What is replacement demand?

Ever wondered what replacement demand is and why you need to know about it ?

Replacement demand is an important part of determining what employment opportunities there may be in the labour market. For those working in careers and the education sector knowing about replacement demand and understanding what opportunities may be available in the future helps with career planning. The recent careers speech by the Robert Halfon, the Apprenticeships and Skills Minister, spoke about the important of meeting the needs of a skills economy:

“We need people of all ages, and those who advise them, to really understand what opportunities are on offer. I want those undertaking apprenticeships or courses in further education to get the same level of information and support to make confident and informed choices when selecting and applying for courses.
We want to ensure that those applying for further education have clear information and support through the process of searching for, choosing and then applying for a particular opportunity. In particular, we want to ensure that they are supported in the same way that higher education applicants are supported through the straightforward and well-understood UCAS system.”

Employment projections are an important to understanding the needs of the economy. These projections are available through LMI for All and are part of the Working Futures dataset.

Employment projections help us understand how levels of employment in an occupation or sector may change over time. These projections are made up by expansion demand (or growth) and replacement demand. Expansion demand is the number of job openings as a result of growth in the sector or occupation. Whilst, replacement demand is the number of openings created by people leaving the labour market on a temporary basis (such as maternity leave or sickness) and those retiring or dying. It is difficult to estimate the number of people who may leave an occupation on an annual basis , as, for example, people retire at different ages. So the replacement demand is often presented over an extended period of time, such as ten years, to provide a projected trend.

As part of the Working Futures projections both expansion and replacement demand are provided as well as the total number of people needed in the occupation (called net requirement). If you want an example of how to use replacement demand and expansion demand data you can get from LMI for Al,l then check out our free widget, Careerometer.

How is careers labour market information and intelligence being used and making an impact across the world?

It is widely accepted that careers labour market information and intelligence is central to the delivery of good careers guidance practice. With more data becoming available and advances in technology, it is possible to create linkages between data to provide more powerful careers information. How careers information and intelligence is made available, linked and used varies greatly by country, but there are interesting international examples available from which to learn. These examples and the evidence of their impact was discussed at a recent symposium organised by the Social Research and Demonstration Corporation (SRDC) held in Ottawa, Canada , in July 2016. The aim of the symposium was to discuss evidence from a recent international literature review of data linkage initiatives and share learning. LMI for All was identified as one of three innovative approaches, along with the US College Scorecard, and New Zealand’s Integrated Datasets. The findings showed that each of these international exemplars provide highly innovative approaches to improving access to accurate, reliable, and timely learning information and labour market information (LMI).

The US College Scorecard is a web-based tool to provide information on the costs and financial returns of post-secondary education (For more information see the latest report and Scorecard data documentation). It was developed by the US federal Department of Education. Behind the tool is a database comprising linked student-level administrative data from the Integrated Postsecondary Education Data System (IPEDS), the National Student Loan Data System (NSLDS) and graduate earnings information from tax records maintained by the Treasury Department. It is an interesting approach to providing data on career pathways.

New Zealand’s Integrated Datasets has been in operation since the 1990s. The New Zealand government has worked to integrate existing datasets from multiple government departments into a single, individual-level dataset. Policy and legislative frameworks were put in place to protect the privacy of its citizens while encouraging greater data sharing between government departments and agencies. The most exhaustive example can be used to analyse labour market outcomes of post-secondary education graduates, their student loan repayment rates, their migration out of the country, and other social and economic factors.

The US and New Zealand approaches share a common methodology of integrating survey and administrative datasets by linking individual-level data. These include individual education programme selections and outcomes (e.g. graduation rates), income tax data, student loan repayments, and in the New Zealand, labour market participation information to capture the true costs and returns of post-secondary education. Like the other two initiatives, LMI for All combines data from various sources, but is based on a different methodology. It does not link individual-level data, but integrates a wide range of existing national sources of data to provide LMI in a single source.

The three initiatives demonstrate the richness of information that can be produced by combining information and data from existing sources. In the UK, the Building out Industrial Strategy Green Paper (2017) discusses the role of LMI in high quality careers advice:

“…. we need to do more to empower students, parents and employers to make confident and informed choices about their education and careers options, whether they are in schools, technical education or higher education. The quality of careers advice is a particular issue for disadvantaged students who lack the social capital to get advice or work experience opportunities via family members.”

This highlights the importance of access to accurate, reliable, and timely labour market information and learning information. It has a number of important consequences for a variety of stakeholders. From a user’s perspective, this can help students and their families make informed choices about learning and work pathways and understand the labour market demands and outcomes related to their choices. For governments, data linkage and labour market online developments provide new and exciting opportunities to better understand career trajectories now and in the future.

Deirdre Hughes, Jenny Bimrose & Sally-Anne Barnes

Warwick Institute for Employment Research, University of Warwick