THE 3D RESET: Demographics

A missing workforce will increase the use of technology and AI to keep costs down and improve productivity

Demographics explained

Around the world, we are seeing aging populations in many advanced economies. As baby boomers are coming to retirement, many economies don’t have enough young people coming of age to replace them in the workforce. This has been further exacerbated by the pandemic as many left the workforce since 2020 due to early retirement or long-term sickness. This scarcity of workers could have significant impact on inflation and economic growth as wages rise. In this environment, businesses will need to pay more for salaries and productivity-boosting technologies such as robotics, automation* and AI*, while workers will demand higher pay increases to alleviate the rising cost of living.

* Defined within the 3D Reset glossary

Key Takeaways

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Falling labor force means scarce talent in the workforce

With global population growth predicted to decline and labor force growth expected to slow, the number of available employees will decrease, putting pressure on employers to compete for talent.

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Increased inflationary pressures

With fewer workers, businesses may need to pay more in salaries to attract the right talent, aggravating inflation. Workers will demand bigger pay increases to alleviate the rising cost of living. And businesses won’t be able to offset these costs easily through offshoring and migration, as these have become less attractive or politically feasible options.

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Increase in investments in productivity-boosting technologies

Companies will have to think about and invest in technology that increases productivity to protect profit margins, leaning more on robotics and AI, where possible.

D-cipher video series: Demographics explained

D-cipher is the video series to help you understand the 3D Reset. In this video, we discuss the long-term trend of demographics.