risk of labour shortages

There are different ideas considering the effect of population ageing on the demand and supply of labour. Most of researchers and professional experts expect labour shortages up to levels which harm the economy. In Finland’s case, not only are they a result of population ageing but they are also related to early retirement and the unmatched skills and demands at the labour market which is visible in persistent mass of unemployment. Another factor is the late entry of students into the labour market, which from the beginning, shortens the working career.

For the last ten years, discussions were picked up by the Finnish media such as: ‘Labour shortages now more worrisome than unemployment’ (Helsingin Sanonmat International Edition 2000a) and ‘Finland faces labour shortage in all sectors in 2005’ (Helsingin Sanonmat International Edition 2000b). These were some of the main headlines. Finnish recruiting companies have begun to open branch offices in the Baltic States and Poland with the purpose of hiring skilled people and fill the empty spaces of the company. Similar trends can be seen in the health care division, where many doctors and nurses are reaching the retirement age themselves. This development is provoked by the fact that Finnish health care personnel have really good job opportunities with great salaries abroad. Concerning the Finnish labour market in general, the Ministry of Labour comes to the following conclusion:

Starting in 2010 and on, the working-age population will begin to decline. By 2030 it will have decreased by about 400,000 people, which is equal to a decrease of about 20,000 people a year. This decline will be the fastest in the 2010s reaching the rate of 30,000 people a year at its highest. The changes in the working-age population will be so great and so sudden that they will have an important impact on the entire functioning of the labour market.

But, even if the labour force is getting smaller in the future, this does not necessarily lead to labour shortages. Many industrialised counties, like Finland, have experienced the phenomenon of ‘jobless growth’ after the decline in the 1990s. While the economy gained pace, the number of jobs grew only slightly or even declined in some sectors due to the replacement of human labour by machines and new technologies. A further increase in productivity and the coexisting transfer of jobs to low wage countries may reduce the demand for labour and could even lead to a stabilization of the unemployment rate at present levels.

http://scientificjournals.org/journals2007/articles/1077.htm