The Global Labor Supply

As the population ages, a larger proportion of people are retiring, leading to a decrease in the overall labor force. This trend is evident in many developed nations, including the US, Canada, the UK and Japan.

Alternatively, developing countries like Mexico and India face challenges with gender disparity and a skills mismatch due to an abundance of educated young people.

United States

As of June 2024, the core age labor force participation rate (LFPR) in the US stands at 62.5%, which is still below the 2019 average of 63.1%. According to the Bureau of Labor Statistics, worker participation rates have risen for African American/Black workers, from a 2019 average of 62.4% to 62.9% in 2024. The women’s labor participation rate has returned to 2019 levels, at 58.8%, after a sizable dip during the pandemic. Men overall have seen a decline of participation, falling from a 2019 average of 71.5% to 69.9% in 2024. Other demographics, such as Asian workers, have increased in participation, while White and Latino workers have both declined since 2019. Decreased worker participation will mean continued worker shortages, even as the labor market starts to cool.

The unemployment rate in the US has seen an uptick, rising to 4.1% in June 2024 from 3.6% in June 2019. Despite this increase, the overall unemployment rate remains relatively low when compared to historical trends. This low unemployment rate is contributing to a worker shortage, as higher interest rates have not significantly dampened the demand for labor. Businesses may have a harder time filling positions due to low unemployment, and wages will continue to be elevated as a result.

A Look at the US Labor Market: Now & Then

In 2024

62.5%

Labor Force
Participation Rate

4.1%

Unemployment

3.1M

Jobs Added (2023)

167.6M

Total Number of
Employees

In 2019

63.1%

Labor Force
Participation Rate

3.6%

Unemployment

2.1M

Jobs Added

163.5M

Total Number of
Employees

Despite an increase in US unemployment from 2019 to 2024, the overall unemployment rate remains relatively low historically, contributing to a worker shortage. Businesses may have a harder time filling positions due to low unemployment, and wages will continue to be elevated as a result.

The generational makeup of the US workforce is undergoing significant changes as Baby Boomers retire at accelerated rates, driven by an elevated stock market. Millennials and Generation X now dominate the labor market, with Millennials making up 39% of all workers and Gen X accounting for 32%. Meanwhile, Boomers represent a declining 14% of the workforce, and Generation Z, the newest workforce participants, make up 13% of all workers. Currently, 1% of the total US population retires each year, while the country’s population growth was only 0.5% in 2023. Companies are seeing significant skill gaps in their workforce as more knowledgeable employees retire and younger workers lose valuable mentors. Companies will have to come up with creative ways to bridge the skills gap as younger workers enter the labor market.

Currently, 1% of the total US population retires each year, while the country’s population growth was only 0.5% in 2023.

Canada

Post-pandemic, the Canadian labor market has cooled and moved into balance from previously overheated levels. The LFPR stands at 67.06% in June of 2024, slightly higher than the 2019 average of 66.8%. Unemployment sits at 6.9% for June 2024, slightly higher than 2019, while core age employment remains relatively unchanged to 2019 levels at 82%. Due to this higher unemployment rate, the Canadian labor force will continue to have a growing reserve of workers that will be available to employers. LFPR will also factor in the Bank of Canada’s decision on rates, as too much slack in the labor market will cause drag on economic growth.

Mexico

Mexico has seen a steady hold of its labor participation rate since 2019, as the country continues to develop and recover from the pandemic. Back in 2020, the country’s unemployment rate spiked to 5.5% and the informal employment sector was devastated. Additionally, gender disparities in the labor market were exacerbated as women faced more employment loss and a slower recovery compared to men. By mid-2021, the male participation rate had recovered while the female participation rate is still stabilizing.

From Upskilling to Changing Lives
In a time when talent pools are shrinking, the market is growing more competitive and companies are seeking new avenues to getting work done, CareerCircle Managing Director Kim Sneeder is building an upskilling and reskilling network that puts more workers into the shifting workforce market.

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Similarly, the pandemic accelerated early retirements, and led to a rise in long-term sickness, driving a significant rise in inactivity in the 50-64 age category. While retirements have stabilized compared to historic levels, economic inactivity due to long-term sickness has been rising consistently for the past 4.5 years.

As a result, the UK’s economically inactive population is still approximately 8% higher than pre-pandemic levels. The UK is lagging behind other nations in terms of employment growth and is the only G7 country where the employment rate hasn’t returned to pre-pandemic levels. This trend poses a long-term challenge for the labor market, with hiring conditions expected to get harder if the population actively seeking work continues to decline.

While demand is easing in the short term, the impact of dwindling long-term supply – coupled with an aging population – highlights the importance of continually attracting and retaining high-quality talent. Employers who embrace flexibility, invest in technology and focus on employee wellbeing will be better positioned to navigate this new landscape. Employers are encouraged to stay aligned with new and developing digital transformation to drive productivity. Alongside this, focusing on implementing policies and practices that support a work-life balance will build an attractive workplace for potential candidates within a competitive market.

The UK is lagging behind other nations in terms of employment growth and is the only G7 country where the employment rate hasn’t returned to pre-pandemic levels.

United Kingdom

The UK labor market is showing initial signs of cooling, following a period of consistently high demand coupled with historically tight supply. We are seeing fewer job vacancies being added, and an uptick in unemployment. While the data indicates that we are returning to a pre-pandemic labor market state, there are fundamental structural changes that we predict are here to stay. Employers will need to adapt hiring strategies to address the long-term challenges in the labor market, resulting from higher economic inactivity, an aging population and ongoing skill shortages.

The LFPR in the UK reached 77.9% in March-May 2024, a decline of 1.1% on the year, but up slightly on the quarter. Despite signs of recovery following a drop during the pandemic, the current rate remains below historical averages.

Young workers (ages 16-24) experienced a significant decline in labor force participation during the pandemic, largely due to educational disruptions and higher unemployment rates in sectors that typically employ young people. However, a peak in young workers in full-time education has led this trend to continue post-pandemic, largely reflecting a rising student population.

India

In the years following the pandemic, India has become the world’s most populus country according to the United Nations, overtaking China. With continued population growth projected for the next several decades, India is poised to elevate itself from a regional powerhouse to a global economic superpower, as most of its peers struggle with declining populations and labor forces.

Despite this rosy outlook, India is currently facing a youth unemployment crisis. Youth unemployment has doubled since 2000, with 65.7% of its younger population now struggling to find a job according to the International Labour Organization. India also has struggled to provide jobs for women, with only 23% of women participating in the Indian labor force. Lack of childcare and cultural barriers put an immense amount of pressure on women to drop out of the labor force after marriage according to DW, which has left India with one of the smallest percentage of female workers globally. While India now boasts the largest population of any country, China continues to maintain the largest workforce mainly due to the lack of female participation in India’s workforce.

Japan

Japan’s struggles with declining population levels preceded the global trend by several decades, with their aging population and staunch opposition to immigration leaving fewer and fewer Japanese left to fill jobs. Since the pandemic, Japan has quietly flipped its position on immigration and allowed 2 million foreign workers into the country. With a 12% jump in foreign workers in 2023 alone, The Japan Times reported that Japan is “entering an era of mass foreign immigration.”