Latin America: The China of 2020 and its Growing Labor Force
Latin America is a notoriously progressive region. By 2020, it will represent 10% of the global population and a total market of 670 million consumers. However, what most don’t realize is that Latin America is home to a young population. Approximately 280 million young adults between the ages of 15 to 35, many of whom are part of the working population, reside in Latin America.
Over the next decade, analysts project significant growth in the Latin American labor force. In 2010, the working population between the ages of 25 to 59 amounted to 255 million. By 2020, this population is expected to rise to 296 million while the United States labor force will only increase to an approximate 105 million from 103 million in 2010.
Latin America’s growing young labor force possesses sizeable disposable income, raising consumer demand and spending. The growth has favorable implications on the region’s economy.
The size of the young working population translates to a larger share of consumption by these groups. Similarly, the entrance of 100 million women (who are young), into the workforce by the end of 2012, signifies the financial independence and increased decision-making power over household consumption by the young generation.
Latin America’s young population is not only growing in terms of size, but also in terms of annual total gross incomes. In Brazil, people between the ages of 30 and 39 accounted for 18.4% of the population with an annual gross income that is equivalent to over $150,001. Clearly, the young demographics expect to see further increases in their average gross income over the next ten years and a corresponding increase in leisure and consumption. Similarly, in Colombia, those in the 15 to 37 age bracket will see their gross income expand over the next decade along with an increased purchasing power. The emergence of a new generation of high-income, young adults will mean more spending in categories such as household items and family-related goods. Business interested in investing in the young, consumer-friendly Latin American market should look to introduce affordable luxury goods, mobile phones and trendy clothing brands.
A growing young middle class will begin to represent the majority of consumers in Latin America, a number that will only continue to grow. As the young consumer segment experiences economic prosperity and a rise in disposable incomes, demand will likely increase for higher quality consumer goods and household products. Again, this young population boom presents immense opportunities for foreign and domestic businesses alike in the financial services, telecom and retail industries.
Businesses expanding to Latin American markets have to consider the evolving demographics and socioeconomic characteristics of the young working population to capitalize on their raw purchasing power. Successful companies will employ market-entry strategies that are attentive to the emerging consumer trends of a growing young, willing-to-spend Latin American population now and into the future.
Stay tuned the next installment of our China 2020 series.