ACCA Applied Knowledge · Business and Technology · Social and demographic factors
A manufacturer plans to recruit mainly from its local area, where the working-age population is shrinking because young people are migrating to cities and the remaining population is ageing. Which response is the most appropriate way to address the resulting risk?
The best response is to use flexible working, retrain older workers and consider automation. These measures counter the shrinking, ageing local labour pool, whereas cutting wages would make recruitment harder and ignoring demographic trends leaves the risk unmanaged.
- AIgnore the trend, as labour supply is determined only by the economic cycle
- BReduce all wages to protect margins
- CConsider flexible working, retraining older workers and automation to offset a smaller labour poolCorrect
- DMove the marketing function into the finance department
Explanation
A shrinking, ageing local labour pool constrains supply, so the firm should widen its sources of labour and reduce dependence on it, for example through flexible working, retraining and automation. Cutting wages would worsen recruitment problems. Demographic trends affect labour supply independently of the cycle.
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