Demographic risk is one of the most insidious of all megatrends threatening the global economy, but its impact throughout the world is neither simultaneous nor uniform.
For our research, we performed simulations on 25 major economies to quantify the extent of labor shortages and surpluses for 2020 and 2030. Overall, by 2020, many countries will still be experiencing a surplus. By 2030, however, this surplus will have turned into a massive shortfall.
These are some of the crippling labor shortages and chronic labor surpluses that the world faces:
- Germany will see a shortage of up to 2.4 million workers by 2020 and 10 million by 2030.
- Brazil will have a shortage of up to 8.5 million workers in 2020; by 2030, that figure could increase nearly fivefold to 40.9 million people.
- Italy will experience a surplus of 2 million workers in 2020, but by 2030, it might face a labor deficit of up to 0.9 million.
- Canada’s labor surplus of between 700,000 and 1.1 million people in 2020 will become a deficit of up to 2.3 million by 2030.
- China’s surplus of 55.2 million to 75.3 million workers in 2020 could reverse sharply, turning into a shortage of up to 24.5 million people by 2030.
- South Africa’s labor surplus of 6.5 million to 7.8 million people by 2020 will hold relatively steady—between 6.2 million to 9.2 million by 2030.
- The U.S., with a surplus of between 17.1 million and 22 million people in 2020, will still face a surplus—at minimum 7.4 million—by 2030.
To quantify these shortages and surpluses, we calculated annual labor supply and demand until 2030. Let’s look first at labor supply.
The Labor Supply Forecast. We found that the labor supply is shrinking in Germany, Poland, Russia, and Japan—and will continue to shrink until 2020. From 2020 to 2030, workforce contraction will accelerate. Europe will be severely affected. And for the first time, South Korea and China will experience a decline. Everywhere else, the labor supply will still expand. (See Exhibit 1.) But labor supply is only one side of the coin.
(To understand how we calculated supply and demand, see “The Calculus of Labor Imbalances.”)