The surprising workforce crisis of 2030 — and how to start solving it now

2014 is a very special year for me:

20 years as a consultant,

20 years of marriage,

and I'm turning 50 in one month.

That means I was born in 1964

in a small town in Germany.

It was a grey November day,

and I was overdue.

The hospital's maternity ward
was really stressed out

because a lot of babies were born

on this grey November day.

As a matter of fact, 1964

was the year with the highest
birth rate ever in Germany:

more than 1.3 million.

Last year, we just hit over 600,000,

so half of my number.

What you can see here

is the German age pyramid,

and there, the small black point
at the top, that's me.

(Laughter) (Applause)

In red, you can see the potential
working age population,

so people over 15 and under 65,

and I'm actually only interested

in this red area.

Now, let's do a simple simulation

of how this age structure will develop

over the next couple of years.

As you can see,

the peak is moving to the right,

and I, with many other baby boomers,

will retire in 2030.

By the way, I don't need any forecasts

of birth rates for
predicting this red area.

The red area, so the potential working age

population in 2030

is already set in stone today,

except for much higher migration rates.

And if you compare this red area in 2030

with red area in 2040,

it is much, much smaller.

So before I show you
the rest of the world,

what does this mean for Germany?

So what we know from
this picture is that labor supply,

so people who provide labor,

will go down in Germany,
and will go down significantly.

Now, what about labor demand?

That's where it gets tricky.

As you might know, the consultant's

favorite answer to any question is,

"It depends."

So I would say it depends.

We didn't want to forecast the future.

Highly speculative.

We did something else.

We looked at the GDP and
productivity growth of Germany

over the last 20 years

and calculated the following scenario:

if Germany wants to continue
this GDP and productivity growth,

we could directly calculate

how many people Germany would need

to support this growth.

And this is the green line: labor demand.

So Germany will run into a major

talent shortage very quickly.

Eight million people are missing,

which is more than 20 percent
of our current work force,

so big numbers, really big numbers.

And we calculated several scenarios,

and the picture always looked like this.

Now, to close the gap,

Germany has to significantly

increase migration,

get many more women in the work force,

increase retirement age.

— by the way, we just
lowered it this year —

and all these measures at once.

If Germany fails here,

Germany will stagnate.

We won't grow anymore. Why?

Because the workers are not there
who can generate this growth.

And companies will look

for talents somewhere else.

But where?

Now, we simulated labor supply

and labor demand

for the largest 15 economies in the world,

representing more than 70 percent

of world GDP,

and the overall picture looks like this

by 2020.

Blue indicates a labor surplus,

red indicates a labor shortfall,

and grey are those countries
which are borderline.

So by 2020, we still see a labor surplus

in some countries,

like Italy, France, the U.S.,

but this picture will change

dramatically by 2030.

By 2030, we will face
a global work force crisis

in most of our largest economies,

including three out of
the four BRIC countries.

China, with its former
one-child policy, will be it,

as well as Brazil and Russia.

Now, to tell the truth,

in reality, the situation

will be even more challenging.

What you can't see here
are average numbers.

We de-averaged them

and broke them down

to different skill levels,

and what we found

were even higher shortfalls

for high-skilled people

and a partial surplus

for low-skilled workers.

So on top of an overall labor shortage,

we will face a big skill
mismatch in the future,

and this means huge challenges

in terms of education, qualification,

upskilling for governments and companies.

Now, the next thing we looked into

was robots, automation, technology.

Will technology change this picture

and boost productivity?

Now, the short answer would be

that our numbers already include

a significant growth in productivity

driven by technology.

A long answer would go like this.

Let's take Germany.

The Germans have a certain
reputation in the world

when it comes to productivity.

In the '90s, I worked in our Boston office

for almost two years,

and when I left, an old senior partner

told me literally,

"Send me more of these Germans,

they work like machines."

(Laughter)

That was 1998.

Sixteen years later, you'd
probably say the opposite.

"Send me more of these machines.

They work like Germans."

(Laughter) (Applause)

Technology will replace

a lot of jobs, regular jobs.

Not only in the production industry,

but even office workers are in jeopardy

and might be replaced by robots,

artificial intelligence,
big data, or automation.

So the key question is not

if technology replaces some of these jobs,

but when, how fast, and to what extent,

or in other words,

will technology help us

to solve this global work force crisis?

Yes and no.

This is a more sophisticated
version of "it depends."

Let's take the automotive industry

as an example,

because there, more than 40 percent

of industrial robots are already working

and automation has already taken place.

In 1980, less than 10 percent

of the production cost of a car

was caused by electronic parts.

Today, this number is more than 30 percent

and it will grow to more than 50 percent

by 2030.

And these new electronic parts

and applications require new skills

and have created a lot of new jobs,

like the cognitive systems engineer

who optimizes the interaction

between driver and electronic system.

In 1980, no one had the slightest clue

that such a job would ever exist.

As a matter of fact,
the overall number of people

involved in the production of a car

has only changed slightly

in the last decades,

in spite of robots and automation.

So what does this mean?

Yes, technology will
replace a lot of jobs,

but we will also see a lot of new jobs

and new skills on the horizon,

and that means technology will worsen

our overall skill mismatch.

And this kind of de-averaging

reveals the crucial challenge

for governments and businesses.

So people, high-skilled people,

talents, will be the big thing

in the next decade.

If they are the scarce resource,

we have to understand them much better.

Are they actually willing to work abroad?

What are their job preferences?

To find out, this year we contacted

a global survey

among more than 200,000 job seekers

from 189 countries.

Migration is certainly one key measure

to close a gap, at least
in the short term,

so we asked about mobility.

More than 60 percent

of these 200,000 job seekers

are willing to work abroad,

for me a surprisingly high number.

If you look at the employees aged 21 to 30

this number is even higher.

If you split this number up by country,

yes, the world is mobile,

but only partly.

The least mobile countries

are Russia, Germany, and the U.S.

Now, where would these
people like to move to?

Number seven is Australia,

where 28 percent could imagine moving to.

Then France, Switzerland, Germany,

Canada, U.K., and top choice worldwide

is the U.S.

Now, what are the job preferences
of these 200,000 people?

So what are they looking for?

Out of a list of 26 topics,

salary is only number eight.

The top four topics
are all around culture:

number four,

having a great relationship with the boss;

three, enjoying a great work-life balance;

two, having a great
relationship with colleagues;

and top priority worldwide

is being appreciated for your work.

So do I get a thank you?

Not only once a year

with the annual bonus payment,

but every day.

And now, our global work force crisis

becomes very personal.

People are looking for recognition.

Aren't we all looking for recognition

in our jobs?

Now, let me connect the dots.

We will face a global work force crisis

which consists of
an overall labor shortage

plus a huge skill mismatch

plus a big cultural challenge.

And this global work force crisis

is approaching very fast.

Right now, we are
just at the turning point.

So what can we, what can governments,

what can companies do?

Every company,

but also every country,

needs a people strategy,

and act on it immediately,

and such a people strategy consists

out of four parts.

Number one, a plan

for how to forecast supply and demand

for different jobs and different skills.

Work force planning

will become more important
than financial planning.

Two, a plan for how to
attract great people:

generation Y, women, but also retirees.

Three, a plan for how to educate

and upskill them.

There's a huge upskilling challenge

ahead of us.

And four,

for how to retain the best people,

or in other words,

how to realize an appreciation

and relationship culture.

However, one crucial underlying factor

is to change our attitudes.

Employees are resources, are assets,

not costs, not head counts,

not machines, not even the Germans.

Thank you.

(Applause)