A decline in the working-age population will not necessarily lead to labor shortages and rapid wage growth. Technology above all, artificial intelligence will increasingly shape how the labor market changes in the coming decades. Alexander Firanchuk, Senior Researcher at the International Trade Department of the Gaidar Institute, discussed this in a commentary for RBC.
According to the expert, demographic forecasts for the next 10–15 years are fairly reliable: changes in the population’s age structure are already largely predetermined. However, the economic consequences of these processes depend on a multitude of factors, so it is impossible to predict in advance whether wages will inevitably rise or whether there will be a labor shortage.
If the adoption of artificial intelligence and automation proceeds at a rapid pace, technology will be able to perform some tasks, and companies’ need for employees will decrease. In this case, even with a reduction in the size of the workforce, the labor shortage may prove to be less pronounced.
However, in professions where it is difficult to replace humans with technology, the shortage of specialists may, on the contrary, intensify.
“Demographic changes alone do not determine the future of the labor market. The pace of new technology adoption plays an equally important role. Artificial intelligence is already changing the demand for knowledge workers, whereas in professions requiring a physical presence, the labor shortage is likely to intensify. Therefore, it is important today to look not only at the number of workers but also at exactly which skills the economy will demand,” noted Alexander Firanchuk.