Reports 2020/41

Projections of labour force and employment by education towards 2040

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This report presents projections of labour force and demand for labour by level and field of education for the period 2019 to 2040. The main objective is to reveal possible imbalances that may arise. This information may be valuable for the authorities in implementing counteracting policy measures. The projections are based on assumptions about the demographic and economic development. For many components observed development from past years is assumed to continue. This will provide a central point of reference for what may happen in the future.

Projections of labour force by level and field of education are based on expected demographic development, educational choices made during 2012 to 2016 and the observed labour market participation. The labour force is thus projected independently of how we expect the Norwegian economy to grow, and it does not respond to changes in unemployment or wages. The projections show an increase in the population’s level of education towards 2040. When older cohorts retire persons with general education at compulsory or upper secondary level are replaced by persons with higher education.

The number of employed by sector is projected based on assumptions regarding the development in international economy, demographic development, fiscal policy and the petroleum sector. Total employment for every industry is disaggregated into five levels of education, that are further decomposed into 28 fields of education based on trends from a longer period of past observations. The macroeconomic projections show decreased employment in the petroleum sector, in manufacturing and in wholesale and retail trade while employment in to public and private services is expected to increase. An ageing population also causes an increasing demand for occupations directed towards health and care services. Demand for labour with vocational education at upper secondary level and educations at the tertiary level is also projected to increase, while employment for those with general education at upper secondary level and lower secondary education is projected to decrease.

Labour force and demand for labour by level and field of education are projected independently, and mechanisms that contribute to labour market equilibrium are not considered. Hence, differences between the projected labour force and demand for a specific group of labour may not be interpreted as unemployment. However, both models are based on the demographic development from Statistics Norway’s population projections from 2020 and the same classifications of education. The development in the labour supply and the demand can thus be compared, and divergent tendencies may be informative for policy makers and agents in the labour market. Macroeconomic policy is handled in a way ensuring total unemployment to move towards a level in the long run not too different from what has been observed during the past years.

The projections show that projected demand for labour is higher than the projected growth in labour force for persons with vocational education at upper secondary level directed towards manufacturing building and construction and crafts, health care workers and nurses. An already observed shortage for these kinds of education may increase unless counteracting policy measures are implemented. For an array of fields at the bachelor and master level, the projections show a stronger growth in labour supply than demand. These subjects have in common that there are relatively few with such education leaving the labour force, and the level of replacement demand is therefore relatively low.

For persons with tertiary education in science and engineering, the petroleum industry and the manufacturing industry have been important. Lower activity in these industries contributes negatively to employment of persons with such educational background. This may at least be somewhat counteracted by increased demand in growing industries such as private and public services.

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