The demographic time bomb is coming (unless you’re a robot)?
There has been much comment recently about a research paper, written by the LSE’s Professor Charles Goodhart, Manoj Pradhan and Pratyancha Pardeshi and published by Morgan Stanley. Put simply, it argues that global demographics mean fewer workers, increased wage growth, reduced inequality and, from our viewpoint at exec-appointments.com, more problems for chief executives and directors as they attempt to keep their businesses competitive by securing the talent that keeps them ahead of the game.
The UN estimates that today’s population growth of 1.25% will fall to almost zero by 2040. Ageing populations in the west, coupled with declines in China (exacerbated by the one-child policy) mean that the basic laws of supply and demand dictate fewer workers and higher wages. There is likely to be a further decline in the numbers of skilled people to fill many key jobs.
What does this mean for those who run our businesses and public services? At government level, especially in the west, there is obviously a potential mismatch between the numbers of those earning and paying tax and the numbers retired and wanting good pensions and services. At a more prosaic level, it means that costs will rise and talent becomes even more scarce.
Those of us who are old enough to have been working in the 1980s will remember we were constantly told the ‘demographic time bomb’ would come and annihilate us. Of course, it’s never that simple: immigration helped fill some, occasionally many, gaps. I suspect though that things will be increasingly difficult in that area in the future. The current furore over immigration into Europe isn’t going away, with political interests trumping economic ones in most instances. On the other side of the coin, if emerging global superstars have declining reservoirs of talent then they’ll simply chuck some money at the problem and we could see another ‘brain drain’ of talent away from our shores, not as in the past to the USA, but to the east and Latin America.
My gut instinct tells me that most recruiters, even the big, global companies, don’t think years ahead. At a lower level, most recruiters simply worry about making the current month’s target. Yet someone needs to stop and take stock of longer-term trends and plan accordingly. Like the military, the recruitment industry needs to think ahead and ensure that its pipelines are going to be continually restocked. While you can do this to some extent by opening global offices, if Professor Goodhart is right then a lot more planning and forethought will be required to meet clients’ demands. On the bright side however, a tightening market of the type he envisages, will require very high quality recruitment indeed, with the premium prices that implies. On the other hand, every commentator on the Morgan Stanley paper has noted that it is underpinned by some crucial assumptions.
In particular, in such circumstances the current drive towards automation, with robots taking over not just the mundane but many skilled tasks, means that the recruitment world as we know it may be totally different in a few years. What price all that recruitment technology now? With programmatic advertising, parsing CVs to application forms, automated interviewing and algorithms doing everything bar making the tea, I can well see the day when most recruitment is done by machines, with online vetting carried out by machines and a robot/hologram welcoming you at reception when you turn up at your new office. The only question remaining is, where/how will candidates find these jobs in this brave new world? (to be continued)…
Steve Playford, Global Director, FT Career Management