For years now, we have been hearing about labor shortages that will occur as a result of the retirement of baby boomers. However, baby boomers have been retiring in large number for several years already, and labor shortages, except in a few highly specialized occupations, are hardly a noticeable problem in most mature economies. This raises the question: Is the labor shortages fear overblown? We do not think so. Our motivation for writing this report is rooted in our belief that most mature economies are likely to experience tight labor markets, a higher wage bill, and a squeeze on the bottom line of many businesses in the next 15 years. If not for the global financial crisis and its aftermath, many mature economies would…show more content… In coming years, the job of many human capital professionals is likely to become tougher as recruiting and retaining workers becomes even more difficult, and controlling labor costs (without losing labor quality) will emerge as a major challenge. In such an environment, looking a few years into the future is not a luxury, but an essential business practice. Better planning and prompt reaction to future workforce trends could make a significant difference in business performance and reduce the impact on corporate profits.
When planning ahead, organizations should make the distinction between the short run and long run. Some countries, such as Italy, are at an especially high risk of labor shortages in the long run, but for the short term they are expected to experience loose labor markets. On the other hand, other countries, such as Canada, which are now experiencing relatively tight labor markets, are at relatively lower risk of labor shortages in the longer run.
Labor shortages are already an issue in many emerging markets, but the discussion of labor shortages in those markets varies greatly from the discussion in mature economies. Given the difference, a discussion of labor shortages in emerging economies is beyond the scope of this report.
A Unique Point in History: The Working Age Population Is Shrinking
Mature economies are at a unique point in history— the working age population (people aged 15 to 64) is declining,