The developed world’s workforce will start to decline next year, threatening future global growth.
Ever since the global financial crisis, economists have groped for reasons to explain why growth in the U.S. and abroad has repeatedly disappointed, citing everything from fiscal austerity to the euro meltdown. They are now coming to realise that one of the stiffest headwinds is also one of the hardest to overcome: demographics.
The 2015 Revision of World Population Prospects is the twenty-fourth round of official United Nations population estimates and projections that have been prepared by the Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat.
The Wall Street Journal published this nice overview full of statistics, analysis and future scenario’s. Here below are some highlights.
Next year, the world’s advanced economies will reach a critical milestone. For the first time since 1950, their combined working-age population will decline, according to United Nations projections, and by 2050 it will shrink 5%. The ranks of workers will also fall in key emerging markets, such as China and Russia. At the same time the share of these countries’ population over 65 will skyrocket.
Previous generations fretted about the world having too many people. Today’s problem is too few.
“This reflects two long-established trends: lengthening lifespans and declining fertility. Yet many of the economic consequences are only now apparent. Simply put, companies are running out of workers, customers or both. In either case, economic growth suffers. As a population ages, what people buy also changes, shifting more demand toward services such as health care and away from durable goods such as cars.
There is no simple answer for how business and government should cope with these changes, since each country is aging at different rates, for different reasons and with different degrees of preparedness.”
“By 2050, the world’s population will have grown 32%, but the working-age population (15 to 64 years old) will expand just 26%.
Among advanced countries, the working-age population will shrink 26% in South Korea, 28% in Japan, and 23% in both Germany and Italy, according to the U.N. For middle-income countries it will rise 23%, led by India at 33%. But Brazil’s will edge up just 3% while Russia’s and China’s will contract 21%.
Among rich countries, the U.S. remains demographically fortunate: Its working-age population should grow 10% by 2050. But it will still shrink as a share of total population from 66% to 60%. The demographic drag on growth, in other words, will last decades.”
We highly recommend to read the complete overview in The Wall Street Journal to dive into the very interesting statistics on the importance of demographics for our future societies and economies.
Read also about the important AI & Robotics trend influencing our future workforce and society: “Robot revolution: rise of ‘thinking’ machines could exacerbate inequality.”
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