“Demographic changes” can mean many things. The composition of a group of people (median age, ethnic composition, etc.) all fall into this category.
But in the context of labor shortages that have gripped the global economy since the start of the pandemic, it coincided with one of Elon Musk’s great worries: the world has no enough babies.
He has previously said that the world’s declining birth rate is “one of the greatest risks for civilisation”, which will “collapse” if the world does not have more children. Now two major job boards, Indeed and Glassdoor, are eagerly awaiting the 2023 workforce (and well beyond) to predict whether the “demographic shifts” of recent years will continue. In short, yes, and that means the labor shortage is here to stay.
Using World Bank projections and analyzing employment trends in several countries, economists at the two job sites found that the number of people of working age (15 to 65) is expected to decline in the years to come. This means that hiring will be more difficult and workers will have more leverage over employers.
The decline in the number of people of working age will come in part from the aging of the population, the number of deaths exceeding births and the decline in immigration. For example, population growth in the United States and the United Kingdom will be driven solely by net migration. And in the UK, deaths are expected to exceed births by 2025.
The United States, United Kingdom, France and Canada are all expected to see their working-age populations decline by more than 3% between 2026 and 2036.
Meanwhile, over the same period, Germany is expected to see a drop of more than 7%, due to its aging population and migration trends that have not returned to pre-pandemic levels.
In addition, the report says Japan’s demographic outlook is “particularly bleak”, with a population expected to fall from 128 million in 2010 to less than 100 million by 2050, and the share of people aged 65 and over will soar.
“Without sustained immigration, increased labor productivity, or a focus on attracting workers from the margins of the labor force, these countries simply won’t have enough workers to meet the long-term demand for years to come,” Indeed and the director of Glassdoor said. economist wrote in a foreword to the report.
So despite warnings of an impending recession and a potential drop in “employer appetite for hiring”, finding candidates will be a challenge, which will allow workers to demand higher wages, benefits more important and flexible hours.
“At a time like this, with so many headlines about layoffs, it might be a little weird to talk about long-term hiring challenges,” Aaron Terrazas, chief economist at Glassdoor, told Bloomberg. “But the reality is that it is precisely at times like this that it is easy to lose the trees to the forest. It is easy to confuse short-term cyclical challenges with long-term structural labor market challenges.
But a declining birth rate isn’t necessarily bad news despite the hiring challenges it can present. It’s often a sign of economic progress: women have more opportunities to choose their own path in life, whether that means prioritizing school, a career, or a life without children.
While some demographers fear alongside Musk that this could create a workforce crisis down the road, it doesn’t have to come to that if society is adjusting properly. This may vary from country to country depending on their economies, but that’s at least the case in the United States, as Christine Percheski, an associate professor of sociology at Northwestern University, told Insider l Over the past year, the country is expected to make structural adjustments such as creating new policies that adapt to changes in population size.
What’s more, as birth rates in the United States hit an all-time high during the pandemic, a new study from the Economic Bureau of Research has found that there is a COVID “baby bump” after all. It’s unclear if this will continue, but it shouldn’t matter to the workforce if we change our mindsets to view the lack of labor as a new norm rather than a shortage and we adapt accordingly.
This could start with paying attention to the changing wants and needs of employees. They care more about a company’s culture and its diversity and inclusiveness initiatives, according to the report. Thus, to remain competitive in a difficult labor market, employers must meet the demands of workers.
“Beyond a competitive salary, providing employees with top-notch benefits, a positive and engaging company culture and a commitment to DEI initiatives will remain extremely important in helping to win talent in a competitive job market and evolving,” the report said.
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