Significant population growth in emerging markets may continue to shift our current world order with the developed economies faced with an aging and shrinking population.
Emerging and frontier markets have opportunities for growth that often aren’t available in more developed economies.
By 2030, 6 out of every 10 people will live in a city, and by 2050, this proportion will increase to 7 out of 10 people. By the middle of the 21st century, the urban population is expected to almost double, increasing from approximately 3.4 billion in 2009 to 6.4 billion in 2050. And almost all urban population growth in the next 30 years is expected to occur in cities in developing countries [i].
For more on Balance shift, including the rise of emerging economies, migration and urbanisation, see Forces for Change
Demand for healthcare in the UK and the associated costs are rising, driven by social changes and increased prevalence of certain lifestyle diseases. Obesity is at a record high, 25% of the population still smoke, alcohol consumption per capita has risen by 50% in 20 years [ii], and the prevalence of cardiovascular disease has risen by 35% over the same period [iii]. The demographics of the UK are also changing, with the number of people over 65 projected to rise from 10 million today to 16 million in 20 years' time. [iv]
Health and demographic challenges, such as the aging society, represents a huge business challenge for the UK and create new market demands.
Supply of skills
There is a lack of supply of skilled workers in the UK who can support future economic growth. Currently 22% of 16-65 year olds in England and Wales are categorised as functionally illiterate, and 42% of employers report they have difficulty in recruiting staff with skills in science, technology, engineering or mathematics (STEM skills). [v]
Rising inequality is also a challenge and is closely linked to education: The poorest tenth of the population have seen their incomes decline in real terms by over 10% in the last decade, whilst most other income groups have seen their incomes increase by 20-30% on average. The richest tenth of the UK have seen their incomes rise the most, by 35% in real terms. [vi]
Alongside this lack in skills, the unemployment rate in the UK has been steadily rising since 2004 (a 65% rise in 8 years), and the number of people facing long term unemployment (longer than a year) has more than tripled over the same period, now making up a third of all unemployment. Youth unemployment is now at 8%, and 23% of 16-24 year olds are without a job. [vii]
A growing shortage of skills and rising inequality may pose a risk to business operations, but also may create an opportunity to improve quality of lives through education and employment.