Econintersect: The McKinsey Global Institute (McKinsey & Company) has conducted a study of the 3.5 billion people global work force. One of their conclusions relates to the characteristics of employee shortages around the world as well as excess supply. Of course we have geographic patterns of unemployment, emphasized recently by double digit unemployment in southern Europe, even higher levels in parts of Africa and, of course the double digit unemployment/underemployment numbers in the U.S. over the past four years. However, looking at patterns globally, McKinsey finds education and skills training are producing major structural stresses in the global labor picture. Click on photo for bigger picture of unemployment.
Here is a summary issued by McKinsey:
Today, the strains on this market are becoming increasingly apparent. In advanced economies, demand for high-skill labor is now growing faster than supply, while demand for low-skill labor remains weak. Labor’s overall share of income, or the share of national income that goes to worker compensation, has fallen, and income inequality is growing as lower-skill workers—including 75 million young people—experience unemployment, underemployment, and stagnating wages.
The McKinsey Global Institute (MGI) finds these trends gathering force and spreading to China and other developing economies, as the global labor force approaches 3.5 billion in 2030. Based on current trends in population, education, and labor demand, the report projects that by 2020 the global economy could face the following hurdles:
· 38 million to 40 million fewer workers with tertiary education (college or postgraduate degrees) than employers will need, or 13 percent of the demand for such workers
· 45 million too few workers with secondary education in developing economies, or 15 percent of the demand for such workers
· 90 million to 95 million more low-skill workers (those without college training in advanced economies or without even secondary education in developing economies) than employers will need, or 11 percent oversupply of such workers
The study concludes that over the next two decades the world will have too many workers without the skills necessary to land full-time employment and shortages of skilled workers. Of course the geographic distribution of the skills and jobs are also a problem, as evidenced by the high unemployment among young college graduates in the U.S. and Europe.
Click on graphic for larger image.
- The world at work: Jobs, pay, and skills for 3.5 billion people (Richard Dobbs, Anu Madgavkar, Dominic Barton, Eric Labaye, James Manyika, Charles Roxburgh, Susan Lund, Siddarth Madhav, McKinsey Global Institute, June 2012)
- Executive Summary (PDF–3MB) (McKinsey Global Institute, June 2012)
- Full Report (PDF–3MB) (McKinsey Global Institute, June 2012)