Report Estimates Economic Cost of Workforce Shortages and Surpluses
Workforce shortages and surpluses worldwide are becoming so acute that they could shave as much as US$10 trillion off world gross domestic product (GDP) by 2030, according to a report released by The Boston Consulting Group (BCG).
The management consulting firm said this projected value loss in the report, entitled ‘The Global Workforce Crisis: $10 Trillion at Risk’, stems from acute shortages and unrelenting surpluses that are being exacerbated by a range of factors, from anaemic economic growth and ageing populations to low birth rates and restrictive immigration policies.
BCG examined workforce supply-and-demand dynamics in 25 major economies, including the G20, to forecast the extent of labour shortages and surpluses for 2020 and 2030. Overall, by 2020, many countries will still be experiencing a surplus but by 2030 this will, for most, have become a massive shortfall, according to the report,.
“The consequences for many nations’ growth and competitiveness are serious,” said Rainer Strack, a BCG senior partner and a co-author of the study.
“Governments, companies, and other institutions must begin to take action now if they hope to avert the potentially long-lasting damage to national and regional economies, as well as to the global economy.”
The impact of the labour imbalances worldwide will be neither simultaneous nor uniform. The respective shortages and surpluses predicted include the following:
A Delicate Balance
The problems associated with labour surpluses are well known, says BCG. High unemployment cuts the tax base and raises the cost of social services while raising the risk of social instability. In the long term, surpluses can lead to the attrition of skills and ultimately reduce an economy’s competitiveness and attractiveness to investors.
But the problems with shortages can be equally harmful to the economy because job openings cannot be filled. This fuels wage inflation and, above all, impedes business growth and competitiveness.
“A country may appear to have a perfect balance of supply and demand,” said Strack. “But after breaking down the numbers, we might find that it actually has a surplus of one million people with a primary education but a shortfall of one million with a secondary education.
“This kind of de-averaging reveals the crucial challenge ahead for governments and businesses. Both will need far more sophisticated tools to analyze supply and demand and devise solutions.”
A copy of the report is available to download at www.bcgperspectives.com.