Population trends indicate a growing global labour shortage in the coming decades
New research by Totaljobs, and its global partners in StepStone Group, warns of a worldwide labour shortage, as official UN data suggests that the world’s five largest economies will lose 30 million working-aged people by 2030.
Economic growth and prosperity have been intertwined with significant population growth over the last 200 years. In fact, since 1950, global population figures increased from 2.5 billion to 7.9 billion.
However, looking ahead, as a generation of ‘baby boomers’ reach retirement age, UN figures have shown that by 2030 there will be 30 million fewer people of working age in the world’s five largest economies – the USA, China, Japan, Germany, and the UK.
To better understand this trend, Totaljobs has joined its global partners in StepStone Group to study an impending crisis that could take the global economy by shock – ‘Arbeiterlosigkeit‘ or ‘The Great Un-employee-ment’, which if forecasts are realised and action isn’t taken, will see businesses increasingly struggle to find the staff they need for economic growth.
Key findings from the study
In a study of almost 20,000 workers and business leaders worldwide, we found that 8 in 10 people are unaware of the issue, in what StepStone Group CEO Sebastian Dettmers labels as, ‘alongside the climate crisis, the greatest challenge of the 21st century.’
That is, a steep decline in the working-age population of some of the world’s largest economies. UN figures suggest that by the end of the century, Europe will have 28% fewer people of working age – equivalent of 132 million workers. Across the G20, this figure rises to 600 million, with some 700 million more people of pensionable age. Hardest hit in the short term is Germany, which is set to lose 7% of its working population, an equivalent to the current population of Berlin, by 2030.
In the UK, the working age population is set to increase by a modest 1.2% by 2050, which while less stark than figures predicted overseas, is at odds with a projected 48% growth in people of pensionable age by 2050. With some 6 million people over the age of 65 by 2050, the economic cost to the UK would be equally dramatic.
Separate estimates by the International Longevity Centre (ILC) projects that as a result, the UK economy would experience a shortfall of 2.6 million workers by 2030.
What industry can do to mitigate the impact of population decline
Left unmanaged, these developments would likely have severe consequences for the global economy and society as a whole, with the threat of a decades-long recession.
In the study business leaders worldwide have highlighted a series of measures which can be implemented to negate some of the impact of a global labour shortage. These include a greater adoption of flexible working patterns (cited by 76% of employers), a growing investment into automation (74%), and taking tangible measures to implement Diversity, Equity and Inclusion within the recruitment process (72%).
Besides this almost two thirds (65%) of business leaders have pointed to increased migration of talent to plug skills gaps and labour shortages, with 57% arguing that increasing retirement age to offer a larger workforce would benefit employers.
Expert commentary
“A new era is beginning in the labour market. For the first time in recent history, the number of people in the workforce will fall rather than rise. This has serious consequences for our economy and the standard of living of every individual.
We all need to be much louder about this, and work together at full speed on solutions to safeguard our prosperity.
Alongside the climate crisis, the demographic reversal in the labour market is the greatest economic and societal challenge of the 21st century. We want to make the threat visible and prevent labour shortages from catching us unprepared. We can still act.
Another key is to ensure greater equality in global labour markets. There has long been no room for discrimination or inequality of opportunity in job markets. In times of labour shortage, there’s a new component: we simply can’t afford to disadvantage people and leave their potential untapped.”
Dr Sebastian Dettmers, CEO of StepStone Group
“A combination of declining fertility rates and longer life expectancy is going to make massive changes to our labour markets in future years. It is, indeed, necessary to plan ahead for a structurally tighter labour force and, as a result, rising unit labour costs.
To offset such higher labour costs, employers will need to invest more in labour-saving technologies, and also to spend more time and effort on labour management.”
Professor Charles Goodhart, Co-Author of The Great Demographic Reversal
Find out more
These findings have been uncovered as part of a brand new global study conducted by StepStone Group, for which the UK job platform Totaljobs, German recruiting platform StepStone.de, and US technology provider Appcast surveyed a total of 20,000 people in the UK, USA, China, and Germany.