In location planning or workforce planning, bandwagon bias may interfere with our ability to make the right decision.  What you hear from the market may sometimes drive you to a decision of “herding.” As practitioners, we have to be very careful about this.  In 1951, psychologist Solomon Asch developed a lab experiment to demonstrate this.  Everyone in the classroom was shown a picture with three lines of varying lengths, in which one line was obviously longer than the others.  Solomon Asch asked the participants to identify the longest line.  Through this experiment, Dr. Asch proved that as soon as participants started calling the wrong line (as the longest), many other participants followed them and made a similar observation.  This study is considered a breakthrough experiment in social studies.

We may also encounter several initial positives from a location or expected skill growth standpoint.  Analyzing and testing the hypothesis will be very helpful in this scenario.  John A. List talks about an interesting case study in the book Voltage Effect.  In 2006, Chrysler piloted a unique wellness program where they rolled out financial incentives to be healthy.  The initial results were excellent, and results showed it reduced absenteeism.  But before rolling out across the enterprise, they piloted in a few more plants and observed it was not as successful as they thought.  Analyzing deeper trends across the locations will help you.  For example, a lot is happening in the Danish, Norwegian, Swedish, and Czech ecosystems.  You may not pay attention as your attention may be elsewhere due to what the market constantly discusses.   We need to study the deeper startup trends to understand the same.  ResistantAi, a startup in the Czech Republic, is developing models to guard the company’s AI’s turning rogue against itself.

Key labor trends in Latin American Countries

• Digital transformation, increasing automation and e-commerce – Greater digitization, automation, and digital technologies influencing labor markets, productivity levels, and creating jobs.  The increasing incorporation of automated processes, digitalization, robotization, and the application of artificial intelligence in production while boosting economic growth and the improvement of competition can have very significant disruptive effects on the labor market
• Digital labor platforms – Gig Economy and teleworking/telemigration – online work performed through online platforms that connect several companies, customers, and workers globally
• The predominance of informal jobs – 1 of every two employed people in Latin America is in informal conditions, according to International Labor Organization  (This shows the potential for formal enterprises to capture the labor)
• There is an early indication that the Latin American population may migrate at a slower pace to North America and other countries (more analysis to be conducted)
• Covid times were challenging for many Latin American countries
• Employment rate – 57.8% in 2019 à 54.9% in 2021 à very sharp decline in aggregate employment and its large magnitude vis-à-vis the level of activity
• Workforce participation rate – 63.2% in 2019 à 61.1% in 2021

Key Labor Trends in the US

• The great resignation and the great reshuffle impacted the workforce in a significant way.  The great hiring continues to be strong
• Graduate International student enrollment – Reduction from ~380K in 2019 to ~290K in 2022
• Undergraduate International student enrollment – Reduction from 490K in 2019 to 315K in 2022
• > 1 mn women are missing from the labor force compared to pre-pandemic
• Lowest net international migration to the US in over two decades (2010-2022), exacerbating labor shortages
• +1,049,000 Increase in U.S. population from immigration in 2015-2016 Vs. +247,000 during 2020-2021 à 76% decline
• Lowest labor force participation rate since the 1970s
• Lower labor force participation rate**: Reduction from pre-pandemic levels of 63.4% à to 62.1% in July 2022
• Aging population: By 2040, about one in five Americans will be age 65 or older, up from about one in eight in 2000

Key Labor Trends in South East Asia

• Two-way labor mobility – Southeast Asian countries are both migrant-receiving and sending countries
• Brain drain – Countries like Malaysia fear a departure of skilled workers à brain drain to high-income western nations
• Reduce dependence on unskilled immigrant labor – There is political pressure to reduce dependence on unskilled foreign labor
• Labor mobility – Economies like Singapore and Malaysia that have large migrant labor flows face a tricky choice à curb outward migration or encourage greater labor mobility
• Globalization à emergence of global value chains (GVC) à different parts of the production process performed in different geographical locations à skills implications

Key Labor Trends in Western Europe

• Highest employment rate since 2009 (20-64 age group) – ~75% of those aged 20-64 were in some formal employment
• Highest job vacancies since 2006 – >3% of all available jobs are vacant, highest since 2006 – meaning that around six million jobs are up for grabs across the EU
• Unemployment rates projected to improve:
  • The unemployment rate is projected to fall back to or below its pre-pandemic levels by 2022 in Western Europe and Eastern Europe by 2023
  • The recovery in unemployment rates will be aided by the likelihood that labor force participation will remain depressed below pre-pandemic levels until 2023
• Widened income inequality induced by the COVID-19 pandemic- Higher-earning workers may have lost fewer working hours and less income, may have saved more, and may see their incomes recover faster than lower-wage earners, who have had less access to remote work, lost more income and saved less
• Incentives to accumulate human capital (focusing on training – reskilling, and upskilling) will be important to facilitate youth transitions into employment and across jobs in the post-pandemic world of work.  Europe needs to create more training and career pathways
• Immigration reforms – Mobility could solve part of Europe’s job-matching challenge
• Spain – In July 2022, the Spanish government passed a law that would make it easier to hire workers from non-EU countries
• Germany – the government is expected to propose a new immigration law by the end of the year 2022
• Austria – Relaxed rules for visa access will come into force by Oct-Nov. 2022
• Employment incentives specifically targeting young job-seekers – Countries such as France, Greece, Hungary, Ireland, Luxembourg, Portugal, Romania, etc., offering incentives

Key Labor Trends in Canada

• Historically tightest Canada labor markets – Canada’s labor markets haven’t been this tight in decades
• Aging population – As against the world average of 9.1% of the aging population (65+ years), 17.6% of Canada’s population is above 65 years, and the same is expected to be 22.8% in 2030.  Also, Canada’s Old-age dependency ratio (65+ /20-64) is high (28.9%), against the world average of 15.9%.  The same is expected to reach 40% by 2030
• Record low unemployment rates – 5.2% in September 2022; The unemployment to job vacancy ratio is at a historical low amid a tight labor market:
  • 2016 Q1 unemployment to job vacancy ratio – 4.5
  • 2021 Q1 unemployment to job vacancy ratio  – 3.2
  • 2022 Q1 unemployment to job vacancy ratio – 1.4
• Record high labor force participation –  among those in the core working ages of 25 to 54
• Record job vacancies – Employers seek to fill over one million vacant positions across Canada.  In March 2022, employers in Canada faced a record-high number of job vacancies, with over one million unfilled positions across the country.  As of June 2022, businesses posted almost 70% more job openings in Canada than in pre-pandemic
• Salary increases are not inflation adjusted – Average weekly earnings increased 4.3% in March 2022, while the CPI increased 6.7% during the same period à even though drum-tight job markets have pushed wages higher, it hasn’t been enough to offset these losses
• An influx of educated immigrants and international students could offer some relief, but their skills have historically been under-utilized
• A strong flow of immigrants and students and better integration of their skills can help to address the long-run problems underlying Canada’s labor crunch

Key Labor Trends in the UK

• ‘The Great Resignation’ -– Record numbers of people quitting their jobs à causing record numbers of vacant/open positions and staff shortages in some industries
• ‘The Great Relearning’** – According to WEF Davos Agenda, alongside the trend of resignations, many people are choosing to retrain and learn new skills – upskilling/ reskilling
• ‘The Great Reshuffle’ – Workers are switching jobs at an unprecedented rate to seek more fulfilling roles with greater flexibility, pay, job satisfaction, and work-life balance
• In the UK, there has been a notable influx of people into the IT and software industry;
• The post-Brexit immigration system – Introduced in Jan 2021, it liberalized access to the UK labor market for non-EU citizens lowering salary thresholds and skills requirements for work visas
• Addressing labor shortage – Re-deploy existing employees into new positions within the organization through upskilling and res-skilling and by automating routine work
• The continuous emergence and strengths of ecosystems around London (such as Manchester) could be a great opportunity for the UK

Key Labor Trends in Australia

• A three-pronged approach is in place- develop skills, encourage increased workforce participation and rebuild sustainable migration
• Historically low unemployment – Australians previously not in work are rejoining the workforce to a greater extent.  The unemployment rate of 4.0 percent in February 2022 is the lowest rate since the peak of the resources boom in 2008
• Scope to increase workforce participation – Australia’s labor force participation rate in Feb. ’22 was 66.2%.  The underemployment rate reflecting those who would like to work additional hours is 6.6 %, amounting to 1.5 MN Australians.
• Delayed recovery in migration – Migration has yet to recover since the borders were reopened, and businesses worry that the worker shortage will impact the economy

Key Labor Trends in India

• The accelerated adoption of novel digital technologies has brought about a paradigm shift in business processes and service provisions.  New technologies associated with Industry 4.0 and the gig economy are already reshaping the world of work and are expected to open up a whole range of new opportunities in the future
• Continues to be the preferred destination for Global organizations scaling and setting up their innovation and operations centers
• The advent of technology has transformed the world of work with new and flexible types of jobs, business models, and working arrangements.  The gig and platform economy is at the heart of this transformation, disrupting a range of sectors from ride-hailing transport services to professional beauty and home services.
• The gig-platform economy is at the core of this unfolding paradigm shift – Digital platforms offer innovative solutions in different sectors such as transport, retail, personal, and home care.  They provide promising income opportunities to workers with different skill sets and wider market access to businesses.  The gig economy has demonstrated resilience even during the pandemic, with platform workers playing an indispensable role in urban India.  The Economic Survey 2020-21 has noted that India has already emerged as one of the world’s largest countries for Flexi-staffing (i.e., gig and platform work) and  will likely continue to grow with the increase in e-commerce platforms
• Strong economic growth but relatively low employment growth – Despite strong economic growth of CAGR 7.0 percent between 2003-04 and 2017-18, the total employment growth remained low and grew at a CAGR of 5.0 percent.
• 17.9 million Indian-born people living abroad and 13.1 million who call India their ancestral home – >2.7 million Indians in the USA
• Rural and Tier2 cities Engineering talent is still untapped in India