• Strategy
  • The Economist

Survey: The Near Future

Peter Drucker explains how it will differ from today, and what needs to be done to prepare for it.

The second reason for the split is a shrinking life expectancy for businesses and organisations of all kinds. In the past, employing organisations have outlived employees. In future, employees, and especially knowledge workers, will increasingly outlive even successful organisations. Few businesses, or even government agencies or programmes, last for more than 30 years. Historically, the working lifespan of most employees has been less than 30 years because most manual workers simply wore out. But knowledge workers who enter the labour force in their 20s are likely to be still in good physical and mental shape 50 years later.

“Second career” and “second half of one’s life” have already become buzzwords in America. Increasingly, employees there take early retirement as soon as their pension and Social Security (state retirement benefit) rights are guaranteed for the time when they reach traditional retirement age; but they do not stop working. Instead, their “second career” often takes an unconventional form. They may work freelance (and often forget to tell the taxman about their work, thus boosting their net income), or part-time, or as “temporaries”, or for an outsourcing contractor, or as contractors themselves. Such “early retirement to keep on working” is particularly common among knowledge workers, who are still a minority among people now reaching 50 or 55, but will become the largest single group of older people in America from about 2030.

Beware Demographic Changes

Population predictions for the next 20 years can be made with some certainty because almost everybody who will be in the workforce in 2020 is already alive. But, as American experience in the past couple of decades has shown, demographic trends can change quite suddenly and unpredictably, with fairly immediate effects. The American baby boom of the late 1940s, for instance, triggered the housing boom of the 1950s.

In the mid-1920s America had its first “baby bust”. Between 1925 and 1935 the birth rate declined by almost half, dipping below the replacement rate of 2.2 live births per woman. In the late 1930s, President Roosevelt’s Commission on American Population (consisting of the country’s most eminent demographers and statisticians) confidently predicted that America’s population would peak in 1945 and would then start declining. But an exploding birth rate in the late 1940s proved it wrong. Within ten years, the number of live births per woman doubled from 1.8 to 3.6. Between 1947 and 1957, America experienced an astonishing “baby boom”. The number of babies born rose from 2.5m to 4.1m.

Then, in 1960-61, the opposite happened. Instead of the expected second-wave baby boom as the first boomers reached adulthood, there was a big bust. Between 1961 and 1975, the birth rate fell from 3.7 to 1.8. The number of babies born went down from 4.3m in 1960 to 3.1m in 1975. The next surprise was the “baby boom echo” in the late 1980s and early 1990s. The number of live births went up quite sharply, surpassing even the numbers of the first baby boom’s peak years. With the benefit of hindsight, it is now clear that this echo was triggered by large-scale immigration into America, beginning in the early 1970s. When the girls born to these early immigrants started having children of their own in the late 1980s, their birth rates were still closer to those of their parents’ country of origin than to those of their adopted country. Fully one-fifth of all children of school age in California in the first decade of this century have at least one foreign-born parent.

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