Seven-Part Series from The Conference Board
Tackles Solutions for Global Labor Shortages
NEW
YORK, Aug. 13, 2024 /PRNewswire/ -- The global
labor shortage crisis is here. The US economy alone needs 4.6
million additional workers per year to maintain current
levels of supply, demand, and population balance.
That amounts to 2% of the US population—and shortages are even
more dire elsewhere: Germany needs
to find 1.6 million workers (3%), South
Korea needs 2 million (5.5%), and China needs 47 million (5%).
Global Labor Market Outlook 2024, a new seven-part
series from The Conference Board, examines the root causes of labor
shortages; the negative effects of scarce labor on business
performance and economic growth; and the number of additional
workers needed to eliminate shortages and where to find them.
"According to our surveys, CEOs around the world cite labor
shortages and attracting/retaining talent among the most pressing
challenges keeping them up at night," said Dana M. Peterson, Chief Economist of The
Conference Board. "However, solutions to chronic labor
shortages are within reach, if governments, companies, and
nonprofits act together. Our new research finds that a multifaced
approach—including older, younger, male, female, and immigrant
workers—can bring millions more into the workforce."
In each of its seven parts, Global Labor Market Outlook
2024 takes on defining forces driving shortages, then provides
rich quantitative analysis of their impact on nearly 30 individual
economies. Among the key insights:
Part 1: What's at Stake for Businesses?
- Shrinking and aging populations—plus the underutilization of
available workers—are reducing the sizes of available labor
pools. This risks capping firm productivity in the short run
and threatening GDP growth over the long run, especially for most
mature economies and select emerging markets. The shrinking
working-age share of population may cut an average of 0.4
percentage points from global growth each year over the next
decade.
- Labor shortages are poised to keep upward pressure on wages
for the foreseeable future. Companies are managing shortages by
increasing wages and benefits. These labor costs are ultimately
passed on to customers, keeping consumer price indexes sticky.
Part 2: Embracing a Multifaceted Approach
- Adopting technology and automation are important ways for
firms to compensate for missing workers—but science can get you
only so far.
- Immigration and greater labor force participation among the
domestic population are critical to solving labor shortages in many
economies. This includes implementing policies and business
strategies to bring more underutilized members of society into the
workforce—including women, youth, discouraged men, and seniors.
Such strategies range from training and reskilling to licensing and
retirement reforms.
Part 3: Immigration Is Necessary but Insufficient
- Increasing the number of foreign workers and providing
pathways to permanent residence is necessary but insufficient
for addressing labor shortages. In addition to political
controversies around migration, many economies cannot admit enough
foreign workers to make up for missing workers.
- Low immigration growth—and/or the failure to integrate
migrants—contributes to labor shortages in many economies.
After declining amid pandemic-era travel bans, immigration
rebounded in most economies, but in many cases remains below
historical norms. Moreover, immigration growth is anticipated to
stall or materially undershoot prepandemic levels over the next
decade.
Part 4: Optimizing the Older Worker Pool
- Retirements are exceeding labor force entrants. Given
declining birthrates—and the large size of the baby boomer
generation relative to younger generations—retirements are
overtaking labor market entries in nearly all mature economies, as
well as several large emerging markets like China.
- Extending working years by optimizing the older worker pool
can help ease labor shortages. Reforming pension programs to
encourage workers to work longer, more flexible work regimes, and
encouraging companies to pair older, experienced workers with
younger workers can add millions of people to regional labor
markets.
Part 5: Maximizing Women Workers
- Increasing female labor force participation can
completely solve labor shortages in many economies, including
the US. Strategies for doing so include upskilling, retraining,
flexible work, closing wage gaps, championing familial support, and
financing entrepreneurship.
- Keeping women sustainably in the workforce is pivotal to
maximizing the impact of women joining the labor market. Companies,
governments, and families will have to work together to create
incentives such as flexibility and hybrid work—as well as proper
support such as reskilling and familial support
policies—for women to enter and remain in the labor market during
prime working years.
Part 6: Getting Men Back into the Game
- Sidelined men are a major contributor to global labor
shortages. Male labor force participation has been falling in
many economies due to a combination of factors, including
technological advancements promoting automation, globalization,
health and societal challenges, labor market segmentation, and
general discouragement.
- Bringing men back into the labor market is vital to solving
worker shortages. There are many solutions to draw them back to
the workforce sustainably, including retraining men for modern
jobs, licensing reform, investing in education, addressing health
and societal barriers to work, and encouraging men to use corporate
benefits and employee resources.
Part 7: Motivating Youth
- Low youth labor force participation is stoking
shortages. Labor force participation is falling, even among
youth. Some of this is due to extended schooling, but skills
mismatches, differing tastes in work culture, and disaffection and
discouragement are also at play.
- Facilitating full-time youth labor force participation
during breaks from school or part-time jobs during school can help
alleviate labor shortages. In many economies, shortages are the
most acute in low-wage services jobs that are ideal for young,
unskilled, and inexperienced workers. Filling this gap will require
reforming inflexible labor laws that currently depress part-time
and seasonal work opportunities for teenagers and students.
- Public-private partnerships can enhance job prep and boost
youth labor force participation. Companies can collaborate with
schools, individuals, nonprofits, and governments to establish
internships, apprenticeship programs, and hands-on training and
skills development to build talent pipelines for young adults.
About The Conference Board
The Conference Board is the
member-driven think tank that delivers Trusted Insights for What's
Ahead™. Founded in 1916, we are a non-partisan, not-for-profit
entity holding 501 (c)(3) tax-exempt status in the United States.
ConferenceBoard.org
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