Central bankers from the world's largest economies have issued a stark warning: without attracting more foreign workers, major economies risk severe labor shortages in the coming decades, leading to stunted growth and soaring prices, potentially costing trillions.

Kazuo Ueda, Governor of the Bank of Japan, highlighted that Japan's rapidly aging population has made labor shortages one of the country's most pressing challenges. Foreign workers, while making up just 3% of the workforce, accounted for half of its recent growth. Similarly, European Central Bank President Christine Lagarde cautioned that the Eurozone could face a deficit of around 3.4 million working-age people by 2040 without increased inflows of foreign labor. In 2022, foreign workers constituted only 9% of total employment but contributed 50% to labor force growth over the preceding three years, underscoring their pivotal role.

Andrew Bailey, Governor of the Bank of England, described the UK's challenge as "acute," citing an aging population and low productivity. He projected that by 2040, 40% of the population will be over 64. He also expressed concern about the rise in people exiting the labor market due to chronic illnesses, particularly mental health issues, which are now the most frequent reason.

Market Signals

Sectoral impacts and opportunities in tourism, agriculture, and construction due to labor shortages.
Potential inflationary pressures stemming from rising labor costs and supply chain disruptions.
Shifts in competitor positioning as companies scramble to secure foreign labor.

Stakeholder Impact

Companies that successfully recruit and retain foreign labor will benefit, while those unable to fill critical positions will face reduced output and project delays, potentially losing market share.

Action Timeline

Immediate: Explore investment opportunities in labor-intensive sectors grappling with shortages, such as tourism and agriculture.
Short-term: Evaluate companies offering solutions for foreign worker recruitment, training, and management.
Long-term: Monitor investments in agri-tech and automation to mitigate reliance on manual labor.

Risk Assessment

Regulatory hurdles and bureaucratic delays in attracting foreign labor.
Potential social and political tensions related to the integration of foreign workers.
Global economic volatility that could strain labor markets.

Key Indicators

This signals a clear trend towards increased reliance on migrant labor to fill demographic gaps.
Monitor wage trends and foreign worker inflows as leading indicators.

Regional Perspective

Central banks in major economies warn of billions in losses without increased immigration, significantly impacting global economic stability.

Immediate Implications

Slowing economic growth and rising prices in major economies.
Urgent opportunities for firms that can secure foreign labor or offer supporting solutions.