Global central bankers highlight pressing labor shortage challenge at Jackson Hole

The world's major developed economies are facing urgent challenges of rapidly aging population and labor shortages, which could drag economic growth and complicate efforts to maintain price stability, warned top central bankers at the annual economic symposium in Jackson Hole, Wyoming, on Saturday.

Speaking at a panel examining the policy implications of labor market transitions, as part of the annual gathering of leading policymakers, Bank of Japan Governor Kazuo Ueda said that labor shortages have become one of the country's "most pressing economic issues."

"Barring a major negative demand shock, the labor market is expected to remain tight and continue to exert upward pressure on wages," he added.

Speaking at the same panel, head of the Bank of England Andrew Bailey emphasized the "acute challenge" over Britain's weak underlying economic growth and reduced labour force participation since the COVID-19 pandemic.

By 2040, 40 percent of the UK population will be older than the standard working age group of 16 to 64, Bailey added.

The central bankers also underscored the important role of foreign workers in supporting labor markets and fueling growth.

Ueda pointed out that although foreign workers accounted for just 3 percent of the labour force in Japan, they contributed to more than half of the recent rise in labour force growth.

Christine Lagarde, president of the European Central Bank, made a similar observation, saying that foreign workers have accounted for half of Europe's growth over the past three years, despite representing only around nine percent of the total labour force in 2022.

As one of the most influential gatherings in global finance, this year's Jackson Hole Economic Symposium, themed "Labor Markets in Transition — Demographics, Productivity and Macroeconomic Policy," addresses the critical policy challenges facing central banks worldwide.