World population is increasing. The number of full-time job vacancies is decreasing. Automation is reducing the number of lower-skilled jobs needed. Skills shortages will only get worse. Salaries and wages are not growing. Housing is getting unaffordable. These are some daily headlines that we are confronted with. What’s going on? Why do we need to worry about these trends? What can we do about it?
The highly competitive market for job seekers
According to the United Nations, the world population is estimated to increase from 7.6 billion in 2017 to 8.6 billion in 2030, 9.8 billion in 2050, and 11.2 billion in 2100. It’s no surprise that the International Labour Organization has said that the number of new entrants into the labor market will be increasing in many countries. Close to 40 million people will be entering the labor market each year. By the year 2030, the world economy needs to create close to 520 million new jobs in order to match the projected increase in the size of the global labor force. The International Labour Organization has warned that the growth rate of the available workforce shall exceed the rate of job creation. The total unemployment is estimated to exceed 201 million people. To make matters worse, McKinsey has predicted that by 2030, between 10 million and 800 million full-time equivalent workers will be potentially displaced by the adoption of automation. With the adoption of automation, employers will want more skilled employees to operate technologically advanced machines. McKinsey has also predicted that between 75 million to 375 million people globally will likely need to switch occupational categories by 2030, depending on how quickly automation is adopted in the countries where they live. On the state of our education systems, the U.S. Secretary of Education has said that “the factory model of education is the wrong model for the 21st century. Today, our schools must prepare all students for college and careers and do far more to personalize instruction and employ the smart use of technology. Teachers cannot be interchangeable widgets. Yet the legacy of the factory model of schooling is that tens of billions of dollars are tied up in unproductive use of time and technology, in underused school buildings, in antiquated compensation systems, and in inefficient school finance systems.” As a confirmation of this, research by The Foundation for Young Australians revealed that 25-year-olds are better educated and more invested in their education than ever before, but half of them can’t get a full-time job. Nearly 60% has tertiary qualifications, up from about 30% in the late 1980s. The U.S. Chamber of Commerce Foundation has reported that many of those looking for work do not have the skills required by businesses looking to hire, resulting in higher unemployment even as businesses desperately seek new talent. Let’s put this into context: From 1948 to 2000, jobs grew about 1.7 times over the rate of population growth. This means that there were more jobs available for people to dive into without any problems of finding work. But from 2000 to 2014, something has shifted. Instead, the population grew about 2.4 times more than jobs. This means that there are many more people going after fewer jobs. This trend will get worse and labor unions can’t do much about it. People are at a structural disadvantage more than ever before. With more competition for a limited number of job vacancies, there will be stagnant wage growth for many years to come.
