The future of work – the global competition for talent

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The future of work – the global competition for talent
The future of work – the global competition for talent

Africa-Press – Liberia. This is the second installment in my mini-series on the future of work. Previously we looked at the impact of digitalisation and automation on the future of work. This week we investigate another driver of change that is impacting labour markets all over the world. The global competition for talent. As people move from country to country aided by technology and the potential of working remotely, organisations and countries are in a global competition for skilled labour.

The global competition for talent has traditionally been driven mainly by advanced economies, largely due to the technology challenges referred to above, as well as their demographic realities. Many developed economies face difficulties in producing enough talent for growth by relying just on their local population and education institutions. Declining birth rates and ageing populations raise added concerns over the shortage of young native talent needed for generating new ideas and innovation.

Although job mobility had become more prevalent since World War II, the rise of digitalisation and sustained growth in foreign direct investment (FDI), trade and global economic convergence meant that global mobility, particularly in STEM subjects, increased steadily after 2000. The Organisation for Economic Co-operation and Development (OECD) first expressed its take on the topic in 2008.[1] The OECD defined global mobility as a positive force that “plays an important role in shaping skilled labour forces throughout the OECD area.” Undoubtedly, the rise of the knowledge-based economy in recent years contributed to this positive assessment. In fact, the OECD highlighted the following positive impacts of an inflow of talent in receiving countries:

• improved knowledge flows

• increased R&D and economic activity owing to the availability of additional skilled workers

• improved knowledge flows and collaboration with sending countries

• increased enrolments in graduate programmes

• potential firm and job creation by immigrant entrepreneurs

• better linkage of domestic firms to foreign knowledge

However, despite this overall positive assessment, the OECD did stress one potential downside of reliance on imported talent for receiving countries: this must not be seen as a long-term solution for domestic skills gaps, and it was essential that active policies were applied to boost the domestic supply of necessary skills and reduce this reliance over time.

The Global Talent Competitiveness Index (GTCI)[2] isolates four determining factors which, in its view, contributed to success in the global competition for talent and therefore shape the indicators selected for their rankings. These are reproduced below:

• Enable – In its simplest terms, countries need to make opportunities for global talent to move there and be open to attracting skilled workers.

• Attract – This needs to be viewed in terms of both people and businesses.

• Grow – Investing in existing talent by driving workers to develop new skills is a major benefit that attracts talent and opens wider potential for skills migration in the future.

• Retain – Though growing talent may offer workers the skills that will help them move elsewhere; talent retention investments will ensure they want to stay.

There have been significant changes in the global competition for talent since the OECD first issued their report in 2008, to a large extent caused by the financial recession of 2009 and its aftermath. Perhaps the most significant shift has been the growing economies of the developing countries that originally formed the first line of sending countries for emigrant talent. Pre-2010, global business and talent strategies were typically one-way, reaching out from developed markets to developing ones; geographically tending to move from north to south rather than the other way around. However, the past decade has seen the BRIC economies (Brazil, Russia, India, and China) mature as global growth engines, and countries in the new tier of emerging markets, including Indonesia, Malaysia, the Philippines, South Africa, Thailand, Turkey, and Vietnam, established themselves as strong emerging economies and solid contenders as receiving countries for talent, shifting away from their former primary role as sending countries.

As technology and innovation grew in importance as major economic drivers, access to talented workers was increasingly identified as a top indicator of a country’s competitiveness, driving global demand further. The talent potential of emerging economies is also rising compared to the demographic realities of the advanced economies with their shrinking and ageing native populations; these countries have young populations; investment in education systems and universities is also reaping results with the number of students in higher education in emerging market economies rising from just under 5.0 million in 2000 to 10.4 million in 2015.

Recent editions of the Global Talent Competitiveness Index (GTCI) focused on the impact of technology change on talent competitiveness, to assess whether any replacement of jobs by technology was reducing the need for human capital. However, annual reports between 2017 and 2020 asserted that while job replacement at lower skill levels was evident, technology was creating new opportunities.

Between 2015 and 2020 the global skills gap continued to widen, with projections made at the end of 2019 that the global talent shortage could reach 85.2 million people by 2030 (World Bank; Korn Ferry Institute), costing governments trillions of dollars in lost economic opportunity.

By end 2019, according to the GTCI 2020 report, the most successful countries in the global competition for talent were dominated by European destinations, which occupied 16 out of the top 25 (Malta was in 23rd place). North America was represented by both the USA and Canada making it into the list. Australasia is similar with Australia positioned in 6th and New Zealand making it to 14th. Singapore gives Eastern Asia a high ranking, but the only other country from the area to make it into the top 25 is Japan in 22nd. The Middle East is represented by the United Arab Emirates (UAE), Israel and Qatar. No countries from Africa or South America are ranked in the top 25 places for highly skilled workers.

The future of work continues to be highly disruptive as various drivers of change are impacting organisations and countries across the world. Preparing and futureproofing organisations and countries will be essential to retain competitiveness and ability to compete in this globalised and heavily interconnected world. The writer is a co-founding partner of Seed, an international research driven advisory firm with offices in Europe and the Middle East.

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