Recently The Boston Consulting Group published a study on projected workforce supply and demand in 25 major economies through 2030. Currently, these countries account for 65 percent of the world’s population and more than 80 percent of total world GDP.
The study revealed that between 2020 and 2030 there will be a global labor shortage. Of the four BRICS countries (Brazil, India, Russia, China, and South Africa), only India and South Africa will not experience a shortage of labor. While in 2020 many countries will have a surplus, this will turn into a huge shortage by 2030. The potential impact of this labor shortage was calculated by multiplying the labor gap figures for each country by labor productibity to reach the “dollar value of GDP not created”, which is $10 trillion of lost GDP.
Dealing With a Surplus or Shoratage
A surplus of workers leads to unemployment and attrition of skills, which can ultimately reduce an economy’s competitiveness. A labor surplus is mitigated by boosting economic growth, which can be tackled by government- and business-sponsored vocational training and job qualification programs, educational programs, and reducing informal employment.
Meanwhile, a shortage in available labor means that countries cannot meet their growth targets. To sustain economic growth, countries could strive to boost productivity through capital investments, increase labor participation rates, increase immigration and mobility, and encourage higher birth rates.
Some Countries at a Glance…
Germany will have a shortage of up to 2.4 million workers by 2020, and 10 million by 2030. Overall, Germany’s labor supply is calculated to shrink from approximately 43 million people today to 37 million in 2030. This is attributed to a lower birthrate, immigration policy, lower hours of work per year, and a low labor force participation rate of women and the elderly.
Brazil will be short by 2 million workers in 2020, but by 2030 will have a labor deficit of up to 0.9 million. Slowing population growth and an aging population are reasons for the changing demographics. Additionally, much of the country’s working-age population is underqualified.
South Korea is expected to experience a significant labor shortage, due to its rapidly aging population. By 2040, South Korea is expected to have the oldest population of the OECD countries.
China is expected to have a surplus of 55.2 to 75.3 million workers in 2020, but this will change in the following decade with an expected shortage of up to 24.5 mllion workers by 2030. This shortage is anticipated as a consequence of its one-child-per-family policy.
South Africa will have a steady surplus of workers with 6.5 million in 2020 and between 6.2 and 9.2 million by 2030. This large excess of workers, combined with the current 50 percent poverty rate and infrastructure needs can lead to serious workforce challenges, with high unemployment expected.
The U.S. will have a surplus of between 17.1 and 22 million people by 2020, and is unlikely to face shortages with a projected surplus of 7.4 million workers by 2030. This surplus is attributed to a relatively high birthrate and a liberal immigration policy. To avoid high unemployment, the U.S. would have to better utilize its workforce and increase economic activity, along with taking measures to increase entrepreneurship, “in-source” oversea jobs, and upgrade workers’ skills.
Labor Shortages/Surpluses Projected Worldwide (% of workforce)