Two demographic statistics that will impact us all

Emerging markets are playing an increasingly important role in the global economy. As the world’s most populous region, Asia-Pacific is central to this shift. And, there are two fascinating population statistics in the region, which have the potential to make big waves on the global labor market.

1. Young and working: approximately one-third of India’s population is below the age of 15 and only 5% is over 65 years of age. This represents the largest pool of young, potentially skilled labor in the world.

2. Aging rapidly: China’s population policies have pushed the median age above the world average, with declines in the working age population expected by 2016—just four years away. This signals a significant demographic challenge ahead for an economic powerhouse built on plentiful, cheap labor.

China and India occupy the fastest growing region (on several fronts) in the world. That’s why these two demographic statistics are likely to have implications far beyond just the Asia-Pacific region.

First, India is well positioned—both geographically and demographically—to capture growth opportunities. It has a falling dependency ratio (the proportion of working-age people to non-working-age) and a significant increase in the potential working population. India may still have one of the highest official unemployment rates in the region, but there are real reasons for hope, not least of all that a generation of Indians have become accustomed to growth and increasing standards of living and would like to see that continue. Fortunately, most of the Indian population is young and motivated to seek these new opportunities.

On the down side, regulation is still relatively weak. Many people, domestically and abroad, are calling for India to undertake a further round of reforms to boost the strong economic progress thus far. This recent article in the Economist outlines just a few of the reforms many believe are necessary, and it’s possible that 2013 could see India embark on at least some of the required structural and legislative changes to capture the opportunities now on its doorstep.

As for China, it continues to dominate the economic landscape, but even this powerhouse of development is coming to grips with the global trend of an aging population. China’s fertility rate is now around 1.6%, which is well below replacement rate and far more reminiscent of a developed economy than a developing one. In fact, it’s even lower than the U.S. fertility rate. Even though some adjustments have already been made to China’s restrictive population policy, the trend of a rapidly aging population is already set in motion and cannot be turned around quickly. Developed nations face similar challenges, but with the advantage of higher per capita wealth, as well as pension and superannuation schemes that have been factoring in their aging populations for some time (and continue to make adjustments to do so).

With some 50.8% of the Asia-Pacific region’s workers in ’vulnerable’ employment, these immense demographic shifts are likely to add weight to an already strong case for better worker protections and employment security. Given the increased competition for talent among organizations in China and India, it’s likely that employees will begin to flex their collective muscle more, particularly regarding pay and working conditions.

The demographic opportunities and challenges are significant for the world’s two most populous countries, but the incentives for change are very strong. Legislative trends in the region continue to focus on up-skilling labor forces and reducing barriers to skilled migration, as well as supporting growth industries and shoring up consumer and business confidence. Cash reserves are relatively high and debt is moderate by world standards, so the region overall occupies an enviable position to absorb further economic instability.

As all eyes are on what happens next in Asia. This new reseach report by workforce solution provider Kelly Services offers some insight into just what that that might be, including the trends and indicators that are shaping the labor market outlook for the region over the next two to three years. You can download a free copy here.