Population growth in developing countries is outstripping that in the industrialized world by a margin of five to one. This will cause enormous changes in the composition of the world’s workforce.
Population Decline in Developed Countries
In developed countries, the reduction in birth rates can be attributed to better education, more frequent use of contraception, higher survival rates for infants and children and generally improved standards of living.To maintain steady population numbers, a birthrate of 2.1 children per woman is required. Fertility rates have been dropping below this for years in Europe and Japan.
- In Europe, France and Ireland have the highest rate at 1.8. Spain and Italy have the lowest at 1.2.
- At 1.4, Germany is at the average for all of Europe. At the current rate, Germany will lose 20% of its population over the next 40 years.
- Estonia will shrink by 25%, Romania by 27% and Bulgaria by 38%.
- The decline in Russia (at a rate of 750,000 per year) is so great that it has been called a national crisis.
- With its rate of 1.3, Japan in 2006 was the first industrialized nation to move into population decline.
- Under current trends, the United States is the only industrialized country expected to grow. Through immigration, its population is expected to increase by 100 million over the next 45 years.
The world has not seen such a precipitous and widespread decline in birth and fertility rates since the Black Plague swept through Europe 650 years ago. Yet while birthrates are lower in the industrialized nations, they are growing in other parts of the world, notably Africa, the poorer parts of India and the Middle East, where the UN expects the population to double by 2050. Among emerging economies, China stands out. Its current birthrate of 1.8 is down from 5.8 in 1970 because of its stringent birth control policies, in which families are strongly encouraged to have only one child.
People are Living Longer
Even as birthrates decline in industrialized countries, people are living longer. As people age and drop out of the workforce, there will be fewer workers to support them. In China, for example, less than a quarter of Chinese workers are covered by pensions. Therefore a huge burden will be placed on the current generation of only children. The Chinese will face the 4-2-1 problem: four grandparents and two parents supported by one child. There may be a similar situation in Russia as the population ages. If current trends of Russian population loss continue, there will be four dependents for every worker by 2025.
By 2050:
- One fifth of the world’s population will be aged 60 or older. This is twice the current percentage.
- China will have more people over 65 years of age than the entire US population.
Labor Shortages and Surpluses
In the next 20 years, availability of skilled workers will not be balanced against the need. Some countries will have surpluses while others will suffer significant deficits.
Projected significant surpluses:
- India – 47 million
- Pakistan – 19 million
- Vietnam – 7 million
- Indonesia – 5 million
- Philippines – 5 million
- Mexico – 5 million
Projected significant shortages:
- United States – 17 million
- China – 10 million
- Japan – 9 million
- Russia – 6 million
- France, Germany, Spain – 3 million
- UK, Italy – 2 million
All this demographic turbulence means that industries around the world will have to find new sources of labor. The problem will be especially acute in industries seen as less attractive by young workers – government agencies, utilities, industries considered not to be “eco-friendly,” etc.
Human resource planners will need to find ways to keep workers in their jobs longer and to locate and attract new workers – even in places they have not looked before. In addition, countries will need to develop in their available workforces the skills needed for tomorrow’s global economy.
Source
Cheese, P. B., Thomas, R. J. & Craig, E. The Talent Powered Organization. London: Kogan Page, 2008.
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