It may seem fanciful, but a new report published last week by The Conference Board concludes that the United States and other advanced economies will actually face significant labor shortages over the coming decade and a half.
This forecast has been made primarily based on the Baby Boomer workforce departing the labor market over this period.
The Baby Boomer phenomenon is what makes things different in now compared to the decades previously: For the first time since World War II, working age populations will actually be declining in mature markets.
As Dr. Gad Levanon, director of macroeconomics at The Conference Board reported, “The global financial crisis and its aftermath – stubbornly high unemployment in many countries – have postponed the onset of this demographic transformation, but will not prevent it from taking hold.”
According to The Conference Board’s analysis, several countries have already begun to see this happen, as their natural rates of employment have now fallen below their pre-recession levels: Japan, Germany, South Korea and Canada.
The same thing is expected to happen in the United States and the United Kingdom by 2015 … and in the Scandinavian countries, the Benelux countries plus Australia by 2016 or 2017.
Other mature economies like those of Spain, France, Portugal, Italy and Greece won’t experience this until the years further out – but The Conference Board predicts that it will happen there as well.
U.S. market sectors that are expected to experience the most severe labor shortages include healthcare occupations, STEM occupations (science, technology, engineering and mathematics), as well as skilled trades that don’t require a college degree but that do require specialist training.
Among the challenges The Conference Board envisions in these three major categories are the following:
- Skilled labor occupations like construction, transportation and utility plant operations are going to be adversely affected by many more retirements happening than new job seekers coming in to fill the void.
- STEM occupations won’t be as stressed as some might imagine, because higher productivity will alleviate the pressure on hiring more workers in IT and high-tech manufacturing segment. That being said, certain sub-segments such as information security, environmental and agricultural engineering, and applied mathematics are expected to face severe labor shortages.
- The numbers of new entrants in various healthcare occupations are constrained by high barriers to entry such as extensive education and experience requirements, along with accreditation requirements.
The Conference Board report has constructed a Labor Shortage Index covering 32 countries. The index combines current labor-market tightness with future demographic trends to predict the likelihood of the different countries experiencing labor shortages.
The bottom line on the index: with the exception of the Mediterranean countries, all of the labor markets in developed economies are expected to be squeezed pretty tightly starting within the next few years.
It’s been quite a while since we’ve been hearing about pending labor shortages … but that’s exactly what The Conference Board is predicting. Here’s a link to more details about the report, which is appropriately titled From Not Enough Jobs to Not Enough Workers.
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