By year 2020, China is expected to have a surplus of 55.2 million to 75.3 million workers. But that surplus could reverse sharply, turning into a shortage of up to 24.5 million people by 2030.
China is not alone.
The U.S. is expected to have a labor surplus of between 17.1 million and 22 million people in 2020. By 2030, it will still face a surplus—at a minimum, 7.4 million.
Workforce shortages and surpluses worldwide are becoming so acute that they threaten $10 trillion of world GDP over the next one to two decades, according to a new report by The Boston Consulting Group (BCG).
This projected value loss stems from acute shortages and unrelenting surpluses that are being exacerbated by a range of factors, from anemic economic growth and aging populations to low birth rates and restrictive immigration policies.
Overall, by 2020, many countries will still be experiencing a surplus. But by 2030, this surplus will for most have turned into a massive shortfall, according to the report, "The Global Workforce Crisis: $10 Trillion at Risk."
“The consequences for many nations’ growth and competitiveness are serious,” says Rainer Strack, a BCG senior partner and a coauthor of the study. “Governments, companies, and other institutions must begin to take action now if they hope to avert the potentially long-lasting damage to national and regional economies, as well as to the global economy.”
The problems associated with labor surpluses are well known, says BCG.
High unemployment cuts the tax base and raises the cost of social services while raising the risk of social instability.
In the long term, surpluses can lead to the attrition of skills and ultimately reduce an economy’s competitiveness and attractiveness to investors.
But the problems with shortages can be equally harmful to the economy because job openings cannot be filled, warns BCG. This fuels wage inflation and, above all, impedes business growth and competitiveness.