Projections of the labour force and employment by education towards 2035

This report studies the labour force and employment by education in the future, and the driving forces that might impact them. We project employment and labour force from 2016 to 2035 by five levels of education and 28 fields. For these fields of education, we use projections of both employment and labour force to indicate potential imbalances at the future Norwegian labour market.

The report is based on central trends in the demographic and macroeconomic development to make projections about employment and labour force by education. These projections build on an important assumption, namely that the historical development that we observe in the past will continue in the future. This analysis hence contributes with an important starting point for discussing potential future developments that may deviate from the historical Development.

Projections of the labour force are based on how the population has made educational choices during the last five years, the expected demographic development in the future, and the observed labour market participation. The labour force by educational level and field 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 increased level of education towards 2035. When older cohorts retire, persons with education at compulsory or upper secondary level are replaced with persons with higher education.

Employment is defined from the working population in the macro model KVARTS. The development in international economy, fiscal policy and the petroleum sector to a large extent determine the demand for goods and services in the model, which further determines the industry structure and employment for each industry. Total employment for every industry is disaggregated to five levels of education, that are further decomposed into 28 fields of education based on the trends from 1986 and onwards.

The projection from KVARTS show decreased employment in the petroleum sector and in manufacturing, in contrast to public and private services. These are sectors that to a large extent employ labour with higher education. The projections show increased employment for persons with vocational education at upper secondary level and tertiary level. Employment for those with general education at upper secondary level and lower secondary education decreases as a share of total employment.

Employment and labour force by education are projected separately and mechanisms that contribute to labour market equilibrium are not considered. Hence, differences between the projected employment and the projected labour force are not projections of unemployment. However, both models are based on the same assumptions for demographic development and the same classification of education. The development can thus be compared, and divergent tendencies may be informative for policy makers and agents in the labour market.

The projections show that growth in employment is higher than the growth in labour force for persons with vocational education at upper secondary level within fields of craft. For an array of fields at bachelor- and master level, the projections show the opposite. These subjects have in common that there are relatively few with such education leaving the labour force, and there is thus little replacement demand.

For persons with educational background 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 is counteracted by growing industries such as private services. Lower competition by the petroleum and manufacturing industries may contribute to better access to this type of skills by other industries.

The ageing population towards 2035 increases the demand for health personnel. The projections show that there is an increase in the employment for persons with vocational education at upper secondary level in health and caregiving, while the projected labour force decreases. For nursing and caregiving at bachelor level, projections show a slight decrease in the labour force and an increase in employment. For other fields of health studies at bachelor level, we see the opposite pattern, with projections of the labor force growing more than employment. It can thus be assumed that this group to some extent might diminish potential imbalances for nursing and caregiving at bachelor level and health studies at upper secondary level.