identifying the potential winners and losers
The structural forces reshaping labor markets will determine the next generation of leaders and laggards across industries, regions and countries. These winners and losers are not predetermined – and will depend heavily on the quality of responses and actions by governments and firms.
Winners and Losers: Factors Driving Sectors
Labor Shortages
Wages
Tech and Demographics
Labor Shortages
Tech and Demographics
Wages
Wages
A shrinking workforce will pressure sectors with a high share of labor costs, and firms able to leverage technology to enhance productivity will be leaders.
Tech laggards will have to address higher wage costs by either shrinking margins or raising prices.
The advent of generative AI may be especially promising for industries where technology adoption has been challenging.
Some industries’ margins are highly dependent on labor cost
Labor cost as a percentage of input costs, United States
Source: PGIM Thematic Research and Bureau of Economic Analysis. Data as of August 2023.
Note: The five industries refer to a representative set of the North American Industry Classification System (NAICS); for each of the five sectors.
Tech and Demographics
Technology is most likely to displace labor in four sectors. In the US and Europe alone, over 30 million workers across these sectors are expected to be displaced.
New technology and demographics will drive employment in leading sectors, adding 13 million jobs by 2031 across Europe and the US alone.
Employment outlook of future leading and lagging industries in the US
Employment growth rates above/below national average (2022-2031)
Source: PGIM Thematic Research, Brookings Institution, European Centre for the Development of Vocational Training, European Commission and US Bureau of Labor Statistics. Data as of August 2023.
Note: Numbers are based on occupation forecasts by the BLS, the European Centre for the Development of Vocational Training and direct forecast of renewable job growth fromthe European Commission; see Appendix for further details.
View European chart
Employment outlook of future leading and lagging industries in Europe
Labor Shortages
Industrial policy is creating demand for millions of workers with specific technical skills, potentially exacerbating labor mismatches.
Millions of workers are expected to be displaced as technological advancement, such as generative AI and robotics, will increase productivity and reduce the need for labor.
Reskilling and retraining of workers will be critical for cities and regions where impacted industries are prominent.
Reshoring efforts will add to
unfilled positions in Germany
European semiconductors
Unfilled jobs are estimated to reach over
by 2030
US semiconductors
60,000+
58%
Americas
EMEA
Asia
Americas
EMEA
Asia
Winners and losers by REGION
To understand how countries are positioned to manage the deep structural changes in labor markets, we have undertaken a multidimensional assessment of each country, focused on:
Asia
• The list of leading countries veers towards advanced countries with smaller populations.
• Malaysia emerges as well-positioned not by a huge advantage in many indicators but by having a well-balanced if roughly average set of strengths across all our indicators.
• Interestingly, neither India nor China were among the leaders (or the most challenged) in our framework and were “stuck in the middle.”
Select leading and lagging Asian countries
Source: PGIM Thematic Research, World Bank, INSEAD and Harvard Growth Lab. Data as of August 2023.
Note: WAP refers to current working age population; for all other definitions see Appendix.
BY REGION
EMEA
• The list of European leaders skews towards smaller countries as well.
• The region’s largest countries by GDP and population, such as Germany, Italy or Spain, face steep demographic drop-offs that are not
likely to be resolved by current immigration trends.
• In Africa and the Middle East, regional leaders like South Africa, Egypt or Nigeria face favorable demographics relative to other nations,
but they scored poorly in other metrics.
Source: PGIM Thematic Research, World Bank, INSEAD and Harvard Growth Lab. Data as of August 2023.
Note: WAP refers to current working age population; for all other definitions see Appendix.
Select leading and lagging EMEA countries
Americas
• Regional leaders like Mexico and Brazil have favorable demographic starting points.
• These economies also face steep demographic challenges unlikely to be mitigated by migration
trends or female labor force participation.
Select leading and lagging countries in the Americas
Source: PGIM Thematic Research, World Bank, INSEAD and Harvard Growth Lab. Data as of August 2023.
Note: WAP refers to current working age population; for all other definitions see Appendix.
US Deep Dive
US Deep Dive
A state- and city-level perspective
Our research in partnership with the Brookings Institution identified states—such as South Dakota, Oregon and Wisconsin—that have the highest potential to boost local productivity and growth in this new era.
These states already have statewide industrial networks and workforces with many of the needed skills for industries such as renewables or the IT sector.
Most cities identified in our research have major universities which can supply a steady stream of scientific and research talent.
The rise of new industries offers opportunities for cities across the US
[ CLOSE WINDOW]
Source: PGIM Thematic Research and Brookings Institution. Data as of August 2023.
Note: See Methodology regarding details and calculations.
View
US
chart
Labor Supply
Labor Quality
Policy Environment
The stock and flow of the working-age population, including the net impact of current migration policies
Labor Supply
The set of skills and education of a country’s workforce and ability to tap global talent.
The extent to which policies encourage well-functioning labor and capital markets.
Labor Quality
Policy Environment
Labor supply: the stock and flow of the working-age population, including the net impact of current migration policies
Labor quality: the set of skills and education of a country’s workforce and ability to tap global talent
Policy environment: the extent to which policies encourage well-functioning labor and capital markets
Data as of August 2023.
Labor Quality
Policy Environment
Labor Supply
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