Businesses generally spend little time worrying about what might happen 10 or more years ahead. But if “what might happen” is a talent shortage so massive as to cause a wholesale, global reinvention of work norms and redistribution of labor, perhaps companies could muster up a smidgeon of concern.
By 2030 — no more than a couple of economic cycles away, in all likelihood — the worldwide talent shortage will reach about 85 million people with needed skills, according to a new report. The estimated financial impact: as much as $8.5 trillion of unrealized annual revenue.
That lost economic opportunity would be equivalent to the combined gross domestic products of Germany and Japan.
The study that informs the report is based on economic modeling designed by talent-management firm Korn Ferry, business-to-business marketing firm Man Bites Dog, and Oxford Analytica, an analysis and advisory firm.
“The impact of the talent crunch is so significant that the continued predominance of sector powerhouses is in question, from London as a global financial services center to the United States as a technology leader to China as a key manufacturing base,” the study says.
“As a result,” it continues, “organizations may be prompted to relocate their headquarters and operational centers to places where the talent supply is more plentiful. Governments will be forced to invest in improving their people’s skills to avert corporate flight and to defend their nations’ income and status.”
If it’s true that companies will be seeking locales with more plentiful talent, and the study data proves relatively accurate, then India may be on track to becoming the world’s most powerful business center. Among 20 countries included in the study, it’s the only one expected to have a talent surplus — numbering 245 million workers — in 2030.
The United States would by far take the biggest economic hit, losing out on $1.7 trillion in unrealized revenue — 21% of the world’s total — as a result of the talent deficit 12 years from now. The $1.7 trillion would equate to roughly 6% of the entire U.S. economy.
There’s already a global talent shortage, but nothing like what will emerge over the next decades-plus, according to the report. In 2020, it forecasts, the labor deficit will be 3% of the workforce. By 2030, the gap will rise to 11%.
Such numbers suggest that advancing technology might not be the scourge causing massive job losses that some have projected.
“Global growth, demographic trends, underskilled workforces, and tightening immigration mean that even significant productivity leaps enabled by technological advances will be insufficient to prevent the talent crunch,” the report says.
Further, “Even companies that are using more robotics foresee a growing need for human talent with advanced skills — for example, redeploying people from the factory floor, where robots can perform repetitive work, to the research laboratory.”
In countries with low unemployment and booming manufacturing production — the Czech Republic, Poland, Hungary, and Slovakia, for example — labor shortages are accelerating automation and increased use of robotics “not to replace people, but because there aren’t enough of them to fill the factories,” the report says.
In the United States, the graying population is a major contributor to the talent shortage, with some 10,000 baby boomers reaching retirement age every day for the next 19 years. Even last year, U.S. job vacancies hit a record 6 million per month.
Making matters worse, the U.S. labor force participation rate, currently 62%, is expected to dip to 60% by 2030, according to the report.
All of the forecasted numbers in the report are what would happen without sufficient mitigating steps by organizations and governments. There’s no shortage of people; skills are what’s missing.
Lessening the talent shortage “requires a fundamental redefinition of the social contract between individuals, organizations, and governments,” the report states. “The future of work doesn’t just require different skill sets, but entirely new ways of working.”
In the report’s view of the future, successful organizations will move from a paternalistic approach to a more mature, flexible relationship with their people, “based on mutual respect.”
Also, the labor market will continue on its path of increasing fluidity, with more staff brought in on a per-project basis. “This will rely on an extended ecosystem of workers rather than a large, permanent work force,” the report says.