Will the retirement of the 'baby boom' generation lead to a labour shortage in the U.S. or will there instead be a skills shortage and increased unemployment as organisations offshore jobs in search of cheaper skilled workers?
According to the U.S. Bureau of Labor Statistics, the overall labour force will grow by 12 percent by 2012. But the percentage of workers aged 55 and older will increase by 49.3 percent over the same period.
More than a quarter of the current working U.S. population will reach retirement age by 2010.
But despite the exodus of skills and experience that the retirement of these ageing workers will bring with it, many HR professionals in the U.S. question whether this really will result in a labour shortage.
According to the "2005 Future of the U.S. Labor Pool Survey Report" from the Society for Human Resource Management (SHRM), only a quarter of HR professionals believe that the flood of retiring baby boomers will be a problem to their organizations, and 43 per cent believe that it has 'the potential' to become a problem.
But according to SHRM President, Susan R. Meisinger, these demographics present major challenges to America's workplaces.
"We know there will be millions of baby boomers retiring and that some workers now entering the workforce lack core competencies. These are serious HR and workforce issues that could undermine the nation's global competitiveness. And HR must determine how to meet these challenges," she said.
Other HR professionals, in both the private and public sectors, are only now becoming aware of the potential labour shortage or are just beginning to examine their organisation's management structures to determine how they will be affected.
Just over half provide continuous skills training for incumbent workers or are researching and modifying pay scales to remain competitive.
But offshoring jobs could become a more common response to a shrinking pool of domestic labour. The SHRM report suggests that while almost no organisations have any plans to move, 17 per cent have outsourced or offshored jobs, with another 17 percent planning to do so in the near future.
Other HR professionals see the lack of core competencies from employees now entering the workforce as a key challenge to the future of the workforce. About half of respondents said they are seeing new workers entering the workforce lacking overall professionalism, written communication skills, analytical skills or business knowledge.
A lack of core competencies poses a serious challenge to HR professionals because this issue is closely tied to public and higher education, and HR may be constrained in its ability to address the problem.
Its repercussions, however, could be among the most severe to the future of the U.S. labour pool.
Another issue – highlighted last month in a report from consultants Accenture – is that many U.S. organisations are failing to capture critical knowledge and experience from older employees approaching retirement and few seem able to transfer valuable knowledge to newer employees.
A quarter of those surveyed by Accenture said that their employers will let them retire without any formal transfer of knowledge.
And as Debra Cohen, Chief Knowledge Officer of SHRM, pointed out: "When the talent and knowledge of retiring workers walks out the door, every organisation needs to make sure they have others ready to fill the gaps."