[Bloomberg Column] The 'Golden Age of Employment' Driven by Immigration Is Ending

Adrian Wooldridge Bloomberg Opinion Columnist.

Until now, companies have relied on the stable labor pool of foreign workers to solve workforce supply issues. From Silicon Valley tech giants to agricultural and food processing companies, hotels and restaurants, construction firms, and large-scale retailers, all have addressed labor shortages by leveraging immigration. This has led to remarkable demographic changes. Currently, 16% of the UK population, 20% of Sweden, 19% of Germany, and 14.3% of the United States were born overseas.

However, this era, which has been a "golden age" for employers, is now coming to an end. Public dissatisfaction with large-scale immigration is rising, and anti-immigration parties are gaining momentum. Even mainstream parties are belatedly paying attention to this trend. It is not just US President Donald Trump who is taking steps to restrict immigration. Canada’s new Prime Minister Mark Carney has implemented caps on the number of temporary foreign workers and international students. UK Prime Minister Keir Starmer has also expressed concerns that the UK could become a "nation of strangers." For companies operating abroad, responding to tariff hikes is the biggest challenge, while for domestic companies, strengthened immigration control policies have emerged as the most significant challenge.

How should companies respond to this changing environment? The first likely reaction is to quietly wait, believing that "this too shall pass." Perhaps, when faced with a shortage of foreign caregivers for elderly parents, people will eventually regain their senses. A second possible response is to actively lobby for more open immigration policies, directly attempting to reverse the shift in public opinion.

However, neither of these responses may be correct. We are not witnessing a temporary change, but rather a "paradigm shift" surrounding large-scale immigration. Backlash against immigration is occurring not only in conservative societies but also in progressive countries. For example, Sweden has introduced financial incentives to encourage immigrants to return to their home countries. This trend is driven more by cultural anxieties than by economic logic. Scandals such as grooming in immigrant-dense areas of northern England, or gang violence in the suburbs of Sweden, make it difficult to fully embrace the previous belief that "diversity is always a strength."

Consider this: the US immigration restriction system introduced in 1924 was maintained until 1965, despite a mass production system based on manual labor and an overall economic boom. Once immigration controls begin, they tend to last a long time. Companies may feel the impact of this paradigm shift sooner than expected. In April of this year, net immigration to the United States dropped sharply to an annualized rate of about 600,000, a significant decrease compared to 4 million in 2023. The massive inflow of undocumented immigrants during the previous Joe Biden administration has now almost ceased. The UK’s net immigration has halved compared to last year, and New Zealand has seen an even larger decrease. While immigration inflows are plummeting, birth rates remain below the level needed to maintain the population. The gap is particularly large in Japan and Italy. In addition, the female workforce, once considered an alternative labor pool, is now also insufficient.

So how should companies respond to this new environment? First, talent supply chains must be managed as rigorously as supply chains for parts or raw materials. For decades, domestic talent pipelines in many countries have been largely neglected. Both governments and businesses have relied too heavily on the easy solution of immigration. As a result, pathways for social mobility have gradually disappeared, and vocational education has been thoroughly ignored. This reality shows that the domestic talent pool itself has become distorted and depleted.

Companies must now take a more proactive role in restoring domestic talent pipelines. They should sponsor charter schools, provide university scholarships, and establish systems to identify and nurture students with potential at an early stage. In addition, to strengthen vocational education, companies should collaborate with high schools to introduce apprenticeship programs or partner with local schools to create customized education and on-the-job training systems. Companies should also become more actively involved in career guidance and mentoring. Furthermore, expanding employment opportunities for older workers and vulnerable groups is a critical task. By introducing flexible work arrangements or long-term leave policies, companies can once again utilize the capabilities of those previously excluded from the traditional labor market.

Companies must also consider more deeply how to effectively apply labor-saving technologies in the workplace. This is especially urgent in industries that have heavily relied on foreign labor, such as construction, agriculture, and services. After World War II, the United States experimented with factory-based home production, which succeeded in reducing the price of prefabricated houses to one-third of previous levels between 1955 and 1973. However, this model was abandoned due to opposition from construction unions and excessive red tape. In agriculture, tasks such as seed planting and weed removal are now being handled by AI-powered "smart farm machinery." In hotel and hospital services, robots are advancing to the point where they can perform increasingly delicate cleaning tasks.

Some companies are already pursuing creative approaches to improve employee training or replace existing labor. For instance, Amazon and Palantir provide university scholarships to outstanding talent and actively recruit students from public schools. Timpson, a UK company specializing in key cutting, phone repair, and shoe repair, hires ex-offenders. Eat & Holdings, a Japanese food and dining company, has introduced AI-based cooking robots in its stores, while the retail industry is rapidly adopting self-checkout systems.

The transition from a high-immigration-dependent system to a low-immigration system will not be easy or smooth. Deportation measures for undocumented immigrants have caused confusion and conflict in cities such as Los Angeles. Nevertheless, attempts to resist the pressure for immigration control lack realism. While there are certainly economic and social costs associated with reduced immigration, there are also clear benefits. Companies will accelerate the automation of repetitive and simple tasks and become more proactive in technological innovation to improve productivity. On a societal level, efforts to discover and nurture "domestic Einsteins" hidden within the country will be strengthened, rather than relying on a vague and inefficient immigration system.

Adrian Wooldridge Bloomberg Opinion Columnist

This article is a translation by Asia Economy of the Bloomberg column The Golden Age for Employers Is Ending.