The world is aging, and that matters for growth. In the past, an abundant and growing labor pool was a powerful engine of the world economy; today, the number of workers is starting to decline in many countries. This leaves no alternative but for companies, individuals, and governments to work in smarter ways. In an era of profound demographic change, another productivity revolution is a necessity.
Without an acceleration in productivity growth, the rate of global GDP growth is set to decline by 40% from 3.6% a year between 1964 and 2012 to only 2.1% over the next 50 years. It would take 80% faster productivity growth to fully compensate for the projected decline. Is it feasible for the global economy to achieve such a large acceleration in productivity growth from an already rapid rate? New research we conducted at the McKinsey Global Institute found that while this is a very tall order, it could be do-able. MGI has identified sufficient opportunities to boost productivity growth to 4% in the 19 national economies of the G20 group plus Nigeria, which together account for 80% of world GDP. This would be more than enough to compensate for the demographic shift.
Three-quarters of the potential, or 3% of growth per year, could come from companies and governments catching up with best practice that already exists. This is good news—we can get a long way to the productivity growth we need to support healthy growth without reinventing the wheel in services, manufacturing, and, indeed, government.
Chosen excerpts by Job Market Monitor. Read the whole story at The productivity challenge of an aging global workforce | McKinsey Global Institute | McKinsey & Company.
Global employment growth has been slowing for more than two decades. By around 2050, our research finds, the global number of employees is likely to peak. In fact, employee headcounts are already declining in Germany, Italy, Japan, and Russia; in China and South Korea, they are likely to begin falling as early as 2024. While … Continue reading