The global economy is approaching a demographic shock of a scale not observed since the Middle Ages, and the working-age populations of many developed economies will start to decline shortly. As a result, numerous organizations will be unable to find enough employees in their home markets to sustain profitability and growth. By 2050, the global population of those 60 years old and older will exceed the number of young (less than 15 years old) people for the first time in history.
Human capital will soon rival – and may even surpass – financial capital as the critical economic engine of the future. The scope of the challenge is so broad that no single stakeholder can solve it alone. Education institutions, business, governments and non-governmental organizations must come together to propose new frameworks and solutions that will create a new talent environment, suitable for the era of workforce scarcity and balancing the needs of both developed and developing economies.
In Germany in 2030, there will be 50 people aged 65 and over for every 100 of working age. Today, that ratio is 34%. The United States will need to add 26 million workers to its talent pool by 2030 to sustain the average economic growth of the two past decades (1988-2008) unless a technological breakthrough replaces manpower, while Western Europe would need to add 46 million employees. While most developing nations will have growing populations, they may face increased difficulties in filling the jobs with the right skills. Continued economic growth paired with a limited employability of the workforce (only 10-20% of graduate students are employable by international standards) is a recipe for large skills gaps.
There are no simple answers to the complex workforce challenges of the 21st century. However, increased talent mobility will certainly be part of the solution. Contrary to conventional wisdom, greater mobility can benefit both nations that receive talent (typically developed economies) and sending nations, especially large nations such as India. In addition to fuelling their countries of origin with remittance funds, many expatriates that decide to return home are armed with skills and business acumen developed abroad. Highly skilled expatriates can also transfer skills, capital and technology back to their home countries.
The talent shock is coming. It will arrive in years, not decades, regardless of the current economic crisis. It is now time for all involved stakeholders to ally forces and prepare for the era of extreme labour scarcity, significant talent mobility and a truly global workforce. Through the Global Agenda Council on Migration, leaders from government, companies, educational institutions and international organizations should collaborate on a systematic basis to address the talent shortages and encourage innovation through redesigned talent mobility.
Council Manager and Forum Lead: Nicholas Davis, Head of Society and Innovation, Member of the Executive Committee, Nicholas.Davis@weforum.org
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