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The Global Demographic Crisis and Company Implications An Ageing Workforce: Implications for Global Strategies Boston College Center for Work & Family The Global Workforce Roundtable April 5, 2006 Tamara J. Erickson
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2006 © All Rights Reserved. 2 Source: Employment Policy Foundation analysis and projections of Census/BLS and BEA data. Millions of People Expected Labor Force and Labor Force Demand The Lines Are Crossing: A Growing Shortage of Workers in the U.S.
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2006 © All Rights Reserved. 3 Screeching to a Halt: Growth in the Working-Age Population Source: Deloitte Research/UN Population Division (http://esa.un.org/unpp/) It’s 2008: Do You Know Where Your Talent Is? Why Acquisition and Retention Strategies Don’t Work, p.6 MexicoBrazilIndiaChinaSouth AustraliaCanadaUSNetherlandsSpainFranceUKRussiaItalyJapanGermany Korea 1970-2010 2010-2050
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2006 © All Rights Reserved. 4 Age of Workers Percent Growth in U.S. Population by Age: 2000-2010 Dramatically Different Patterns of Growth by Age 1. Declining number of mid-career workers 2. Few younger workers entering 3. Rapid growth in the over-55 workforce Source: U.S. Census Bureau International Data Base
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2006 © All Rights Reserved. 5... Continuing for Our Working Lives! Age of Workers Percent Growth in U.S. Workforce by Age: 2000-2020 Source: U.S. Census Bureau International Data Base
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2006 © All Rights Reserved. 6 A Pattern Found ‘Round the Industrialized World Source: Demography is De$tiny, The Concours Group and Age Wave, 2003
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2006 © All Rights Reserved. 7 Age of Workers Percent Growth in the Japanese Workforce by Age: 2000-2010 Japan Source: U.S. Bureau of Labor Statistics U.S. Census 2000 Age of Workers
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2006 © All Rights Reserved. 8 Age of Workers Percent Growth in the Chinese Workforce by Age: 2000-2010 China Source: U.S. Bureau of Labor Statistics U.S. Census, 2000
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2006 © All Rights Reserved. 9 Source: United Nations India Age of Workers Percent Growth in the Indian Workforce by Age: 2000-2010
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2006 © All Rights Reserved. 10 In 2000, A Fairly “Young” World... Under 5% 5% to 12.4% 12.5% to 20%Above 20% Source: U.S. Census Bureau Percent of Population Age 60+ 2000
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2006 © All Rights Reserved. 11... Rapidly Aging by 2025 Source: U.S. Census Bureau Under 5% 5% to 12.4% 12.5% to 20%Above 20% Percent of Population Age 60+ 2025
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2006 © All Rights Reserved. 12 19001950197019801990200019101920193019401960 75 70 65 60 55 50 45 40 80 Source: U.S. Social Security Administration Average Life Expectancy at Birth in the U.S. Why? Dramatic Increase in Life Expectancy
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2006 © All Rights Reserved. 13 The “Sudden” Boom in Life Expectancy Source: U.S. Census Bureau, 2000 Life Expectancy at Birth: 1000 - 2000 Age
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2006 © All Rights Reserved. 14 Why? Dramatic Drop in Birth Rates Source: Age Wave Total Fertility Rate
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2006 © All Rights Reserved. 15 Why? The Baby Boom Pattern Source: U.S. Census Bureau International Data Base 1930 1940 1950 1960 1970 1980 1990 4.5 4.0 3.5 3.0 2.5 2.0 Birth in Millions The Boom Years: 1946-1964
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2006 © All Rights Reserved. 16 Skill Mismatch: What’s Ahead? Over the next decade: Only 30% of the twenty-year-olds will obtain a college degree Over 90% of the new jobs created in the U.S. will require a college degree Key skill sets will be in critically short supply: For example, the number of students that declared their major in computer science has declined for the past four years and is now 39% lower than in the fall of 2000 Many of the most educated, skilled immigrants – including people who have been working at U.S. companies for years – are going back to their home countries at the rate of about 1,000 a day Source: In part, The Seventh-Annual Workplace Report, Challenges Facing the American Workplace, Summary of Findings,” Employment Policy Foundation, 2002; India Daily, October 12, 2005, citing McKinsey & Co. research; Computing Research Association, March 2005; Information Week, August 16, 2004; “Holding on to Global Talent: Foreign-born stars are heading home. How to keep them working for you” by Anne Fisher, Fortune Magazine, October 19, 2005
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2006 © All Rights Reserved. 17 Global Pockets of Talent: Engineers Source: Based on McKinsey Global Institute Labor Supply Database
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2006 © All Rights Reserved. 18 Global Pockets of Talent: Finance & Accounting Staff Source: Based on McKinsey Global Institute Labor Supply Database
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2006 © All Rights Reserved. 19 The Coming Workforce Crisis Limited in availability – Growing in the U.S. by only a fraction of a percent per year through the first half of this century; declining in many other countries The Employment Policy Foundation predicts an 8 million worker shortfall in the American economy in 2014 Chronologically older – individuals over 55 progressively larger proportions of the workforce – and generally more diverse 11% in the US in 2000; 20% in 2015; nearly one-third by 2050 Lacking key skills – Shortages of needed talent, particularly in high skill areas, such as science and engineering disciplines The EPF estimates a shortfall of 6M degree holders in 2012 Global and virtual – Requiring collaboration of individuals and teams around the world Source: Testimony by Tamara J. Erickson to the U.S. Senate Committee on Health, Education, Labor and Pensions, May 2005
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2006 © All Rights Reserved. 20 Implications for Companies Different workforce older, more diverse, and more variation in needs, preferences, lifestyles Talent shortages as labor markets tighten and there are fewer educated/ skilled candidates to replace the "brain drain" of Baby Boomer retirements Corporate pressures on training and development, HR practices, and management practices generally
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2006 © All Rights Reserved. 21 Getting Ready for the New Workforce Understand and plan – reality, needs, scenarios, options Attract and retain – work arrangements that “turn every stone”
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2006 © All Rights Reserved. 22 New Work Arrangements: Turn Every Stone Retire “retirement” Create bell-shaped career paths
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2006 © All Rights Reserved. 23 The Shape of Careers to Come: “Down Shifting” for Continued Contribution 20s 30s 40s 50s 60s 70s 80s Career Development Career Deceleration Source: Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent by Dychtwald, Erickson, and Morison, April 2006
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2006 © All Rights Reserved. 24 New Work Arrangements: Turn Every Stone Retire “retirement” Create bell-shaped career paths Recruit at counterintuitive entry points Accommodate blended lives Design cyclic and project-based work Offer lateral career opportunities
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2006 © All Rights Reserved. 25 The Shape of Things to Come: Lateral Moves 20s 30s 40s 50s 60s 70s 80s Career Development Career Deceleration Source: Demography is De$tiny, The Concours Group and Age Wave, 2003
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2006 © All Rights Reserved. 26 Getting Ready for the New Workforce Understand and plan – reality, needs, scenarios, options Attract and retain – work arrangements that “turn every stone” Tap new sources – out source; think globally Educate – develop the skill sets you need Motivate – create an employee experience to drive engagement Design and link – justify in terms of customer engagement Support – new human resource skills and abilities
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2006 © All Rights Reserved. 27 Change is Coming Begin now to shift deep-seeded policies and practices Be ready to attract., retain, and motivate the talent you need over the next decade
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