The labor shortage could last for years, major employment agencies predict. Here’s why

But in the context of the labor shortage that has gripped the global economy since the pandemic began, it coincides with one of Elon Musk’s major concerns: The world isn’t having enough babies.

He previously said the world’s declining birthrate is “one of the greatest risks facing civilization,” which will “collapse” when the world stops having children. Now, two major job boards, Indeed and Glassdoor, are looking to the workforce in 2023 (and well beyond) to predict whether the “demographic shifts” of recent years will continue. In short, yes, and it means the labor shortage will continue for a while.

Using forecasts from the World Bank and analysis of employment trends in several countries, economists from both job exchanges found that the number of people of working age (15 to 65) will decline in the coming years. This means that hiring will be more difficult and workers will have more influence over employers.

Part of the reason for the decline in the number of people of working age will be an aging population, more deaths than births and lower immigration. For example, population growth in the US and UK is driven entirely by net migration. And in the UK, deaths are projected to outpace births by 2025.

The US, UK, France and Canada are projected to see their working-age populations shrink by more than 3% between 2026 and 2036.

Meanwhile, Germany is forecast to fall more than 7% over the same period – driven by its aging population and migration trends that have not returned to pre-pandemic levels.

The report also said Japan’s demographic prospects are “particularly strong” as the population is projected to fall from 128 million in 2010 to below 100 million in 2050 – and the proportion of those aged 65 and over will skyrocket.

“Without continued immigration, an increase in labor productivity, or a focus on attracting workers from the margins of the labor force, these countries simply will not have enough workers to meet long-term demand in the years to come,” says the Indeed and Glassdoor chief economist wrote in a foreword to the report.

Despite warnings of a looming recession and a potential slackening of “employers’ appetite for hiring”, finding candidates who will pave the way for workers to demand higher wages, stronger benefits and flexible working hours will be a challenge.

“At a moment like this, with so many headlines about layoffs, it might feel a little strange to be talking about long-term hiring challenges,” Aaron Terrazas, Glassdoor’s chief economist, told Bloomberg. “But the reality is that in moments like these, it’s easy to lose the trees to the forest. It is easy to conflate short-term cyclical factors with long-term structural challenges in the labor market.”

But a declining birth rate isn’t necessarily bad news, despite the hiring challenges that come with it. It is often a sign of economic progress: women have more opportunities to choose their own path in life, be it school, work or life without children.

While some demographers along with Musk fear this could lead to a workforce crisis in the long run, it need not happen if society adjusts properly. This can vary from country to country depending on the economy, but at least in the US, as Christine Percheski, associate professor of sociology at Northwestern University, told Insiders last year, the country would need to make structural adjustments such as creating new business strategies, take into account changes in population size.

Also, while U.S. birth rates hit record lows during the pandemic, a new study from the Economic Bureau of Research found there was a COVID “baby bump” after all. Whether this will last is unclear, but it shouldn’t matter to the workforce if we change our mindset and see labor shortages as a new norm rather than a shortage and adapt accordingly.

This could start with paying attention to the changing wants and needs of employees. They are more interested in a company’s culture and its diversity and inclusion initiatives, the report found. So, to stay competitive in a challenging job market, employers need to keep up with the demands of employees.

“Beyond a competitive wage, it will continue to be incredibly important to provide employees with world-class benefits, a positive, engaged culture and a commitment to DEI initiatives to attract talent in a competitive and changing job market,” the statement reads Report.

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