Shortage Of Labor
One of the major concerns of today's companies
is the shortage of labor,
especially in management. The baby boomers are
nearing retirement age in the
United States and the birth rate is
dropping. These circumstances, coupled with
the booming economy are the main
causes of the labor shortage. There is a high
demand for labor but the once
seemingly bottomless pool of employees and
managers that companies drew from
has started to dry up. What are the factors
that contributed to the problem
and how are today's corporations going to handle
this problem? The type of
labor needed in today's society has been undergoing a
constant change. There
is an increase in demand for workers but there is a much
greater demand for
educated white-collar workers, especially management
material. Projections
state that the growth in managerial positions will
increase 20% by the year
2010 yet the population aged 35-50 will decrease nearly
10%. What these
figures say is the already diminishing supply of executives is
going to
dwindle even more over the next 10 years. There is a shortage of
blue-collar
workers now and there will also be an even greater shortage of them
in the
future. In order for employers to find people who are willing to
perform
unskilled, repetitive jobs they are going to have to be willing to
raise the
level of compensation offered to employees. If McDonalds needs
someone to flip
hamburgers they better be prepared to pay double to triple
minimum wage. There
are a wide variety of employment opportunities and
today's workforce can afford
to be selective when choosing a job. The demand
for employees is high while the
supply is low. The figures on the change in
average population ages and growth
in industrialized nations is beginning to
make the corporate world stand up and
take notice. If the trends continue as
they have been for the past thirty years,
the shortage of labor is going to
continually get worse with each year that
passes. The predictions from the
United States Census Bureau state that between
1990 and 2000 the increase
of the American population over 60 will be 10.5% but
in 2010 to 2020, the
increase will be 32.5%. The change in the 60 plus
population in the United
States is projected to nearly triple in thirty years.
Compare these
figures to the increase in under sixty-year-old population. From
1990 to
2000, the increase in under sixty year olds will be 6.5% and it is
projected
to drop to 2.8% by 2010. If you look at the changes in the workplace
you will
see that the average age of an employee is steadily rising as the
average age
of retirement continues to drop. The projected increase in 55-64
year olds in
the workforce from 1996 to 2006 is a staggering 54%. The projected
change in
the 25-34 year old bracket is -8.8%. These trends are not only true in
the
United States. Japan is also going to be coping with similar problems.
Today
the people over age 65 compose 16% of Japan's population, but by the
year 2020
it is projected that percentage will soar to 26.3%. Japan, just
like the United
States is going to have to attempt to retain some of this
group in the workforce
to compensate for the continually falling birthrate in
their country. This
problem is very true in Europe too. Since 1995 Germany,
France and Italy have
experienced a continual fall in working population ages
15-64. This trend is
projected to continue into the year 2000. Our aging
population is also choosing
to retire much earlier than they once did. This
is a factor contributing to the
strong economy we are enjoying now. The old
are growing older, living longer and
they are healthier than ever.
Breakthroughs in medicine have enabled people to
live much longer. The
advancements our pharmaceutical companies research and
development
departments have made are staggering. Diseases that once were a
death
sentence are curable. Organs that are failing in the human body can
be
replaced or rebuilt. There are even some types of cancer that are
considered
curable. These things were not true twenty years ago. There also
is a trend in
this country towards remaining healthy. Americans are taking
much better care of
themselves; there is a genuine concern towards health.
People are not smoking as
much as they did in previous decades and there is a
trend towards exercise. We
take vitamins, we go out for a weekend run or bike
ride and we are eating
healthier. All these factors contribute to a longer
life expectancy and a rising
demand for products and services. Another major
contributor was the big push in
the eighties, "out with the old, in with the
new" school of thought,
forcing the older management and executives into
early retirement has left the
companies of today in dire need of top caliber
people. This coupled with the
fact that each year more and more baby boomers
decide to retire early. The gains
the baby boomers stand to receive far
outweigh the costs in most cases. Their
401k plans and stock options have
sky rocketed in value because of the strong
economy we have been experiencing
for nearly twenty years now. Today's older
working population has the choice
to continue working or retire because for the
most part, they are financially
sound. Many are choosing the retirement option.
They no longer have to
deal with the day-to-day grind, the high pressure and
rigorous schedules that
are demanded of senior executives in today's world. They
have worked hard for
many years and now have the option to retire and enjoy the
remainder of their
lives. It's a choice that is hard to say no to. It's a choice
that has proven
to be very costly to today's businesses. The companies of today
are rapidly
losing their think pools. The older executives possess a great deal
of
knowledge and diplomacy that is priceless to many organizations. These
people
could be mentors to the future stars of the company but they can't do
that if
they are no longer employed in some capacity by their respective
firm. What the
forward thinkers of today's companies are trying to do is lure
these valuable
assets into staying in the work force. In order to do that,
human resource
departments must be very flexible with their offers. Some
companies are offering
what they refer to as "dream jobs" to their execs who
are considering
retirement. What a "dream job" consists of is the opportunity
for the'would be retiree' to work in whatever location and department of
the
corporation they prefer, doing what they choose to do. They also are able
to
work part time verses full time. This gives the person a new job and a
fresh
outlook on work, which can be extremely beneficial to the individual
while it
also allows the company to hold on to a key player in their
organization.
Employers are being forced to offer options similar to this
because if they are
not available where a person is currently employed, they
will choose an early
retirement and seek more flexible working conditions
elsewhere. There are many
companies willing to be more flexible and
understanding to the older executive's
wants and needs in order to take
advantage of their years of knowledge and
experience. Placing this category
of employee in a position to guide and advise
the management of tomorrow,
forming a stronger base and filling in some of the
gaps formed as people
retire is very smart strategy. One example of how
companies are handling the
situation is utilizing their aging managers as
consultants. Chevron became
aware of the problem three years ago and this is an
example of how they have
handled it. One of their well-respected executive
chemical engineers, Jesse
Krider announced his retirement from Chevron but he
now works as a consultant
overseas. This enables Chevron to hold on to his 30
plus years of expertise
and allows Krider to see the world doing something he
enjoys. It is a
mutually beneficial situation. Another solution is already up
and running at
IBM in Belgium. IBM needed to cut lower labor costs and they
concentrated on
offering an early retirement package to the 55-60 year olds.
What they
did next was to set up another company called Skill Team and offered a
job to
any of the former IBM employees affected by the forced retirement.
The
rewards to the employee at Skill Team are working 58% of the time they
worked
before for 88% of the last salary received at IBM. Skill Team offers
its
services to IBM allowing IBM to maintain a fair percentage of its
"think
pool" while the former big blue employees can ease their way
into
retirement. A third example is corporations inviting the retired
executives to
sit on the boards of their companies and subsidiaries. John
Castle, chairman of
the leveraged-buyout firm Castle Harlen Inc, exercises
this philosophy. He taps
into the resource of the retired executives by
asking them to serve on the
boards of the companies his firm takes over. This
arrangement is perfect for all
involved. The retiree is looking at a
short-term commitment because Castle
Harlen usually sells off the
companies it acquires in less than seven years and
Castle Harlen has the
services of a qualified director without the worries of
what the director
will do when they sell off or dissolve the company. These are
a few examples
of the creative approach some of today's companies are taking to
cope with
the economic obstacles caused by an aging workforce. The companies of
today
are aware of the constantly growing problem and are working towards
a
solution. I think that they are moving in the right direction.
Offering
flexibility in what was once a very rigid structured hierarchy is
certainly a
step in the right direction. People in today's world lead very
different lives
than they did 4o years ago. A rewarding profession is not
exclusively defined by
the income generated anymore, rewarding can also mean
personally rewarding. A
good employee doesn't necessarily work 40 hours each
and every week, some work
part time or are involved in a job-sharing program.
In order to keep the
workforce meeting the needs of the economy, the employer
must continue to become
more flexible and remain open to suggestions. Today's
companies are on the right
track. I believe that with proper management and
forward thinking, we will be
able to cope with the ever-increasing shortage
of labor.
Bibliography
"Grey Dawn" by Peter Peterson Center for
Strategic and
International Studies Newsweek magazine Business Week
magazine The Economist
magazine St Petersburg Times Newspaper The United
States Census Bureau CNN.com