New global labor market surfaces

A new Report from the McKinsey Global Institute maintains that The dynamics of the global labor market may create new challenges for supply chain managers

By ·

A new Report from the McKinsey Global Institute maintains that The dynamics of the global labor market may create new challenges for supply chain managers.

The McKinsey Global Institute (MGI) analysts noted that over the past three decades – as developing economies industrialized and began to compete in world markets – a global labor market started taking shape.

“As more than one billion people entered the labor force, a massive movement from ‘farm to factory’ sharply accelerated growth of productivity and per capita GDP in China and other traditionally rural nations, helping to bring hundreds of millions of people out of poverty,” said analysts. “To raise productivity, developed economies invested in labor-saving technologies and tapped global sources of low-cost labor.”


Today, added analysts, the strains on this market are becoming increasingly apparent. In advanced economies, demand for high-skill labor is now growing faster than supply, while demand for low-skill labor remains weak. Labor’s overall share of income, or the share of national income that goes to worker compensation, has fallen, and income inequality is growing as lower-skill workers—including 75 million young people—experience unemployment, underemployment, and stagnating wages.

MGI finds these trends gathering force and spreading to China and other developing economies, as the global labor force approaches 3.5 billion in 2030. Based on current trends in population, education, and labor demand, the report projects that by 2020 the global economy could face the following hurdles:

• 38 million to 40 million fewer workers with tertiary education (college or postgraduate degrees) than employers will need, or 13 percent of the demand for such workers
• 45 million too few workers with secondary education in developing economies, or 15 percent of the demand for such workers
• 90 million to 95 million more low-skill workers (those without college training in advanced economies or without even secondary education in developing economies) than employers will need, or 11 percent oversupply of such workers

The dynamics of the global labor market will make these challenges even more difficult, said MGI. The population in China, as well as in many advanced economies, is aging, reducing the growth rate of the global labor supply; most of the additions to the global labor force will occur in India and the “young” developing economies of Africa and South Asia.

Aging will likely add 360 million older people to the world’s pool of those not participating in the labor force, including 38 million college-educated workers, whose skills will already be in short supply.

Alan Beaulieu, president of ITR, an economic forecasting firm, said an increase in private sector hiring in the U.S. will lower the chances of a “double-dip” recession.
“But that means U.S. companies will have to generate 200,000 jobs per anum for the next 10 years,” he added.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at pburnson@peerlessmedia.com.

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

Global · Logistics · Supply Chain · All Topics
Latest Whitepaper
The Essential Guide to High Value, Low TCO WMS on the Fast Track
A warehouse could become your weakest link if you can’t execute with speed and accuracy. Your bottom line will be negatively impacted, so will your customer’s experience, and they are only one click away from buying from your competitors!
Download Today!
From the November 2017 Logistics Management Magazine Issue
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships into true, collaborative partnerships—and greatly strengthened its logistics and supply chain operations in the process.
34th Annual Quest for Quality Awards: 2017 Awards Dinner
Trucking Regulations: Washington U-Turns; States put hammer down
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Logistics Showcase: Rising to the same-day delivery challenge
Today’s delivery puzzles are very different than traditional DC to store or warehouse to DC puzzles. It’s not just the shorter time frame for delivery; the basic requirements are significantly different and more complex as well. In this session you'll learn how to address same day delivery challenges while also driving down costs and increasing customer satisfaction.
Register Today!
EDITORS' PICKS
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...
2017 Alliance Awards: Recognizing outstanding supply chain partnerships
In an era where effective supply chain collaboration is both highly valued and elusive, Logistics...

26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...