From ageing to AI: how structural economic shifts are tightening labour markets worldwide

The OECD study finds that labour shortages across advanced economies are increasingly driven by long-term forces such as ageing, digitalisation, decarbonisation and AI, rather than short-term economic cycles. These structural trends tighten labour markets, especially in high-skill sectors, while reshaping skill mismatches, calling for anticipatory policies in education, training and labour mobility.

Produced by researchers at the OECD’s Economics Department and Directorate for Science, Technology and Innovation, under the OECD Global Forum on Productivity, this study starts from a striking observation: labour shortages across advanced economies have been building for years, well before the pandemic, and they are not going away on their own. Using new sector-level data for 32 OECD countries from 2010 to 2019, the authors show that labour markets became steadily tighter almost everywhere. Vacancies grew faster than unemployment, especially in the United States and in knowledge-intensive sectors such as health, finance, ICT, and professional services. These shortages increasingly reflect long-term structural changes rather than short-term economic cycles.

A stable mismatch hiding big changes underneath

At first glance, skill mismatch appears surprisingly stable. Around half of all workers across OECD countries are employed in jobs that do not match the dominant qualification level in their sector, and this share changed little over the decade. But the stability hides an important shift. Under-qualification steadily declined, while over-qualification increased. In practice, this means firms facing worker shortages increasingly hired people with higher education levels than required, rather than leaving jobs unfilled. This pattern is most visible in high-skill sectors, where the demand for specialised workers has grown fastest.

How five structural forces reshape labour markets

The core of the study links labour shortages and mismatches to five structural trends transforming economies at the same time. Population ageing gradually reduces the supply of younger, highly skilled workers and increases skill obsolescence. Decarbonisation raises demand for workers with green skills as emissions-intensive sectors transform. Digitalisation increases productivity but also raises demand for digital skills. Deglobalisation, measured through declining import penetration, reduces foreign competition in some sectors. Artificial intelligence spreads unevenly across industries, sometimes replacing workers and sometimes enhancing their productivity.

The analysis shows that digitalisation and decarbonisation are the strongest short-term drivers of labour shortages. As countries invest in digital technologies and cut emissions, labour demand rises fastest in sectors that rely on digital and green skills, pushing vacancies up. By contrast, AI tends to loosen labour markets on average, because job losses outweigh job creation in the sectors most exposed, unless AI is used to complement human labour, in which case it tightens markets instead.

When time and interactions matter

Looking beyond the short term, the effects of these trends change. Workforce ageing becomes a powerful driver of labour shortages over time, especially in countries where ageing is already advanced. Digitalisation initially tightens labour markets but later creates slack as automation gains ground. AI gradually reduces over-qualification by shrinking employment in highly credentialed jobs. Importantly, these forces interact. The study finds that decarbonisation leads to labour shortages mainly where digitalisation is also strong, underlining that the green transition depends heavily on digital capabilities. Structural trends also have stronger effects when economic growth is high, meaning booms can amplify labour shortages rather than ease them.

What policymakers should do differently

The paper’s message for policymakers is clear: labour shortages and mismatches are structural, not temporary. Treating them as short-lived frictions risks slowing both productivity growth and the green and digital transitions. Governments need to move from reacting to shortages toward anticipating them. Education, training, and lifelong learning policies can deliver a double dividend by easing labour shortages while supporting technological change. Measures that raise labour force participation, especially among women, older workers and migrants, can help offset demographic pressures. Policies that improve labour mobility, such as housing, transport and recognition of qualifications, can speed up worker reallocation across sectors. Finally, innovation and automation policies should be aligned with workforce development, ensuring that technology complements workers rather than simply replacing them.

In short, the study shows that the future of labour markets will be shaped less by short-term shocks and more by how well societies manage the deep structural forces already at work.