It sounds like we’ll need to improve worker efficiency then, while at the same time workers are able to demand better working conditions and fewer hours because of competition for them. Company A wants you to work 40 hours, but Company B has better processes and efficiency and can get the same productivity out of 32 hours of work. Because of shrinking/stagnant workforce, this doesn’t cause unemployment to spike, and they still need you for those 32 hours so they’re willing to offer a competitive salary.
Maybe this is a bit over-optimistic, but I think that assuming everyone will just work more hours is equally over-pessimistic! Realistically we’ll likely get something in the middle. But hopefully leaning more towards the optimistic side :)