The European Union’s share of global economic output is set to almost halve
by 2050 as its workforce shrinks.
This is backed by a study released by the World Economic Forum (WEF) and
consultancy Watson Wyatt Worldwide, which claims that the abundance of workers
in developing countries such as India and China should help to boost their own
economic growth.
"Economic output is determined by labour force growth and productivity
rates," said Richard Sammans, a managing director at the WEF.
"In countries with dramatic labour shortages, the supply of goods and
services may not meet demand and standards of living."
The study, Living happily ever after: the economic implications of aging
societies, estimates that the number of working-age people in India will rise
by 335 million by 2030 – almost as much as the EU and the United States’
combined workforce in 2000.
Assuming current demographics and economic trends hold, it is claimed that
the EU’s share of total global output will shrink from the present 18 per cent
to 10 per cent in 2050.
To combat the economic impact of a shrinking workforce, the report advised
developed countries to increase immigration rates, set up more businesses in
the developing world and encourage more women and young people to find a job.
Brett Walsh, UK head of human capital at Deloitte, said: "The number of
pensioners in the UK is expected to double over the next 20 years. UK
corporations will need to revise their perspectives on the employment of older
people and will need to introduce greater flexibility that encourages them to
work longer.
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"The war for talent will become even more important as the pressure of
skills shortages grows."
By Quentin Reade
