The World Bank warned in March that the impact of an aging workforce on the global economy continues to intensify. In Japan and South Korea, due to the rapid increase in the proportion of the elderly population and the lack of a young labor force, the economic growth rate has been significantly dragged down. China, the United States, and many European countries are facing the problem of an increasing retirement population, but there is a shortage of a replaceable labor force.
Taipei, TAIWAN (Merxwire) – The World Bank warned at the end of March that the impact of the aging global workforce on the economy continues to intensify and has become a critical demographic issue in the 21st century. The proportion of the elderly population in Japan and South Korea is rapidly increasing, and the lack of a young labor force has dragged down the economic growth rate. China, the United States, and many European countries are facing the problem of an increasing retirement population, but there is a shortage of a replaceable labor force. Coupled with the decline in private and enterprise investment, the world economy will continue to decline without effective reform policies.
Growth in the young and middle-aged labor force is already slow as populations in developed and developing countries continue to age and fertility rates decline globally. The COVID-19 epidemic in the past three years has affected children’s learning progress and delayed the accumulation of human capital. The outbreak of the Russia-Ukraine war not only made the international situation tense but also disrupted global economic activities. Under the multiple influences of these factors, the inflation crisis was triggered, and the economic growth rate came to the lowest level in 30 years.
Russia and Ukraine have always been important exporters of global energy, agricultural products, and minerals. With their ongoing war, the world’s energy and food supply chains are bound to continue to be threatened. If Russia keeps Western countries in check by not selling oil, oil prices will fluctuate even more.
With the price increases of various daily necessities, people’s willingness to purchase other luxury goods and invest has also declined, and the consumption economy has become sluggish. Enterprises will also consider the need to retain turnover funds and reduce the amount of investment. If rents and wages continue to rise despite declining supply and demand, the bad economy, and rising unemployment, it will cause stagnation of inflation. The most feared situation in the market is the wage-price spiral. This is also one of the indicators of economic recession.
The World Bank report predicts that the annual growth rate of global GDP may drop to 2.2% per year from 2022 to 2030. Compared with the 3.5% annual growth rate between 2000 and 2010, the reduction is nearly one-third. The main reason for the slowdown in economic growth is the retard in productivity growth. The reason is the shortage of young and middle-aged labor force and the change in work concept.
COVID-19 has not only changed people’s living habits but also changed employees’ outlook on work. During the epidemic, the proportion of remote work has increased, causing some distance and trust issues between employees and employers. WFH also makes many people want to seek a job that can take care of family balance instead of just working first. Therefore, they have more ideas about the conditions and autonomy of work. Employees express their sense of job burnout and dissatisfaction with income, or even reluctance to return to labor-intensive labor industries, which affects work efficiency and productivity.
Just after Silvergate Bank, Silicon Valley Bank, and Signature Bank closed down one after another due to factors such as interest rate hikes, deposit transfers, and consumer panic effects, Credit Suisse also collapsed in mid-March and was acquired by UBS. As a result, countries are worried about whether the world economy will collapse because of this bad situation.
Therefore, on March 31, economists from all over the world attended an economic conference hosted by Dr. Valerio De Molli in Lago di Como, Italy, to discuss the current economic situation. They expressed extremely pessimistic views on the European and American economies. Because it is extremely difficult to fight inflation, maintain price and financial stability and promote economic development at the same time.
Nouriel Roubini, a professor of economics at Stern School of Business, who is known as Dr. Doom, directly mentioned that the FED needs to deal with inflation with all its strength, otherwise the collapse of the U.S. banking industry will be difficult to stop, which may lead to the risk of financial and economic fall down.
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However, some economists are more optimistic about the bank failure crisis. The uncertainty index analyzed by Nick Bloom, professor of economics at Stanford University, and his colleagues found that although the index rose at the beginning of the bank failure storm, it has now fallen. The German Business Confidence Survey Report also showed an upward trend in March. Google searches for bank failures have also dropped since mid-March. The British heavyweight journal “The Economist” believes that after experiencing the storm of COVID-19 and the Russian-Ukrainian war, the people have established a high degree of stability and confidence to face various changes.
Because of the shortage of labor force, the lingering war between Russia and Ukraine, and the severe weather year by year, the world economy is indeed facing multiple challenges and difficulties. The governments of all countries must improve the source of the problem through the policy perspective, and at the same time respond to the actual situation at any time. World Bank believes that although the growth rate of the global economy is currently showing a downward trend, productivity can still be increased through the incentive work system, and the investment policy released to encourage people and enterprises to invest. They believe that we can survive this economic crisis safely.
