We don’t have to be tarot card readers or fortune tellers to structure our forward thinking and attempt to anticipate rather than predict the future.
From 2010 to 2030, five megatrends will shape our lives: the future of population effects on the environment and society, globalization, geopolitics and governance, and science and technologies. This article will briefly explore the first two and their strategic implications for HR management.
Population effects
In the 1960s, demographers expected the world’s population to double every 35 years. Today, owing to contraception and the greater participation of women in the workforce, they predict it will double every 67 years. Nonetheless, the global population will still top 7 billion towards the end of 2011 and reach 8.5 billion inhabitants by 2030, 85% of whom will live in the developing countries. Growth will be sluggish or even negative in Japan, Europe and North America, despite population increases of 75 million in the US and 4.6 million in Canada. But the Earth will also be home to 230 million more Indians and 100 million more Chinese. The age distribution of these populations will vary according to region.
In wealthy nations, the percentage of people over age 65 will climb from 15% to close to 20%, versus from 8% to 12% in China. In fact, by 2050, the number of China’s inhabitants over age 65 will equal the entire population of the US. That’s why the Chinese do all they can to get rich before they get old. In 2030, the planet will contain more than 246 million people aged 85 and over, 60% of whom will live in Asia.
The age of change is also that of the change of age. In the West, the workforce participation of older workers will return to levels recorded in the 1940s, i.e. a period before the advent of the pension plans and generous social programs that brought the “golden age to golden agers.” For example, in 2000 only 26% of Belgians and 29% of Italians over fifty-five were still working.
It will also be an age of urbanization since most of the new population will live in cities or megalopolises, a shift that will have a significant impact on the environment and on resources. More people will also mean more hands in the cookie jar and depleting resources. About 40% of the best arable land has been over-exploited; overfishing has cleaned out half the planet’s schools of fish; close to a billion barrels of oil have been consumed in the last 30 years; more than 32 million acres of forest are destroyed each year; and 15 million acres of desert have been created. What’s more, 17,000 animal, aquatic and plant species are now threatened with extinction.
In turn, urbanization, agriculture and the climate all affect our access to fresh water: one person in eight now suffers from a lack of drinking water and 3.5 million people die from this lack each year. In fact, half the world’s hospital beds are occupied by patients whose condition is in some way related to water. At the same time, 1 billion people are suffering from malnutrition. In 2020, we will have to produce 640 million more tons of grain than we did in 1997 (41% will go to Asia) and catch 95 million more tons of fish than in 1995.
We could also discuss at length the impact of the population on energy, more specifically on the demand for hydrocarbons. But a simple image will suffice: to meet the needs of new Chinese drivers (who ironically received US$23 million in fuel subsidies in 2007), we would need the oil equivalent of another Saudi Arabia or to prohibit drivers’ from using their vehicles two days a week in Europe and North America.
In his bestseller, The Revenge of Gaia, John Lovelock describes the Earth’s natural feedback system to offset the damage inflicted on it. The 235,000 deaths and the displacement of 200 million people triggered by meteorological disasters in 2008, which cost around US$180 billion, lend credence to his theory of a dangerous and irreversible process. With 40% of the Arctic ice cap having melted, millions of tons of methane ready to be released and accelerate global warming, and over 135 million people living a metre below sea level, will climate change become public enemy number one? It may appear to some that after the industrial and technology revolutions, we’ve finally entered the green technology revolution in the energy, transportation, construction, agriculture, and waste management industries.
Strategic implications for HR management
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Globalization
Trade globalization was widespread well before Canada was discovered by the Europeans. Later, at the beginning of the 20th century, Sun Life partners set off from Montreal for Latin America, Africa and Asia to establish life insurance companies in these regions. Armed with a large trunk, a spirit of adventure and travelling by ocean liner, these pioneers were sometimes able to globalize their business faster than today’s executives can with a private jet or a blackberry. But what has changed in recent decades is the more extensive range of trade and greater economic integration, which have contributed to global prosperity and introduced two important variables: new players and economic interdependence.
New players
Lenovo, Cemex, Tata, Infosys, Vale, Ranbaxy and Embraer are all brands that originated in so-called third-world countries in our parents’ time. The International Monetary Fund now confirms that the GDP of emerging and developing countries will overtake the share of the global GDP of the advanced economies within the next three years, rising from the 30% recorded in the 1980s and1990s to 53%. This rapid increase stems from the emerging nations’ demographic advantage, the modernization of their economies and the liberalization of trade and financial markets. Their natural resources or simply their geographic location are also often contributing factors.
Accordingly, most of the 300 million new workers that will enter the workforce by 2020 will live in one of these countries. In 2020, 488 million new households (including 306 million in China and India) will have a disposable income ranging from US$5,000 to US$15,000 and average consumer spending in these emerging nations will amount to US$6,450 (versus US$28,000 in the G7 countries). In 2020, the per capita GDP for all BRIC countries (Brazil, Russia, India and China) will be one-third of that of the G7 nations despite their having four times the population. In 2030, 1.2 billion people will belong to the middle classes, compared to 430 million in 2000 (China and India will account for one-third of this explosion).
Economic interdependence
In this global economic village, value can be quickly created, but destruction can spread even faster and is highly contagious. That’s why a financial crisis that started in a few American institutions in 2008 was able to spark a European bank crisis (which will have cost over 800 billion euros), which then contaminated the rest of the world’s economies. The demand crisis and that of public balance sheets, together with sudden currency and market fluctuations, have plunged the 21st century into its first global recession. A recovery is on the horizon, but we must be patient and resilient. It may be viewed through a “3D” (deglobalization, debt reduction and deconsumerism) lens, as well as from a perspective of long-term interdependence.
The world in 3D | ||
Deglobalization Redrafting globalization | Debt reduction Rebalancing finances | Deconsumerism Rethinking spending |
State capitalism, interventionism, new regulations and growing economic rivalry | Capital losses, job or operating losses | End of the easy credit era |
Commercial, financial and political regionalism | Individuals, corporations and governments will be forced to clean up their balance sheets | Decreased spending, increased saving |
Economic security and diversity | Limit to credit and lenders’ and taxpayers’ tolerance | Job insecurity |
Local trade (in response to transportation costs and mercantilism | Pursuit of a better credit rating | Return of higher natural-resource prices |
Economic decoupling (EU/US/Asia) and rise of a more autonomous Asian pole | Sluggish recovery, less financial risk, greater liquidity | “Green inflation” |
Fragility and new rules in the banking sector | Anticipated hike in public service costs or taxes | |
Higher interest rates and credit standards | Questioning of material well-being and voluntary frugality | |
Catch-up in respect of emerging countries (and capital surplus) | Growing environmental awareness | |
Aging of the population |
Strategic implications for HR management
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By conducting a similar study of the other two megatrends (geopolitics and governance and science and technologies), any HR department can determine the long-term repercussions, uncertainties, risks and opportunities facing its organization. In a period marked by chaos and the unexpected, it’s not because nothing is certain that we should be certain of nothing. Conducted properly, this exploration of the future should lead to strategic thinking that promotes the development of a proactive action plan and appropriate HR management solutions.
Éric Noël, Senior Vice President, North America, Oxford Analytica
Source : Effectif, volume 13, numéro 4, septembre/octobre 2010.