As the world’s population evolves and changes, so do challenges for companies. It’s not a given that an increase in population will go hand in hand with an increase of the workforce within organisations. In this article, we will take a closer look at two phenomena that will significantly influence the world of work in the coming decades: demographic shifts and the talent gap.
What are Demographic Shifts?
What are demographic shifts? Why do we talk about demographic change? What factors play a role in demographic shifts? And how are these aspects reflected in today’s world of work?
The demographic transition is a phenomenon that is occurring worldwide and involves a reduction in birth rates and a corresponding ageing of the population, with certain consequences of different magnitude on various aspects of society and the economy.
All countries worldwide are going through demographic shifts that we have never experienced before, with extreme high population growth rates. Since 1960, the world population has grown from 3 to 7.9 billion (May 2022), and according to the UN, by 2050 we will reach a world population of 10 billion. For this reason, predictions for the next half-century foresee a highly different world.
These demographic changes are obviously having a strong influence on the labour market and related career opportunities for younger people.
Demographic change describes changes in the size and structure of the population, caused by changes in birth and death rates, as well as migration. Demographic change in today’s Western developed countries is characterised by low birth rates and increasing life expectancy.
In Europe, demographic change is having strong repercussions economically and socially, and it is now clear that many sectors will need to be able to cope with the consequences. Professionals in every field will have to be able to respond to the transformational needs to ensure Europe’s competitiveness.
What is a Talent Gap? Definition and causes
The talent gap refers to the lack of qualified personnel in an organisation and is the gap between the current level of talent, skills or competencies of employees and the level needed to achieve the organisation’s objectives.
In most cases, the talent gap occurs due to the rapid advancement of technology that makes it difficult, if not impossible, for employees to keep up with evolving work tools. In addition, PMI identifies three causes that focus on the project management industry:
- The increase in the number of jobs requiring project management-oriented skills
- The increase in demand for project professionals in emerging and developing countries due to economic growth
- The rate of retirement from the workforce
In the physiological span of a human life, labour productivity peaks in the middle years of each worker’s life. For this reason, an increase in the middle-aged population contributes directly to a country’s output. Dependent people, i.e. those too young or too old to work (or to work very productively), on the other hand, consume more than they produce through their own labour, with implications for living standards.
With declining fertility rates and an increasing ageing population, organisations will have to find new ways to alleviate the shortage of workers and close the talent gap.
Working longer, however, does not compensate for the general decline in the working age population. The need for a Project Manager and other professionals will increase as industries become more project management-focused.
Talent Gap: consequences for the market
According to the Talent Gap Report: Ten-Year Employment Trends, Costs, and Global Implications published by PMI in 2021, several phenomena related to the Talent Gap can be analysed.
First of all, the persistent gap between the demand for project management skills and the actual availability of these skills.
It is estimated that by 2050 the world’s population will grow significantly from 7.7 billion to 9.7 billion and reach 11 billion by the end of the century.
According to the Talent Gap Report published by PMI in 2021, the global business and economy will require 25 million new project management professionals over the next decade. It is estimated that this resource shortage could cause up to 345.5 million losses in GDP globally.
According to data collected by PMI:
- By 2030 there will be an increase from today’s 90 million project management employees to 120 million
- Of these, 25 million will be new employees hired to fill the market gap (12 million will be hired to fill new positions while 13 million will be hired to fill the positions of retired professionals)
Finally, another reason for the persistence of the talent gap is the ever-increasing demand for project professionals in emerging countries: this phenomenon implies a decrease in the rate of emigration to other countries leading to a real talent shortage that is estimated to lead to a loss of 345 billion in terms of GDP by 2030.
The global demand for project management talent is unlikely to be met by 2030 unless organisations foster a culture of continuous learning. Developing the skills of the next employees will therefore be a challenge that employers will have to face in order to deal with the talent gap. They will have to be more resilient and better prepared for the future, especially more attentive to demographic changes.
PMI has identified five factors that could enhance current and future developments:
- Using technology better: the implementation of new technologies and the related Digital Transformation will bring major changes in all areas of work, including project management.
- Finding and retaining young talent: the percentage of companies investing in young talent is extremely low. This can instead be a new perspective for companies that want to grow and above all stay ahead of the times and change. Hiring young talent requires a commitment to training but on the other hand has many positive aspects in the long run.
- Finding talent outside our borders: regions such as Africa, South-East Asia and Latin America offer pools of young talent. The introduction of these new workforces could foster the increase of diversity management to create more equity and inclusion in the business environment.
- Using the power of change agents: rely on the skills of change agents to manage existing employees more efficiently and thus reduce costs.
- Preserving the knowledge of employees who leave: it is estimated that less than half of all companies actually deal with the process of knowledge transfer between employees, although effective Knowledge Sharing is a key element for the development and growth of all companies.
Also read: 6 PMI Megatrends to watch in 2022
It will be the task of the Project Managers of the future, with the help of human resources, to implement equity policies to support the generation gap at work by balancing new young talent with those employees approaching retirement. In this way it will be possible to close the talent gap and make up for the lack of qualified personnel.
Among the main objectives of organisations for the immediate future we thus find the search and training of new personnel and the consequent need to be competitive on the market. It will become increasingly important to ‘know how to sell oneself’ not only to potential customers but also to potential employees. Brand reputation will increasingly be a fundamental element for any company and business.
New strategies and new professionals such as Project Managers will be needed to face the new challenge of demographic shifts. They will be the ones who will need new skills such as empathy and communication combined with a strong ability to adapt to change.
Source: PMI Talent Gap Report