About 40 million people among advanced economies are without jobs. Also the future prospects do not show a significant improvement in the global labor market of advanced economies. To improve the situation and avoid a so called ‘double-dib’ , McKinsey examines five trends which are influencing advanced labor markets and give advices to policy makers how to manage the turnaround.
Five future trends:
- Technology and changing nature of work
The progress in technology altered the way of working. A lot of work can be substituted by machines. People are no longer producing but they have to do ‘interaction work’. These are all tasks which have to be done face to face (i.e. day-care work) or management and organizational work. In the management sector new information technology can help to create a more flexible and networked working environment.
- Skill mismatches
The gap between employees with a certain degree needed and the supply of people with this degrees available is growing. Especially the USA, Japan and France are facing this problem. They need more high skilled workers, or at least some with any approved degree, to fill the job in the future.
- Geographic mismatches
High skilled people go to or life in areas with little unemployment and high job creation and areas with high unemployment usually have only a small job creation activity. These imbalances are within and across borders. Whereas the problem is bigger in Europe than in the US, because in Europe additionally there is the problem of different cultures and languages. Another imbalance is between advanced and developing countries.
- Untapped talent
The number of non used talents or workers is growing in advanced economies. Elder people (over 55) are highly skilled and have a lot of experience but do not find a job easily. Women, also highly educated, have difficulties to find a job after maternity leave, because there are not sufficient accesses to child care. And the youth, also well trained but inexperienced, could contribute to the success of enterprises when the employers are willing to invest in them.
- Disparity in income growth
Income is growing very slowly or not at all, which is problematic in view of consumer´s demand, living standards and social stability.
Options for policy makers
The economic and financial crisis hit the advanced economies hard. Now they have to adapt to future trends to improve the current situation and create a sustainable labor market.
Some measures could be:
- Enhancing aggregate demand for consumption and growth, so that companies start hiring again.
- Training of workers to improve their skills. This process has to start already in school to have higher school completion rates.
- Support and promote of business- creation and innovation.
- Global value chains and more flexibility in a complex and globalizing world.
- Address geographic mismatches and make use of information technology to facilitate collaboration.
- Investment of companies in formation of employees, especially young people.