How economic predictions could affect organisations and the labour market in the coming years
Economic experts predict that the world's economy will grow by around 3.5% in the coming years. If these predictions prove correct, how will this economic growth affect organisations? Are companies prepared to face this increase in real gross domestic product (GDP)?
Esade faculty members Josep M. Sayeras and Ignacio Serrano have analysed what would happen to organisations if the global economy experiences this positive prosperity. In their findings, the experts outline the potential consequences and the impact that a GDP increase could have on organisations.
GDP growth and technology
"The two main factors that trigger GDP growth are either an increase in employment rates or an increase in efficiency and productivity," the authors write. "In terms of employment rates, the predictions for Europe are less favourable: Spain and Europe have an ageing population, thanks to a decrease in mortality rates and an increase in life expectancy."
Based on the poor employment rate predictions, the authors forecast that the second main factor that could trigger 3.5% GDP growth – an increase in efficiency and productivity – could be a stronger source of economic growth in the coming years.
The study, however, offers a word of caution: "A recent report by the OECD warns that global productivity has slowed down. If we take into account the current workforce stagnation and poor productivity growth, the expectations for the coming years are not that positive," warns Sayeras.
Technological advances are an undeniable factor that will play a crucial role in future economic growth
Besides the classic GDP growth triggers, the technological advances derived from the 4th Industrial Revolution are another undeniable factor that will play a crucial role in future economic growth. "Technological advances along with demographic changes are contributing to an increase in prosperity thanks to productivity improvements and the creation of new jobs," says Sayeras.
Labour force challenges
Globalisation is reshaping the dynamics of the global economy and the labour market, which is experiencing workforce mobility challenges and demanding higher flexibility.
Between 2015 and 2020, transformations linked to technological advances will create around two million jobs, yet they will also destroy around seven million jobs, according to the World Economic Forum's report The Future of Jobs. In 2020, over half of the job vacancies worldwide will be filled by millennials.
In 2020, over half of the job vacancies worldwide will be filled by millennials
This first digitally-native workforce will bring about profound changes in the job market. "Companies' main concern will no longer be achieving breakthrough innovation models – such as Facebook or Google – but being able to recruit the best professionals and having policies in place to retain talent," warns Serrano.
There is no doubt that technological advances will offer numerous opportunities and improve many people's level and quality of life. But these technological disruptions will also bring about social challenges.
"The effects in the workplace will involve a shift in the contribution of employees, who will adopt roles of substitution and complementarity," the authors predict. "Technological innovations will facilitate an increase in productivity, which in many fields will imply a direct redundancy in the levels of human contribution we are used to."
Technological innovations will facilitate an increase in productivity
Loyalty and workforce pressure
Organisations expect employees to be loyal and bring their best contributions to meet corporate goals. Without a doubt, the pressure employees feel when they fear their job could be temporary is one way to achieve this contribution. "This is an undesired dynamic that can have negative consequences for companies. Firms need not only an available workforce but also professionals who are highly committed," state the authors.
A growing number of companies are using temp agencies as a way to recruit talent while reducing costs. With this type of practices, how can we expect employees to be loyal and highly committed?
"There is no doubt that pressure works. However, if we want truly committed professionals, when an employee meets a company's expectations, the firm should acknowledge this contribution by providing sufficient stability," the researchers conclude.
This article is based on knowledge insights published in Harvard Deusto.
Join the Do Better community
Become a member and enjoy our free benefits. Get recommendations, receive personalised content in your inbox and save your favourite articles to read later.