The UK is facing a major talent shortage, which could see the nation miss out on an unrealised revenue of more than £300 billion. With the approach of Brexit threatening to stifle the flow of labour between Britain and the continent, the effects of an ageing population could see almost 3 million jobs left unfilled by 2030.
For decades, mechanisation and automation have been spoken of as creating a glut of human resources, with the ominous suggestion that robots are inevitably coming for almost every job prompting many experts to worry of mass unemployment and a global economic realignment. However, such thinking often fails to take into account the huge demographic, economic and geo-political shifts occurring at the same time. Ageing populations across developed economies mean that there may soon not be enough new members of the workforce to replace retirees, while closing borders and an increasingly hostile environment for migrant workers may exacerbate this further.
According to new data analysis conducted by Korn Ferry, in partnership with Man Bites Dog and Oxford Analytica, this combination of factors is leading developed economies to struggle with a rapidly growing talent shortage. The researchers looked at the effects of talent shortage, and found that while the issue already comes with a massive economic cost, the development will only worsen in the coming decades.
Indeed, the study finds that by 2030, there will be a global human talent shortage of more than 85 million people – roughly equivalent to the population of Germany. Left unchecked, in 2030 that talent shortage could result in about $8.5 trillion in unrealised annual revenues.
Looking at the results, a recurring theme appears to be that the nations which look set to be worst hit by this are either typically or increasingly hostile to the movement of international labour, while also hosting an ageing population. This is typified by the US, with the largest amount of unrealised revenue of $1.7 trillion, although only the third largest labour shortage, at 6.6 million unfilled roles – illustrating the high value of the jobs which may be vacant in 2030.
Surprisingly, China, which currently hosts the world’s largest population, will be home to the largest labour shortage outright. Some 6.7 million jobs could be left unstaffed by 2030, although this becomes less surprising when the nation’s shifting demographics are considered. According to the United Nations, China is ageing more rapidly than almost any country in recent history, and it’s dependency ratio for retirees could rise as high as 44% by 2050. While the relaxing of China’s infamous one child policy in 2016 will soften this slightly, allowing for a larger next generation to enter the workforce, a huge $1.4 trillion could still be missed in unrealised revenue.
Proportionally speaking, however, Japan looks set to be hit even harder. Japan’s overall population is shrinking due to low fertility rates, meaning its ageing population bracket is rapidly increasing. This is coupled with the nation’s historic hostility toward welcoming newcomers to the shores of its islands. Japan has been notoriously steadfast in its refusal to increase quotas for migrant labour, going so far as to openly favour the development of robots to care for the elderly over the softening of border policies. In 2009, the Japanese Government even introduced a programme that would incentivise Brazilian and other Latin American immigrants to return to their nation of origin, with a stipend of $3,000 for airfare and $2,000 for each dependent. Now, however, Japan is faced with a potential labour shortage of 13.8 million come 2030, which could lose the country some $1.3 trillion in revenues.
Following in fourth is Germany. While the country is central to the EU, and subsequently benefits from drawing labour from across the 28 member states, its access to migrant workers is limited to “skilled labour”, while the employability of those arriving is curtailed by linguistic barriers. In early 2018, it was reported that 55%, of the recipients of unemployment benefits had a migrant background. According to the Bundesagentur für Arbeit (German Federal Employment Agency), while part of this was due to a lack of employable skills, it was also largely thanks to migrants lacking knowledge of the German language. The failure to adapt the working environment to incorporate labour such as this is partially why Germany could face a shortage of 4.9 million by 2030, and unrealised revenues of $630 billion.
Britain is likely to see a severe impact on its economy via the coming talent shortage, according to Korn Ferry. The country is set to miss out on $408 billion (£307.55 billion) in unrealised revenue by 2030, while 2.9 million jobs could be in line to go unfilled.
With a ‘Hard Brexit’ still very much on the cards, along with a much-feared ‘No Deal’ scenario, either of which could scupper free movement and trade between the UK and the mainland, the triggering of Article 50 back in March 2017 may lead to various undesirable outcomes. Even in a scenario where skilled workers are still able to enter the country, there may still be an exodus of young, highly skilled workers. As many as 10% of EU nationals with post-graduate degrees, who earn above £50,000 a year are considering returning to the mainland, creating the potential for a large talent shortage for employers, and placing a strain on public services such as the NHS.
Of the sectors studied by Korn Ferry, the financial sector is the hardest hit internationally, with a trifling deficit of 10.7 million employees, especially in the most developed countries in Europe. A major loser is the London financial sector, which, with a shortage of half a million employees, will miss £67.9 billion (€77 billion), or 7% of the value of the entire sector.
The research warns that if the government and businesses fail to act, by 2030 the talent shortage could become “a real crisis”. The authors added, “Companies now have to work on this to prevent this: staff planning is essential, as is good knowledge of the talent pipeline.”