Businesses should begin preparing now for a volatile future according to an insightful report published by Bain and Company in the US.
The report predicts that a “collision” of automation, an ageing population and a widening gap between the rich and poor, will “trigger economic disruption far greater than we have experienced over the past 60 years”.
The report highlights a changing workforce demographic: Ever since the 50s, baby-boomers, increasing female workers and developing markets of China and India have provided massive growth to the labour market… however this has changed. Baby boomers – who powered the workforce in the 60s and 70s – are stepping into retirement and there are no more vast pools of women waiting to be tapped, and fewer workers from developing nations. Those coming along behind the baby boomers are deferring retirement (due to longer life spans and increased costs of living), however their decision to remain in the workforce is being balanced out by younger generations who are spending more time studying at university.
In terms of economic growth, while investment in technologies (humanoid service robots, collaborative robots, drones, artificial intelligence and machine learning algorithms) could stimulate the economy in the short term, Bain predicts it will also abruptly lift interest rates and eventually eliminate 20% to 25% of jobs. The winners will be the investors in technology and highly skilled, highly compensated workers; the losers will be middle to low income workers….
How can you prepare?
According to Bain & Co, it’s important for businesses to “look beyond traditional targets and goals and develop the ability to adjust to a changing and volatile macroeconomic environment”. New performance metrics, planning techniques and organisational structures that can adapt with speed and agility will be essential. The ability to “absorb sudden shocks” and the resilience to withstand new challenges will be imperative.
“Leadership teams that start thinking now about shifting resources to build resilience will be better able to navigate the broad arc of the coming transformation and cope with increased volatility as the forces of demographics, automation and inequality collide,” the authors write.
While automation will reduce demand for lower skilled workers across many industry sectors, Bain predicts demand for highly skilled, high income labour will increase as along with its scarcity.
“The immediate challenge for business over the next few years will be attracting and retaining workers, especially highly skilled ones who already are scarce,” they write.
To attract these workers it will become necessary to increase existing incentives with higher wages, flexible work arrangements and more attractive corporate cultures. Offering the option of working remotely and providing millennials with a higher purpose to work – a sense of mission beyond shareholder value alone – are two great ways to get the best people onboard.
The full report is well worth a read.
Ayers Group can help you with the challenges of managing your business in a volatile environment with expert contractor management, migration, human resources, payroll, back office and financing services tailored to your needs. Get in touch with an Ayers consultant today. 1300 767 391