IMF looks at falling participation globally
Aging of the workforce is probably the main headwind for growth, globally. The IMF released a report today noting that 34% of people are not between 20 and 64 compared to 27% in 2008. That is expected to hit 55% by 2050.
That's a daunting statistic.
What makes it even worse is that prime age workers (25-54) are falling in many countries, particularly the United States.
What the IMF advises is to try to manufacture policies to keep older workers working and to encourage others to stay in the workforce. There has been success in Europe in keeping more women working via social benefit programs.
Another headwind at the moment is automation.
"We find that individuals whose current or past occupations are more vulnerable to automation are significantly more likely to drop out of the labor force," the IMF says.
It's particularly stark in rural areas and cities that are dominated by one industry.
What the IMF recommends:
- More education
- Many advanced economies may need to rethink immigration policies to boost their labor supply
- Public spending on early childhood education and care, flexible work arrangements, and parental leave can help attract women to the labor force
- Reduce the incentives to retire early
The last one on that list strikes me as missing the point. The entire premise is through the lens of 'growth' but people aren't driven to just want growth. They want to have a productive work life and then retire and pursue other things. Forcing people to work longer so you can get another 2 pp of GDP is self-defeating. In the future I think there will be a debate about how much growth is enough?
