The New Worker Math: Older, Fewer, Urban

The New Worker Math: Older, Fewer, Urban

Human capital will be a 'front burner' issue for manufacturers as the working age cohort declines and urban populations grow.

With birth rates falling and the world population getting older, human capital will be a "front burner" issue for manufacturers in an “era of constrained labor supply,” warns a new report from the Manufacturers Alliance for Productivity and Innovation (MAPI).

“Population shifts are being felt very much in the present,” notes MAPI Senior Economist Cliff Waldman, author of “An Aging, Urbanizing World,” adding that they are “among the reasons for the lackluster performance of the world economy in the years following the 2008-2009 crisis.”

“Manufacturers must understand how dramatic demographic changes intersect with economic activity, and the resulting reshaping of the business climate in ways that would have been unimaginable just a decade ago,” he writes.

By 2020, the global population growth rate will be below 1.0%. However, there are dramatic differences between regions. For the period 2010-2015, the average population growth in Africa will be an estimated 2.46%, but it will be 0.81% in the United States and 0.08% in Europe, Waldman points out.

Manufacturers, already facing battles for skilled workers and to attract young people to manufacturing, will have to deal with a shrinking working age cohort in coming decades. People in the ages 15-59 group in developed economies will comprise less than 60% of the population by 2015. That won’t occur in less developed regions as a whole until 2045. And by 2035, the 15-59 group will make up less than 50% of the population in Germany and Japan.

Given Africa’s relatively young population and growing working age sector, Waldman writes, it presents an attractive destination “for goods production and potential manufacturing profitability.”

With an aging population comes another shift, toward a higher percentage of people living in urban areas. For developed countries, nearly 78% of the population lived in urban areas in 2011, compared to 46.5% in less developed regions. For the U.S., the figure was 82.4% while more than half of China’s population lives in urban areas. That’s not the case in India, where just 31.3% of the population is in cities and towns.

“For manufacturers, population concentration adds a spatial element to the recruiting problem,” Waldman writes. “Urbanization also has wide implications for the configuration of supply chains that will need to be increasingly geared toward urban labor supply and urban markets.”

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