Our weekly video. For those of you who would like to expand on the issue of work.
October 2014
TED.com
Rainer Strack
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 gray November day, and I was overdue. The hospital's maternity ward was really stressed out because a lot of babies were born on this
gray 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. 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 the red area in 2014, 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 the 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 workforce, 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 workforce, 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 gray are those countries which are borderline. So by 2020, we still see a labor surplus in some countries, like
Italy, France, the US, but this picture will change dramatically by 2030. By 2030, we will face a global workforce crisis in most of our
largest economies, including three out of the four BRIC countries. China, with
its former one-child policy, will be hit, as well as Brazil and Russia.
Now, to tell the truth, in reality, the situation will
be even more challenging. What you
can see here are average numbers. We de-averaged
them and broke them down into
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 again. 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." That was 1998. Sixteen years later, you'd
probably say the opposite. "Send me more of these machines. They work like
Germans."
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
workforce 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 conducted 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? Number seven is Australia, where 28 percent
could imagine moving. Then France, Switzerland, Germany, Canada, U.K., and the
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 the 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 workforce 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 workforce crisis which consists of
an overall labor shortage plus a huge
skill mismatch, plus a big cultural challenge. And this global workforce
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 to act on it immediately, and such a people strategy consists of
four parts. Number one, a plan for how to forecast supply and demand for
different jobs and different skills. Workforce 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.
Glossary
to be overdue = not having born by the
expected time
to be stressed out = to be under pressure,
overstretched, overtaxed, pushed to the limit
as a matter of fact = actually, in reality, in fact, as it happens, really
we just hit
(over 600,000) = reached, attained, touched, got to, secured
baby boomers =
the babies born after the Second World War
to be set in stone = to be fixed and unchangeable
to run into (a shortage) = to experience,
encounter, be confronted with
to close/bridge the gap = to overcome,
solve, triump
The workforce crisis of 2030 h over
a shortfall = a deficit
(even more)
challenging = demanding, testing,
taxing, difficult, tough, hard
to de-average = to consider data
separately
to break sth down into = to analyze,
categorize, examine in detail
surplus = excess,
surfeit, glut, superabundance
(skill) mismatch = unequal or dissimilar issues
or conditions
to upskill = to teach an employ additional
skills
to boost (productivity) = to increase,
improve, raise, amplify, enhance
in jeopardy = in
danger, at risk, imperiled, endangered
to split (the number) up by country = to break down, divide, apportion
to connect/join the dots = to get the real
facts by evidence
(to be at
the) turning point = critical
moment, decisive moment, crisis, moment of truth
generation Y =
the generation born in the 1980s and 1990s
ahead of sb = in
front of, earlier than
appreciation
(culture) = recognition, gratitude, gratefulness
head count = the
total number of people
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