Across the world, many countries are facing a rapidly aging population. This, combined with declining birth rates in these markets, will lead to long-term workforce worries, and in turn, serious consequences for developed economies.
According to the World Health Organization, from 2015 to 2050, the proportion of the world’s population over 60 will nearly double from 12% to 22%. Reversing these demographics in many countries with aging populations will not be possible in the near or even medium term as these trends have been decades in the making. The sobering reality is that a structural gap in talent in many developed countries will continue to intensify in the foreseeable future.
Put simply, talent scarcity will be endemic to the labor market in the years and decades ahead. There’s going to be more work to be done by fewer people. And it is not just the number of people: there will also be a mismatch in terms of the skills that people have versus the skills that companies need in the market. The need for specialization in the labor market is arguably greater than ever.
A demographic challenge
There is no silver bullet solution for this global issue–but multi-pronged strategies –which we’ve outlined in Randstad’s new ‘Understanding Talent Scarcity’ report–can help businesses and policymakers to future-proof the workforce and bring more immediate relief to a tight labor market.
One of the issues governments must consider is how immigration policies may affect their nation’s ability to attract highly skilled talent. Such policies that severely limit access to talent pools across borders should be understood in light of potentially negative consequences.
In this context, successfully retaining and encouraging older workers to remain active will help sustain economic activities. Randstad’s research shows that close to two in five of workers aged between 55-67 would quit a job if it prevented them from enjoying their life–and that younger generations are even more likely to do so. It’s essential for leaders to create a working environment where older people can benefit from fulfillment at work, while continuing to thrive outside of it.
Both private and public sector initiatives are needed to incentivize people to hold off retirement or to work part-time, accommodating flexible schedules that complement their lifestyles. Having the option to work around other responsibilities like caring for a loved one or treating any health issues would benefit older workers and may help retain those close to retirement. Offering flexibility in terms of working location will also be key. Businesses should build each of these factors into a transitional plan for older workers’ eventual retirement.
All roads lead to AI
Elsewhere, technology, largely AI, can play a fundamental role in mitigating the talent shortages caused by an aging workforce. While AI is often portrayed as a threat to workers’ livelihoods, this technology will be critical for businesses and industries battling structural scarcity caused by the long-term impact of an aging society.
Each technological revolution has brought about waves of labor market disruption–but also opportunities for growth. Recent studies show where the use of technology is intensive, a positive correlation is detected between the exposure of the professions to AI and employment growth.
Increasing the use of AI to empower workers may help drive productivity and efficiency–and help to fill hard-to-hire-for roles. People will be able to offload repetitive, time-consuming tasks so they can focus on high-value, creative ones that add more value to their organizations. Through such efforts, companies are poised to become more efficient, innovative, and resilient amidst talent shortages caused in part by aging workforces.
There will of course be a transitional period during which some workers will face displacement. Certain industries will be disproportionately impacted by AI automation, including industries that are not of a scientific and technological nature, such as managerial, economic, and legal occupations.
This doesn’t mean professions in these industries will disappear–but it does make it essential that the technology is rolled out fairly and in a way that creates opportunities for all workers.
Companies need to be deliberate in their approach, introducing well-designed and impactful skilling programs to ensure effective adoption. Our recent Workmonitor Pulse survey found that close to half (46%) of employees aged 55-67 believe that AI skillsets will be essential for their role, but just 8% have been offered any AI training in the last year. Businesses clearly need to do much more in this area.
The acuity of these trends and their impact on the global workforce shouldn’t be underestimated. The aging of the world’s mature economies will continue to exacerbate structural shortcomings in the labor market.
As more people reach retirement age and workforce activity rates decline among older workers, businesses and governments will have no choice but to embrace technologies such as AI, all while ensuring they are addressing the diverse needs of increasingly scarce talent.
Sander van’t Noordende is the CEO of Randstad.
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