North America is aging, and a lot of the rest of the world is aging as well. It is something to think about as we consider where we are going to get the labor we need to grow our economies in the years ahead. That is, for decades we in North America have been able to attract the cream of the crop in terms of workers if we so chose. The opportunities were here and a surplus of workers was elsewhere. So what will happen when that surplus dries up, and more and more countries are scrambling for young workers?
This article from the World Economic Forum (WEF) details the aging trends in Asia very clearly. The region has for years benefitted from a ‘demographic dividend’ where a a young, growing work force (aged 15-64) has helped drive growth. Now, as is the case so many places, fertility rates are falling and people are living longer. Already one-third of the population in Singapore and South Korea is over 50, and in Japan the ratio is closer to half. No surprise then that workforce growth is slowing. The most dramatic example of labor force contraction could well be in China, where the WEF figures there could be a decline of 170 million people in its working-age population over the next three decades.
If left unchecked, all other things being equal a declining labor force means strained public finances as well as lower economic growth. That is why the WEF suggests that the countries experiencing the decline in labor force growth look to the ones with younger populations as sources of labor. India, Indonesia and the Philippines fall into this category.
It could mean a shift for North America. Right now, there is no shortage of willing workers, at all skill levels, who want to be in Canada or the United States. The competition of those workers, particularly those in the highest skill categories could heat up in the years ahead if would-be workers have the choice of staying at home or heading to a nearby Asian country rather than going further afield. That could be a big deal, given that North America is also aging rapidly.
Does that mean that North America is headed for labor shortages? Probably not. What the article does not mention is something else the WEF has discussed at great length, which is the fact that we are in the midst of a ‘Fourth Industrial Revolution’ by which automation has the potential to replicate many job tasks. Right now we are still figuring out the costs and practicalities of using robots or other technology to get things done. If workers are in short supply, the incentive to figure it out faster will be ever higher.