Five themes for 2025
Theme 5: Working with the modern workforce
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This series explores the five themes we expect to top the sustainability agenda in 2025. The fifth theme considers the importance of a long-term, strategic and mindful approach to the modern workforce.
Growth in global productivity has been decelerating since 2008 – in advanced economies it has slowed by one percentage point over the period.1 At the same time, the labour market faces both higher unemployment and a lack of skilled workers. AI, automation and other technological advancements are raising concerns of large-scale redundancies, yet it is estimated there will in fact be a human talent shortage of more than 85 million people by 2030.2
Against this backdrop, in January the World Economic Forum published its 2025 Future of Jobs Report.3 According to the report, several forces are reshaping the labour market. These include the rising cost of living, climate change mitigation, demographic shifts, geoeconomic fragmentation and geopolitical tensions. The report suggests that, in the next five years, workers can expect nearly 40% of existing skill sets to be transformed or become redundant.
Sectors undergoing structural change, such as aerospace and transport, are facing costly labour disruption, with industrial action surging in Europe and the US. Solutions will encompass skills training and more localised supply chains. New regulation, such as the Corporate Sustainability Reporting Directive, will require greater disclosure of social factors.
Transitioning the global labour market to recognise new economic realities is critical. Higher income nations are facing rising pressure on a smaller pool of working-age individuals, while in emerging economies, an unprecedented number of working-age adults is expected to exceed job vacancies.4 This regional imbalance of resources, skills and demographics will require careful policy decisions on how best to resource the job market opportunities of the transition.
Investors must understand the extent to which sectors and companies are able to maximise productivity while managing headwinds from emerging trends in the modern workforce (see graphic). As costs rise from labour disruptions, we expect a sharpened focus on workforces in 2025. The challenge is to return to the levels of productivity growth seen before the global financial crisis, while ensuring that opportunities are available to all.
The social reach of the modern workforce
Source: AllianzGI Sustainability Research
1 Investing in productivity growth | McKinsey
2 The $8.5 Trillion Talent Shortage
3 World Economic Forum - Future of Jobs Report 2025
4 In the Global South in the next ten years, an estimated 1.2 billion people will become working age adults. The World Bank predicts they will be forced to compete for some 420 million jobs, “leaving nearly 800 million without a clear path to prosperity”. World Bank Group Launches High Level Council to Tackle Looming Jobs Crisis
- Read the fourth post in this series: Theme 4: The case for defence
- Read an overview of our five themes: Sustainable investing in 2025: five themes to watch