The global labour force participation rate will continue its decline, reaching 63.1 percent in 2025. Driving this trend is the fact that, in many countries, the population share of those 65 and older is increasing.
This demographic shift will raise dependency burdens for prime-age workers and intensify competition for labour. To compensate, countries will push back retirement ages, businesses will adopt more automation solutions, and employers will rely more heavily on female and immigrant labour pools.
According to recent analysis from Frost & Sullivan titled, ‘The Global Future of Work–The Future Labour Force,’ finds that in addition to overall participation rate declines, the global labor force will experience a surge in millennials.
The global labour force will comprise approximately 3.85 billion people in 2025, with Generation X accounting for over one-fourth of the labour force and millennials almost half.
By 2025, those currently aged 15 to 34 will comprise almost half of all workers. Businesses must consider how they will accommodate up to four generations of employees in addition to an increasingly culturally diverse workforce.
Aging populations will greatly affect Japan and many Western European countries, increasing dependence on female and immigrant labour as well as automation. Global competition over high-skill labourers is forcing some countries to rewrite immigration policies and other countries to incentivize talent retention. These trends will intensify through 2025.
Demand for highly-skilled science, technology, engineering and math (STEM) workers will further pressure labour supplies in developed economies, causing many countries to revise their immigration policies.
However, given rising standards of living and an expanding middle class, especially in India and China, many STEM workers will opt to stay in their home countries.
Better communication between the business sector and education providers is needed to proactively address anticipated skills gaps. Moreover, business will have to assume greater responsibility in training future employees.
“Companies need to implement strategies to prevent a future talent shortfall,” said Frost & Sullivan Visionary Innovation Group Senior Research Analyst Jillian Walker. “In many economies, women earn more degrees than men. Thus, recruiting and mentoring female graduates as well as taking millennial preferences seriously will go a long way in curbing an anticipated talent crunch.”
While STEM worker shortages will persist, the freelance community will grow, spurring new and emerging employment models, enabled by greater levels of connectivity. Businesses will embrace hybrid labour pools, facilitated by online marketplaces and innovative labour solutions, such as adopting open innovation programs or crowdsourcing amateur expertise.
“Businesses must recognize that to be competitive in the future, they will have to be more flexible in the skills they recruit for and how they accommodate employee lifestyles,” added Walker. “The corporate world must invest in today’s students to ensure that tomorrow’s demands are met.”