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Labour shortages across the G20 are easing as the global economy slows, but issues may resurface as populations age, according to a new report from Moody’s Investors Service.

The rating agency said supply and demand imbalances for labour in the world’s advanced economies are starting to moderate as the cyclical demand pulls back amid weaker growth.

“Labour shortages will gradually abate this year, easing wage pressure and the risk of more entrenched inflationary dynamics,” it said, with a recession likely by the end of the year.

These shortages will take longer to resolve in Canada, the U.S., Italy and Germany, “where labour force dropouts from aging and retirement have outpaced recoveries in other age groups,” Moody’s said.

Additionally, labour imbalances will resolve unevenly across sectors, it said.

Shortages will ease more quickly in leisure and hospitality, “because consumers tend to pull back from these services first during recession,” it said. “Construction and manufacturing are also likely to rebalance quickly given their sensitivity to higher interest rates.”

Labour imbalances will likely take longer to unwind in the health-care and social assistance sectors, which face less cyclical demand, the report said.

Moreover, labour shortages threaten to resurface in the years ahead as aging populations “will lead to renewed shortages without policy action or productivity gains,” Moody’s said.

Faced with this long-term challenge, government policies that encourage immigration, increased labour participation and the adoption of new, productivity-enhancing technologies “will determine the extent and persistence of labour supply challenges,” the report said.