What it means
The working age population counts everyone in the chosen age band, whether they are employed, looking for work, studying or caring for family. The commonly used range is 15 to 64, although some countries use different cut-offs, such as 16 to 64 or 15 to 69, so figures are not always directly comparable.
The measure is based on age alone and ignores whether the person wants or is able to work. It matters because an economy can only produce so much with the people available.
A growing working age population generally means more workers, more income and more demand for housing, goods and services. A shrinking one can mean labour shortages, wage pressure and slower growth unless productivity rises.
Analysts compare it with the number of people outside the band, using the dependency ratio. This ratio shows how many young people and older people there are for every hundred of working age.
A rising ratio means each worker supports more dependants through taxes and family spending. Businesses use these numbers for planning, whether choosing where to open a new office, how to forecast demand for consumer products or how to design pension and benefit schemes.
A company thinking of entering a market with a young and growing working age population sees a larger future customer and talent base. One entering a market with a shrinking base may need to plan for automation or for attracting workers from elsewhere.
The nuance is that population is only the starting point. The labour force participation rate and the employment rate show how many of that group actually take part in the labour market, and those can differ widely between countries for reasons such as education, childcare and retirement habits.
Governments publish projections of this group many years ahead, because births, deaths and migration change slowly and predictably. That makes it one of the more reliable inputs in long-range planning, unlike many economic forecasts.
Even so, migration policy and ageing can shift the picture, so analysts normally show several scenarios rather than a single line.
In practice
Real-world examples.
Example
A consumer goods company compares two countries before choosing a site for a new factory. One has a growing working age population and the other a falling one, so the company expects an easier time hiring in the first.
Example
A pension fund projects the contributions it will receive over 30 years. The analyst uses forecasts of the working age population to estimate how many people will pay in compared with how many will draw benefits.
Example
A fast food chain plans store openings in a city where the working age population is rising by 2% a year. The finance team builds the extra customers and available staff into the revenue and labour cost forecasts. They also test a slower growth case so that the store budget is not built on one optimistic number.
Formula
Calculation
Working age share = working age population / total population x 100
Suppose a country has a total population of 20,000,000. Of these, 13,000,000 are aged 15 to 64. Working age share = 13,000,000 / 20,000,000 x 100 = 65%. If 9,100,000 of those 13,000,000 are in work, the employment rate for the working age population is 9,100,000 / 13,000,000 x 100 = 70%.Case study
Seen in the real world.
Northgate Retail is an illustrative, fictional chain planning expansion into one of two regions. Region A had a working age population of 4,000,000 that was growing 1.5% a year, while Region B had 4,200,000 that was shrinking 0.5% a year.
On headline numbers Region B looked larger. The finance director projected both regions forward five years and found that Region A would reach about 4,309,000 and Region B would fall to about 4,096,000, so Region A would be the bigger labour and customer pool.
The board chose Region A for its first new stores. The illustrative lesson is that the direction of travel of the working age population can matter more than today's total. The team added a sensitivity table so the board could see how the answer changed if growth in Region A slowed.
Watch out
Common mistakes.
- Treating the working age population as the number of people employed, when it only counts people old enough to work.
- Comparing countries without checking that they use the same age range for the measure.
- Assuming a larger working age population always means faster growth, when jobs, skills and productivity decide what those people produce.
Questions
People also ask.
Is the working age population the same as the labour force?
No, the labour force counts only those working or actively looking for work, so it is smaller.
Why do some countries use different age ranges?
Education leaving ages and retirement ages differ, so statistical offices set the band to suit local conditions.
Why do investors care about it?
It influences long-term growth, consumer demand, tax revenue and the cost of pensions and health care.
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