Strains in the global labor market could lead to a surplus of up to 95 million low‐skill workers and a shortage of up to 95 million high- and medium-skilled workers by 2020, according to a recent report by the McKinsey Global Institute (MGI).
MGI concluded that unless there is a immediate and massive global effort to improve worker skills, there will be "far too few workers with the advanced skills needed to drive a high-productivity economy and far too few job opportunities for low-skill workers."
One paragraph is particularly foreboding:
For advanced economies, such imbalances would likely lead to more long- term and permanent joblessness. More young people without post-secondary training would fail to get a start in the job market and older workers would drop out because they don’t qualify for jobs that are being created. The polarization of incomes between high- and low-skill workers could become even more pronounced, slowing the advance in national living standards, and increasing public-sector burdens and social tensions. In some advanced economies, less-skilled workers could very well grow up poorer than their parents, in real terms.
MGI recommends policy makers and businesses raise the share of graduates in science, engineering, and other technical fields, double the growth rate of post graduate education, retrain mid-career workers and allow more high-skill workers to immigrate.
Even then, the report notes, advanced economies could see a shortage of high-skill workers as well as 20 to 23 million workers whose only chance of being employed would be if the rate of job creation for low-skill workers was at least five times higher than in the past.
MGI found that the challenge for developing countries "could be even more daunting" as there could be up to 58 million surplus low-skill workers in 2020 along with a glaring need of up to 45 million medium‐skill workers (i.e. those with secondary education and vocational training).
To stem the tide, MGI posits that developing economies would need to double or triple labor-intensive exports, investment in infrastructure and housing construction to employ low-skill workers while also doubling or tripling the current rates of capacity of high schools and vocational schools.
The bottom line:
As the 21st century unfolds, the supply of high-skill workers is not keeping up with growing demand, while too many workers are left with inadequate or outdated skills. Slower growth, rising income polarization, growing pools of unemployed or under-employed workers, and soaring social costs are real possibilities. To keep those possibilities from becoming realities, policy makers, business leaders, and workers themselves must find ways to bring education, training, and job creation into the 21st century.