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ACCA Applied Knowledge · Business and Technology · Social and demographic factors

Delta Ltd, a manufacturer, operates in a country where the working-age population is shrinking because of low birth rates. Which of the following is the most direct problem Delta is likely to face?

Delta is most likely to face difficulty recruiting skilled staff and upward pressure on wages. A shrinking working-age population reduces labour supply, so employers compete for fewer workers and must retain and train them, rather than benefiting from labour oversupply or rising demand for children's products.

  1. ADifficulty recruiting skilled employees and upward pressure on wage costsCorrect
  2. BAn oversupply of labour leading to falling wages
  3. CA rapid rise in demand for children's products
  4. DReduced need to retain and train existing staff

Explanation

A shrinking working-age population reduces labour supply, making recruitment harder and pushing wages up. Oversupply of labour would follow from a growing workforce. Low birth rates would reduce, not raise, demand for children's products, and scarce labour makes retention more important, not less.

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