Demographic crunch to squeeze global economy—but there's a way out: OECD

The OECD's latest Employment Outlook warns that developed nations face a critical demographic crunch, with declining working-age populations and rising old-age dependency ratios projected to slow GDP per capita growth by 40% by 2060. To counteract this economic threat, the report urges policymakers to swiftly implement strategies including boosting youth employment, closing the gender employment gap, leveraging migration, and extending the working lives of older individuals. While AI can improve productivity, it is not a substitute for human labor but can support longer working careers.

Analysis

The OECD's latest Employment Outlook identifies a critical, long-term structural shift for developed economies: a demographic transition from a job shortage to a worker shortage. This is driven by a declining working-age population, which is projected to cause the old-age dependency ratio to rise to 52% by 2060, up from 19% in 1980. This demographic headwind poses a significant threat to economic growth, with forecasts indicating a potential 40% slowdown in GDP per capita growth to just 0.6% annually through 2060 for most member countries. The report outlines a cautiously optimistic path forward, contingent on policy action to unlock untapped labor pools, including youth, women, and migrants. For instance, closing the gender employment gap is estimated to add 0.2% to annual GDP per capita growth. The OECD also stresses the necessity of facilitating longer working lives for healthy older individuals. Artificial intelligence is positioned not as a "silver bullet" to replace workers, but as a key enabler of productivity and a tool to make jobs less physically demanding, thereby supporting the extension of careers.