In 1494, an Italian monk named Luca Pacioli published an overview of the mathematics of his time. His 36-chapter work described what has since become standard knowledge among the world’s finance and business professionals and a building block of balance sheet accounting: double-entry bookkeeping. And since the advent of this method, invested capital has been the pillar of every enterprise, government, and economy. Even today, in the wake of the global financial crisis and amid a spreading debt crisis, invested capital remains the core and the promise of economies everywhere. But a much bigger crisis is yet to come—one that strikes at the very purpose of economies but is scarcely noted, let alone managed: the crisis in human capital.
Every economy’s ability to compete depends on a steady supply of human capital and talent. When that supply is inadequate, imbalances result, creating serious threats not only to the economy but also to social and political stability and future development. This impact, moreover, extends beyond borders.
Over the past few years, we have examined workforce supply-and-demand dynamics in 25 major economies (including the G20) through 2030. Today, these countries collectively account for more than 2 billion economically active people, or around 65 percent of the world’s population—and more than 80 percent of total world GDP. This report highlights the impending labor shortages and surpluses and their implications for future growth. Trends across the 25 economies we studied are alarming: an equilibrium in supply and demand is rapidly becoming the exception, not the norm. Between 2020 and 2030, we project significant worldwide labor-force imbalances—shortfalls, in particular. One significant implication is the potential aggregate value of GDP squandered, because either these nations cannot fill the jobs available or they cannot create enough jobs for the workers they have. This represents a stunning $10 trillion—around 60 percent of U.S. GDP and more than 10 percent of total world GDP (according to the latest available 2013 figures).
This report, the first of a series on this topic, summarizes the findings of The Boston Consulting Group’s extensive research on global talent risk and outlines basic solutions to mitigate these imbalances. The series as a whole will describe the consequences of labor imbalances for businesses and governments and offer further remedies to help mitigate them.