An impending perfect storm: The collision of the aging workforce, automation and income inequality
- A new Bain & Company study predicts that employers will continue to struggle with current pension commitments, a skilled-workers shortage, social pressure to address depressed wages among mid- to low-skilled workers and layoffs. Automation will change the makeup of the workforce, but displaced workers' transition into higher-skilled jobs is expected to be slow, challenging employers to attract, develop and retain highly skilled workers and reassess how their organizations are structured to maximize productivity, says Bain. The study also predicts a rising generational conflict, as the retiring workforce and the generations of workers left behind clash over resources.
- The study also predicts that all of these factors will collide, causing global economic disruption by 2030. Bain's Macro Trends Group says an aging population will slow labor growth to 0.4% a year, and while automation will increase labor output, it also will widen the income gap between high- and low-paid workers by displacing 40 million and creating high-paying jobs for a specialized few. As the labor force stagnates, so might the economy, says Bain.
- Automation could drive a 10- to 15-year economic boom, followed by an economic downturn, according to the study. Companies might feel pressured by their competitors to invest in automation, but Bain recommends that investors monitor their exposure to risk because it predicts that markets will be more volatile in 2030.
Adapting to the digital age is critical now for employers — and likely mandatory by 2030. According to a new business study, HR professionals are losing influence on their organizations because they lack sufficient digital skills. HR functions were among the first to be automated in the early stages of digitization. But HR must increase its knowledge and use of digital tools and data if it's to lead a fully digitized workforce into the future and restore its own influence on the C-suite.
Workplaces now have as many as five generations working side by side, exacerbating present conflict. For example, Millennials in a EurekaFacts study said they felt baby boomers and Gen X bosses were blocking their advancement. Such conflicts may continue for longer than expected, as many boomers are staying in the workplace longer, either by choice or necessity. Some must work due to retirement savings issues; others opt to work simply because they are healthy and don't feel the need to retire fully just yet. Either way, workers over 65 are the fastest growing workforce segment right now.
However, the boomers that do leave are creating a brain drain, or skills and knowledge deficit, that's hard to fill with today's skills and labor shortages. Some employers are addressing the problem through phased retirement, part-time work or contract arrangements.