The Strategist

Twelve trends of the labor market

03/27/2017 - 13:52

Consulting company BCG named 12 main trends in the labor market. In the analysts’ opinion, among the most important trends are automation, new strategies to attract customers, aging of the population, growth of the income gap and development of more flexible structures.

The Boston Consulting Group (BCG) has prepared a study in which it identified the 12 main trends that are already increasingly more affecting the labor market and work of companies. Half of these trends are associated with changes in demand in the labor market, and other half - with a change in supply. BCG analysts reckon that it becomes more difficult for company managers to adapt to changes in the organization of labor as this development goes faster and deeper. BCG identified 60 trends in organization of the labor process and combined them into 12 megatrends.

Growing automation is one of the trends highlighted by the researchers. Over time, robots and artificial intelligence will be able to perform more functions. So, it is expected that about half of all works in the US will be automated by the year 2050. The second trend is growing use of Big Data (processing and analysis of large amounts of data, including poorly structured data) and in-depth analytics, without which business cannot do. Another trend is to facilitate access to information. According to analysts, the fact that the most diverse information and ideas are now available to anyone, both private individuals and business, also cannot but affect the labor market. In addition, modern technology allows hiring employees in any part of the world and help to interact with colleagues in different countries. Employer and employee relations become more flexible - for example, more and more employees can be hired for a specific project.

The first three trends are primarily related to opportunities offered by digital technology. The next three, however, imply changes in business itself. For instance, there is a need for simplicity in a more complex world. On the one hand, with the growth of companies, their structures and activities become more complex. On the other, 74% of managers interviewed by BCG said that their companies’ productivity is suffering because of such complexity. Another trend - innovation and mobility - involves creating more flexible structures and space for experiment. Also, BCG analysts mentioned new strategies to attract customers - for example, 66% of consumers in 60 countries say they are willing to pay more for green products.

Other tendencies in the labor market include demographic changes, lack of certain skills and geopolitical and economic shifts in distribution of power and income. Aging of the population is the most noticeable among the demographic changes. By the year 2035, every fifth person on Earth will be over 65 years old, in addition, new generations with new priorities differ from previous ones. Increasing demand for highly qualified workers will lead to the fact that, according to Gartner, by 2020 two-thirds of vacancies in technical specialties will not be filled because of lack of necessary skills for potential workers. Regarding the third trend, growing mobility of the population is forming communities such as the Silicon Valley. On the other hand, the income gap is widening (currently 1% of the wealthiest people own 48% of the world's wealth, and this share will reach 54% by 2026). 

In addition, BCG analysts point to the fact that businessmen increasingly see advantages of heterogeneous work collectives, including representatives of various groups of the population, such as minorities. The study reported that heterogeneous teams are 13 times better able to involve and motivate employees than homogenous ones. Another trend is growth of individualism and desire to engage in entrepreneurship. According to the research, 43% of the respondents from the generation Z (usually referred to as people born in the mid-1990s, sometimes starting in the 2000s) said that they would like to start their own business after graduation. Another study suggests that up to 50% of all employees will be freelancers by 2020. In addition, representatives of new generations are more likely to work to influence the social environment.