10 Trends Behind Today's Talent Scarcity as the Global Workforce Ages

A report from global HR and recruitment services firm Randstad, “Understanding Talent Scarcity,” paints a fairly dire picture about the future of the global workplace, based mainly on today’s aging workforce demographics. From the Executive Summary:

“Across the world, many industrialized markets are facing a rapidly graying population and workforce. The demographics of populous countries are a harbinger of societal challenges, with talent scarcity one of the most vexing consequences of this long trend. And slower migration over the past three years as a result of the pandemic has restricted talent movement, making the global labor market less efficient.

“The acuity of the aging global population is undeniable. According to the World Health Organization, from 2015 to 2050, the proportion of the world’s population over 60 will nearly double from 12% to 22%. In Europe, the share of the population aged 65 and over is increasing in every EU member state. By 2050, one in four people in Asia and the Pacific will be over 60. From 2010 to 2020, the 65-plus population in the U.S. experienced its largest-ever 10-year gain.

“Furthermore, the aging populations in some of the world’s most dynamic economies are not being offset by births. From Europe to China, declining reproductive rates will lead to long-term workforce worries and, in turn, serious consequences for their economies. Japan, which has the oldest median age of any major economy in the world, also has one of the lowest birth rates at 1.26 per woman during her lifetime (a rate of 2.1 is needed to sustain a population).”

The report highlights 10 trends to help hiring managers understand why this is happening.

Trend 1: Aging workforce. As Baby Boomers retire and fertility rates continue to fall in most industrialized nations, more people will leave the labor market than enter during the next decade, resulting in a deficit of talent.

Trend 2: Declining working-age population. In a number of large economies, the working-age population is already declining from a decade ago.

Trend 3: Mixed activity rates across markets. The availability of talent is not solely a function of the working-age population, but also of people’s willingness to work, which is measured as activity rates.

Trend 4: Historically low unemployment rate. Despite the recent slowdown in hiring, unemployment rates around the world remain unusually low; among OECD member countries, they are near-historic levels. In fact, many of these countries are experiencing their lowest rate in the past 20 years.

Trend 5: Rising job vacancy rates. A slight easing in vacancy rates in 2023 has not alleviated difficulties associated with acquiring specialized and some business-as-usual skills. During the past decade, but especially in the post-pandemic period, the labor market has experienced near-universal increases in vacancy rates.

Trend 6: Top sectors affected. Structural scarcity has affected sectors to varying degrees. Of the 10.5 million U.S. job openings reported last November, the highest numbers were in business services (2 million with a vacancy rate of 8.3%), followed by healthcare (1.9 million with a vacancy rate of 8.5%), and information and communications technology (with a vacancy rate of 6.4%). Over the past decade, the vacancy rates for these professions have all doubled.

Trend 7: Growth of highly skilled jobs. During the past decade, 66 million jobs have been created in the group of countries Randstad studied, with every market recording gains. The greatest area of increase — 55.7 million — has been in roles filled by workers with advanced education.

Trend 8: Retaining older workers. As the workforce continues to gray in the decades ahead, retention of older workers will be key to mitigating worsening structural talent scarcity.

Trend 9: Highly-skilled migration & talent hubs. Faced with a reduction in the working-age population and lower activity rates among older workers, some countries have prioritized immigration as a remedy to their talent scarcity problem.

Trend 10: The opportunity of AI. Automation and the most innovative technologies, particularly AI, are having a very significant impact on the labor market, but this is not being felt equally in all countries or occupations. Automation and AI are predicted to place 45% of jobs at risk of disappearing or of undergoing significant changes.

Conclusion

“The aging of the world’s industrialized nations will continue to exacerbate structural shortcomings in the labor market. As retirements intensify over the next several years and as workforce activity rates decline among older workers, talent scarcity will likely worsen, leading to challenges for employers to procure and retain the human resources they need to optimize growth.”

Download the full 28-page report here.