May 18, 2004
Workforce Growth In Industrialized Countries To Slow

Labor markets are going to stop growing as populations age and population growth slows.

Research from a US think tank, the Aspen Institute, has found that in the past 20 years, the US workforce grew by 44 per cent. Over the next 20, however, the projected growth rate is zip. In the past 20 years, skilled workers increased by 19 per cent but over the next two decades, the number will rise by just 4 per cent.

The figures from Australia are just as stark. At the moment, our workforce increases by around 170,000 a year. Fast-forward to 2020 and the forecast is 125,000 new entrants - for the entire decade.

Changes in labor market participation rates make future workforce sizes hard to predict precisely. It seems likely that the coming financial crunch due to huge unfunded retirement liabilities governments will need to raise retirement ages and cut back benefits. So older people will come under increasing financial pressures to work longer and even people in their 50s will come under pressures to work more to save more for their retirements.

As Ben Franklin famously commented, necessity is the mother of invention. It therefore seems logical to expect more innovation aimed at reducing the need for expensive skilled labor.

One big trend I expect to see is the greater use of telecommunications and computer technologies to allow remote use of experts. This will greatly increase the amount of work each expert can do for types of jobs that require remote site support.

To take just one example think about just how wasteful it is to fly an expert petroleum engineer to a remote oil field or an expert mining engineer to some remote mining site. The time the engineer has to spend travelling is not productive. Also, upon arrival the engineer may not be needed all the hours of each day of a visit. Even worse, other experts that a visiting engineer may need to interact with may be available only part of the time. Plus, some worksites pose risks due to terrorism, lawlessness, climate, or disease. But as networks become faster and cheaper and sensors improve it seems reasonable to expect we will gain the ability to allow geographically distant workers to use high fidelity holographic image projectors of people and equipment to allow experts to support many more far-flung projects.

In the future even operation of many types of equipment could be done remotely. Picture someone operating a crane or mining machine from thousands of miles away while wearing goggles that provide incrredibly high resolution images that make it seem like the person is at the distant worksite. While current communications technologies represent a substantial improvement on what was possible in years past we are still scratching the surface of what will become possible once we are able to build much higher resolution holographic imaging systems.

Share |      Randall Parker, 2004 May 18 02:19 AM  Trends Demographic


Comments
Dave Schuler said at May 18, 2004 6:14 AM:

It seems likely that the coming financial crunch due to huge unfunded retirement liabilities governments will need to raise retirement ages and cut back benefits. So older people will come under increasing financial pressures to work longer and even people in their 50s will come under pressures to work more to save more for their retirements.

I've been predicting for some time now that the scandal caused by unfunded retirement plans will dwarf the S&L crisis, ENRON, etc. There are a number of secondary effects that should be taken into account, as well. For example, Gen-Xers and Gen-Yers shouldn't expect the boomers to go away any time soon. I wouldn't be surprised if a lot of us aren't working into our 70's and 80's. We won't be able to afford anything else. Those dreams of retiring to a villa in Tuscany pretty much died with the collapse of the tech bubble.

Also, don't expect major reforms in Social Security or Medicare. The boomers are the most selfish generation in history. I don't expect old age to change us.

Dave Schuler said at May 18, 2004 6:15 AM:

It seems likely that the coming financial crunch due to huge unfunded retirement liabilities governments will need to raise retirement ages and cut back benefits. So older people will come under increasing financial pressures to work longer and even people in their 50s will come under pressures to work more to save more for their retirements.

I've been predicting for some time now that the scandal caused by unfunded retirement plans will dwarf the S&L crisis, ENRON, etc. There are a number of secondary effects that should be taken into account, as well. For example, Gen-Xers and Gen-Yers shouldn't expect the boomers to go away any time soon. I wouldn't be surprised if a lot of us aren't working into our 70's and 80's. We won't be able to afford anything else. Those dreams of retiring to a villa in Tuscany pretty much died with the collapse of the tech bubble.

Also, don't expect major reforms in Social Security or Medicare. The boomers are the most selfish generation in history. I don't expect old age to change us.

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