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The Collision of Demographics, Automation and Inequality – The deceleration in labor force growth in OECD countries could result in a $5.4 trillion GDP shortfall by 2030

Demographics, automation and inequality have the potential to dramatically reshape our world in the 2020s and beyond. Our analysis shows that the collision of these forces could trigger economic disruption far greater than we have experienced over the past 60 years (see Figure 1). The aim of this report by Bain’s Macro Trends Group is to detail how the impact of aging populations, the adoption of new automation technologies and rising inequality will likely combine to give rise to new business risks and opportunities. These gathering forces already pose challenges for businesses and investors. In the next decade, they will combine to create an economic climate of increasing extremes but may also trigger a decade-plus investment boom.

Older workers delaying retirement, younger workers delaying entry into the workforce and baby boomers moving into retirement, the net result of these trends does not alleviate much of the global deceleration in workforce growth or, by extension, the rate of sustainable global growth. In the coming decade, the population of those age 65 and older will grow faster than the working-age population in OECD countries for the first time in history, leading to overall dependency ratios falling below 1:1 in some markets (see Figure 9). Labor force growth will slow to a crawl in the US, while Western Europe will experience outright shrinkage (see Figures 10 and 11).


Bain Macro Trends Group analysis indicates that deceleration in labor force growth in OECD countries could result in a $5.4 trillion GDP shortfall by 2030 (see Figure 12). Historic labor force growth rates would have contributed $8.6 trillion to GDP growth over that period, but slower labor force growth will produce only $2.3 trillion. Increased labor participation of workers age 55 and older will add back $1.4 trillion, but that figure is offset by $1 trillion due to the declining participation rates of younger workers. In total, changes to labor force growth contribute $3 trillion, leaving a $5.4 trillion growth gap that can only be closed by a sharp increase in the productivity growth rate. China’s situation is even more imbalanced due to its one-child policy. The combination of a baby boom followed by a baby bust will abruptly diminish China’s labor pool and could aggravate labor scarcity.

Chosen excerpts by Job Market Monitor. Read the whole story at Labor 2030: The Collision of Demographics, Automation and Inequality – Bain & Company

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