The European Union has an overall unemployment rate of 10.8%, and a youth unemployment rate of 23.4%. Despite the high number of jobless, McDonald’s is already feeling a demographic “workplace cliff” that is making it harder for the fast-food chain to find the workers it needs. Experienced by businesses more broadly, this cliff could stall the continent’s economic growth.
“The workforce is shrinking at both ends of the spectrum,” McDonald’s Europe chief people officer David Fairhurst told the Financial Times (paywall). “There aren’t enough young people coming into the labor market and too many older people are leaving it.”
Behind the shrinking workforce is a decades-long drop in the birth rate in Europe, which is most acute in the economically weaker southern and eastern parts of the continent. Lower birth rates, combined with longer lifespans, mean both a smaller workforce and growing pressure on social safety nets that provide funds and services to retirees. An estimated one-third of the population in Greece, Spain, and Portugal will be over 65 by 2050 (compared to 18% now.)
Fairhurst says this demographic cliff is going to hurt sooner rather than later, predicting it would hit in the Netherlands in 2015, and Germany by 2016. It presumably will take longer in the less-prosperous countries of southern Europe with higher youth employment rates, though a shrinking youth workforce in those areas should eventually be felt as well.
One side of the equation is appealing more to youth to get them to join the labor force in general (only 41% of Europeans aged 15 to 24 are either working or looking for work) and into jobs at McDonald’s.
There’s also room to keep more older people working. In the UK, more than 60% of the population aged 55-64 is actively in the labor force, but in the rest of the EU, the rate is lower:
The decline in workforce growth is going to be acute enough to threaten future economic expansion, but can be delayed by as much as a decade by getting more of the working-age population at both ends involved, Fairhurst says. So McDonald’s has stepped up recruitment of older workers and made efforts to encourage youth employment. The company has even placed grandparents to work alongside their grandchildren in its restaurants.
Three-quarters of the McDonald’s staff are under 30 and fast-food is a notoriously high turnover industry, so the coming slowdown in the numbers of young people in the labor force could be a big challenge.
There are added benefits to the older-worker strategy. A McDonald’s study found that customers were 20% more satisfied when served in restaurants that employed staff over 60.