DAVOS – As the global economy changes at an ever-quickening pace, the labor market in many countries is not merely struggling to keep up, but seems to have broken down in important ways. High unemployment coexists with unfilled jobs. Rising productivity fails to translate into higher wages. And, for many, upward mobility is beyond reach, even though the economy has begun to recover.
Fortunately, change seems to be underway. Four global trends are reshaping the world of work, helping to resolve contradictions and overcome dysfunction in the labor market as companies, workers, and governments adapt to a new demographic, technological, and economic environment.
The first trend is demographic. In much of the world, aging societies and declining birth rates mean that the days of abundant labor are coming to an end. Some 60% of the world’s population lives in countries with stagnant or shrinking workforces. China’s working-age population peaked in 2010; by 2050, more than a quarter of its people will be over 65 (today, just 8% are). In Germany, the labor force is projected to shrink by six million over the next 15 years.
As labor becomes increasingly scarce, employers and policymakers are being forced to think differently about sourcing talent. In Japan, where a quarter of the population is older than 65, Prime Minister Shinzo Abe has championed a major effort to bring more women and older workers into the labor market. As a result, even though Japan’s working-age population, traditionally defined, has shrunk 8% over the past decade, the labor force decline totaled just 1%.