diminished and this raises the employment rate. On an institutional level, the level of economic development achieved today pushes people to study more and start working later, thus accruing social security rights later in life. Rights that have been adapted to the extension of life.
For the first reason and for the second, the effective retirement age has risen in Italy and the most recent data indicate over 67 years of retirement due to old age (67,3 years), compared to 61,4 years in 1997, and 61,4 years of retirement due to working seniority, compared to 55,4 years in 1997. This increase will certainly continue and therefore the employment rate in the 55-64 court will increase automatically, i.e. without having to change norms and behaviors.
The greater employment gap helps Veneto more, Liguria less
Mechanically raising the employment rate will lead to more workers. How many? The limited public availability of statistics indicated above prevents us from providing a precise estimate. However, one size can be indicated: almost half a million (+470 thousand). The regional distribution of this greater number depends on the difference that exists today between the employment rate in the 35-54 age group and that in the 55-64 age group. This gap is greater in Veneto (25,2 percentage points) and smaller in Liguria (18,2, even below the national average). Therefore Veneto will benefit to a proportionately greater extent from theadjustment of the employment rate in the 55-64 age group to that in the 35-54 age group.
Although important, the attenuation in the number of employed due to the mechanical increase in the employment rate leaves unchanged the severity of the fall in employment that will be caused by the demographic ice age. Gravity that makes it urgent to attract people from other territories, as a mitigating measure. Even more so young people, whose number has been reduced and will continue to be reduced in the coming years.
