The global labor shortage crisis is here. The US economy alone needs 4.6 million additional workers per year to maintain current levels of supply, demand, and population balance.
That amounts to 2% of the US population—and shortages are even more dire elsewhere: Germany needs to find 1.6 million workers (3%), South Korea needs 2 million (5.5%), and China needs 47 million (5%).
Global Labor Market Outlook 2024, a new seven-part series from The Conference Board, examines the root causes of labor shortages; the negative effects of scarce labor on business performance and economic growth; and the number of additional workers needed to eliminate shortages and where to find them.
“According to our surveys, CEOs around the world cite labor shortages and attracting/retaining talent among the most pressing challenges keeping them up at night,” said Dana M. Peterson, Chief Economist of The Conference Board. “However, solutions to chronic labor shortages are within reach, if governments, companies, and nonprofits act together. Our new research finds that a multifaced approach—including older, younger, male, female, and immigrant workers—can bring millions more into the workforce.”
In each of its seven parts, Global Labor Market Outlook 2024 takes on defining forces driving shortages, then provides rich quantitative analysis of their impact on nearly 30 individual economies. Among the key insights:
Part 1: What’s at Stake for Businesses?
- Shrinking and aging populations—plus the underutilization of available workers—are reducing the sizes of available labor pools. This risks capping firm productivity in the short run and threatening GDP growth over the long run, especially for most mature economies and select emerging markets. The shrinking working-age share of population may cut an average of 0.4 percentage points from global growth each year over the next decade.
- Labor shortages are poised to keep upward pressure on wages for the foreseeable future. Companies are managing shortages by increasing wages and benefits. These labor costs are ultimately passed on to customers, keeping consumer price indexes sticky.
Part 2: Embracing a Multifaceted Approach
- Adopting technology and automation are important ways for firms to compensate for missing workers—but science can get you only so far.
- Immigration and greater labor force participation among the domestic population are critical to solving labor shortages in many economies. This includes implementing policies and business strategies to bring more underutilized members of society into the workforce—including women, youth, discouraged men, and seniors. Such strategies range from training and reskilling to licensing and retirement reforms.
Part 3: Immigration Is Necessary but Insufficient
- Increasing the number of foreign workers and providing pathways to permanent residence is necessary but insufficient for addressing labor shortages. In addition to political controversies around migration, many economies cannot admit enough foreign workers to make up for missing workers.
- Low immigration growth—and/or the failure to integrate migrants—contributes to labor shortages in many economies. After declining amid pandemic-era travel bans, immigration rebounded in most economies, but in many cases remains below historical norms. Moreover, immigration growth is anticipated to stall or materially undershoot prepandemic levels over the next decade.
Part 4: Optimizing the Older Worker Pool
- Retirements are exceeding labor force entrants. Given declining birthrates—and the large size of the baby boomer generation relative to younger generations—retirements are overtaking labor market entries in nearly all mature economies, as well as several large emerging markets like China.
- Extending working years by optimizing the older worker pool can help ease labor shortages. Reforming pension programs to encourage workers to work longer, more flexible work regimes, and encouraging companies to pair older, experienced workers with younger workers can add millions of people to regional labor markets.
Part 5: Maximizing Women Workers
- Increasing female labor force participation can completely solve labor shortages in many economies, including the US. Strategies for doing so include upskilling, retraining, flexible work, closing wage gaps, championing familial support, and financing entrepreneurship.
- Keeping women sustainably in the workforce is pivotal to maximizing the impact of women joining the labor market. Companies, governments, and families will have to work together to create incentives such as flexibility and hybrid work—as well as proper support such as reskilling and familial support policies—for women to enter and remain in the labor market during prime working years.
Part 6: Getting Men Back into the Game
- Sidelined men are a major contributor to global labor shortages. Male labor force participation has been falling in many economies due to a combination of factors, including technological advancements promoting automation, globalization, health and societal challenges, labor market segmentation, and general discouragement.
- Bringing men back into the labor market is vital to solving worker shortages. There are many solutions to draw them back to the workforce sustainably, including retraining men for modern jobs, licensing reform, investing in education, addressing health and societal barriers to work, and encouraging men to use corporate benefits and employee resources.
Part 7: Motivating Youth
- Low youth labor force participation is stoking shortages. Labor force participation is falling, even among youth. Some of this is due to extended schooling, but skills mismatches, differing tastes in work culture, and disaffection and discouragement are also at play.
- Facilitating full-time youth labor force participation during breaks from school or part-time jobs during school can help alleviate labor shortages. In many economies, shortages are the most acute in low-wage services jobs that are ideal for young, unskilled, and inexperienced workers. Filling this gap will require reforming inflexible labor laws that currently depress part-time and seasonal work opportunities for teenagers and students.
- Public-private partnerships can enhance job prep and boost youth labor force participation. Companies can collaborate with schools, individuals, nonprofits, and governments to establish internships, apprenticeship programs, and hands-on training and skills development to build talent pipelines for young adults.
