The Global Demographic Crisis and Company Implications An Ageing Workforce: Implications for Global...

The Global Demographic Crisis and Company Implications

An Ageing Workforce:An Ageing Workforce:Implications for Global StrategiesImplications for Global Strategies

Boston College Center for Work & Family Boston College Center for Work & Family The Global Workforce Roundtable The Global Workforce Roundtable April 5, 2006April 5, 2006

Tamara J. Erickson

22006 © All Rights Reserved.

Source: Employment Policy Foundation analysis and projections of Census/BLS and BEA data.

Millions of People

Expected Labor Force and Labor Force Demand

0

50

100

150

200

250

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

Labor Needed

Labor Available

140142144146148150152154

2004

2005

2006

2007

2008

The Lines Are Crossing:A Growing Shortage of Workers in the U.S.


Screeching to a Halt:Growth in the Working-Age Population

Source: Deloitte Research/UN Population Division (http://esa.un.org/unpp/) It’s 2008: Do You Know Where Your Talent Is? Why Acquisition and Retention Strategies Don’t Work, p.6

-50%

0%

50%

100%

150%

200%

Mexico Brazil India China South Australia Canada US Netherlands Spain France UK Russia Italy Japan GermanyKorea

1970-2010

2010-2050


Age of Workers

5% 5%

-9%

18%

48%

15%

-20%

0%

20%

40%

60%

80%

16-24 25-34 35-44 45-54 55-64 65+

Percent Growth in U.S. Population by Age: 2000-2010

Dramatically Different Patterns of Growth by Age

1. Declining number of mid-career workers

2. Few younger workers entering

3. Rapid growth in the over-55 workforce

Source: U.S. Census Bureau International Data Base


. . . Continuing for Our Working Lives!

Age of Workers

Percent Growth in U.S. Workforce by Age: 2000-2020

7% 8% 7%

-10%

3%

73%

54%

-20%

0%

20%

40%

60%

80%

under 14 15-24 25-34 35-44 45-55 55-64 65+



A Pattern Found ‘Round the Industrialized World

Source: Demography is De$tiny, The Concours Group and Age Wave, 2003

2 0 0 5 © A l l R ig h ts R e s e rv e d . 1 1

A g e

-2 %

-1 0 %

-1 %

1 4 %

2 2 %

8 %3 %

-2 0 %

0 %

2 0 %

4 0 %

6 0 %

8 0 %

U n d e r 2 5 2 5 -3 4 3 5 -4 4 4 5 -5 4 5 5 -6 4 6 5 + T o ta l

S o u rc e : U S C e n s u s B u re a u In te rn a t io n a l D a ta B a s e

The U n ited K ingdomChange in Popu lation by Age G roup: 2 0 0 0 -2 0 1 0


-9 %

-2 4 %

1 1 %1 4 %

9 %1 3 %

1 %

-4 0 %

-2 0 %

0 %

2 0 %

4 0 %

6 0 %

8 0 %

U n d e r 2 5 2 5 -3 4 3 5 -4 4 4 5 -5 4 5 5 -6 4 6 5 + T o ta l

A g e

I ta lyChange in Popu lation by Age G roup: 2 0 0 0 -2 0 1 0



A g e

-7 %

-1 9 %

-1 1 %

2 7 %

-7 %

2 4 %

0 %

-4 0 %

-2 0 %

0 %

2 0 %

4 0 %

6 0 %

8 0 %

U n d e r 2 5 2 5 -3 4 3 5 -4 4 4 5 -5 4 5 5 -6 4 6 5 + T o ta l


G erm anyChange in Popu lation by Age G roup: 2 0 0 0 -2 0 1 0


Age of Workers

Percent Growth in the Japanese Workforce by Age: 2000-2010

Japan

Source: U.S. Bureau of Labor Statistics U.S. Census 2000

Age of Workers

-7%

-25%

10%1%

14%

28%

-40%

-20%

0%

20%

40%

60%

80%

Under 25 25-34 35-44 45-54 55-64 65+


Age of Workers

-8%

1%

-8%

34%

48%

30%

-20%

0%

20%

40%

60%

80%

Under 25 25-34 35-44 45-54 55-64 65+

Percent Growth in the Chinese Workforce by Age: 2000-2010

China

Source: U.S. Bureau of Labor Statistics U.S. Census, 2000


Source: United Nations

India

Age of Workers

6%

16%

23%

36%33% 34%

0%

20%

40%

60%

80%

0-24 25-34 35-44 45-55 55-64 65+

Percent Growth in the Indian Workforce by Age: 2000-2010


In 2000, A Fairly “Young” World . . .

Under 5% 5% to 12.4% 12.5% to 20% Above 20%

Source: U.S. Census Bureau

Percent of Population Age 60+ 2000


. . . Rapidly Aging by 2025

Source: U.S. Census Bureau

Under 5% 5% to 12.4% 12.5% to 20% Above 20%

Percent of Population Age 60+ 2025


1900 1950 1970 1980 1990 20001910 1920 1930 1940 1960

75

70

65

60

55

50

45

40

80

Source: U.S. Social Security Administration

Average Life Expectancy at Birth in the U.S.

Why? Dramatic Increase in Life Expectancy


The “Sudden” Boom in Life Expectancy

Source: U.S. Census Bureau, 2000

Life Expectancy at Birth: 1000 - 2000

Age76.5

47

383635

30

25

0

10

20

30

40

50

60

70

80

1000 1200 1400 1600 1800 1900 2000


Why? Dramatic Drop in Birth Rates

Source: Age Wave

Tota

l Fer

tility

Rat

e

3.3

2.8 2.9

3.6

2.0

2.5 2.5

2.01.7 1.7 1.6

1.4 1.3 1.2

0

1

2

3

4

US UK France Canada Japan Germany Italy

1960 2000

Total Fertility Rate


Why? The Baby Boom Pattern


1930 1940 1950 1960 1970 1980 1990

4.5

4.0

3.5

3.0

2.5

2.0

Birth

in M

illion

s

The Boom Years: 1946-1964


Skill Mismatch: What’s Ahead?

Over the next decade: Only 30% of the twenty-year-olds will obtain a college degree Over 90% of the new jobs created in the U.S. will require a college degree

Key skill sets will be in critically short supply: For example, the number of students that declared their major in computer

science has declined for the past four years and is now 39% lower than in the fall of 2000

Many of the most educated, skilled immigrants – including people who have been working at U.S. companies for years – are going back to their home countries at the rate of about 1,000 a day

Source: In part, The Seventh-Annual Workplace Report, Challenges Facing the American Workplace, Summary of Findings,” Employment Policy Foundation, 2002; India Daily, October 12, 2005, citing McKinsey & Co. research; Computing Research Association, March 2005; Information Week, August 16, 2004;

“Holding on to Global Talent: Foreign-born stars are heading home. How to keep them working for you” by Anne Fisher, Fortune Magazine, October 19, 2005


Global Pockets of Talent: Engineers

Source: Based on McKinsey Global Institute Labor Supply Database


Global Pockets of Talent:Finance & Accounting Staff

Source: Based on McKinsey Global Institute Labor Supply Database


The Coming Workforce CrisisLimited in availability – Growing in the U.S. by only a fraction of a percent per

year through the first half of this century; declining in many other countries

The Employment Policy Foundation predicts an 8 million worker shortfall in the American economy in 2014

Chronologically older – individuals over 55 progressively larger proportions of the workforce – and generally more diverse

11% in the US in 2000; 20% in 2015; nearly one-third by 2050

Lacking key skills – Shortages of needed talent, particularly in high skill areas, such as science and engineering disciplines

The EPF estimates a shortfall of 6M degree holders in 2012

Global and virtual – Requiring collaboration of individuals and teams around the world

Source: Testimony by Tamara J. Erickson to the U.S. Senate Committee on Health, Education, Labor and Pensions, May 2005


Implications for Companies

Different workforce older, more diverse, and more variation in needs,

preferences, lifestylesTalent shortages

as labor markets tighten and there are fewer educated/ skilled candidates to replace the "brain drain" of Baby Boomer retirements

Corporate pressures on training and development, HR practices, and

management practices generally


Getting Ready for the New Workforce

Understand and plan – reality, needs, scenarios, optionsAttract and retain – work arrangements that “turn every stone”


New Work Arrangements: Turn Every Stone

Retire “retirement”Create bell-shaped career paths


The Shape of Careers to Come:“Down Shifting” for Continued Contribution

20s

30s

40s

50s60s

70s

80s

Career Development

Career Deceleration

Source: Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent by Dychtwald, Erickson, and Morison, April 2006


New Work Arrangements: Turn Every Stone

Retire “retirement”Create bell-shaped career pathsRecruit at counterintuitive entry points Accommodate blended lives Design cyclic and project-based work Offer lateral career opportunities


The Shape of Things to Come:Lateral Moves

20s

30s

40s

50s60s

70s

80s

Career Development

Career Deceleration

Source: Demography is De$tiny, The Concours Group and Age Wave, 2003


Getting Ready for the New Workforce

Understand and plan – reality, needs, scenarios, optionsAttract and retain – work arrangements that “turn every stone”Tap new sources – out source; think globallyEducate – develop the skill sets you needMotivate – create an employee experience to drive engagementDesign and link – justify in terms of customer engagementSupport – new human resource skills and abilities


Change is Coming

Begin now to shift deep-seeded policies and practices Be ready to attract., retain, and motivate the talent you need over the next decade

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