Microsoft President Brad Smith has issued a stark assessment of the troubles facing US companies fulfilling staffing positions, due in part to declining population growth in key markets.
In an interview with Reuters, Smith said American companies are facing a “new era” in which fewer people are entering the workforce and pressure to pay higher salaries may become permanent.
Smith made the comment at Microsoft’s headquarters in Redmond, Washington, and he reportedly highlighted one source of what he called today’s “greater economic turbulence.”
The problem it seems mostly to do with declining population growth.
Reuters reported that Smith in his office, walked over to a wall-sized touchscreen device and pulled up a series of charts, showing how population growth has tumbled in the United States, Europe, China and Japan.
The trend of around 5 million people expanding the US working age population every five years since 1950 has shifted, starting in the period between 2016 and 2020 when growth slowed to 2 million, and is now slowing further, said Smith last week, citing United Nations data.
Major markets overseas have seen outright labour force declines, Reuters reported.
“That helps explain part of why you can have low growth and a labour shortage at the height at the same time. There just aren’t as many people entering the workforce,” said Smith.
Government stimulus during the pandemic, Covid-19 concerns, childcare and other factors have contributed to the current labour shortage as well.
Executives including Meta’s Mark Zuckerberg and Tesla’s Elon Musk have warned about the state of the economy, with Zuckerberg warning the United States might face “one of the worst downturns that we’ve seen in recent history.”
Elon Musk meanwhile said he had a “super bad” feeling about the economy and is in the process of axing 10 percent of the Tesla workforce.
Microsoft’s Smith said it would be premature to declare a recession inevitable.
That said, Microsoft recently confirmed it had begun cutting less than 1 percent of jobs as part of a structural adjustment, after warning the management the Windows and Office divisions in May to adopt a more conservative approach to hiring new people.
But the reality is that positions still need to filled.
Competing for limited workers, Microsoft recently boosted pay at the same time as it slowed hiring, company officials said.
Smith said Microsoft’s business selling productivity tools, cloud services and technology with artificial intelligence, which enterprises may need in a downturn, sets it up to weather economic challenges.
Brad Smith’s comments comes after Ceri Shaw, chief delivery officer at Scottish digital skills academy Codeclan addressed the skills shortage in the UK, and pointed out that organisations are placing more importance than ever on digital experience when recruiting new staff.
“The significance of having the know-how to implement digital skills within all kinds of roles, from software developers to data engineers, cannot be underestimated with the demand for tech talent displaying no indications of slowing,” said Shaw.
“It’s vitally important that business leaders, skills academies, and universities continue to invest to help combat the talent shortage and squeeze the skills gap to ensure the long-term success of the UK tech sector,” said Shaw.