Despite today’s high unemployment rates, the global talent risk is growing. Soon staggering talent gaps will appear in large parts of the world threatening economic growth. Economies will struggle to remain competitive while organizations will compete for talent on an unprecedented scale. Now, human capital is replacing financial capital as the engine of economic prosperity.
The roots of the looming talent scarcity are no mystery. The Northern hemisphere faces talent shortages in a wide range of occupational clusters largely because populations are ageing rapidly and educational standards are insufficient. The United States, for example, will need to add more than 25 million workers by 2030 to sustain economic growth, while Europe will need more than 45 million. In Germany, according to a recent assessment, 70 percent of employers are hard-pressed to find the right people. In developed countries, ageing and the retirement of baby boomers will have significant implications for how to manage workforce quantity, quality, and costs.
Many countries in the Southern hemisphere report workforce surpluses due to high economic growth and stable birth rates. However, there are questions about the employability of these workers—whether they have the necessary skills to get jobs and work effectively. The uneven quality of educational systems in developing countries is one reason why workers are not receiving the training they need to thrive in an increasingly global economy. As one example, only 25 percent of Indian professionals are considered employable by multinationals.
The talent crisis demands bold responses. Skills for high-demand jobs in 2020 must be developed now. Demand will be highest for well-educated professionals, technicians, and managers. All over the globe—in developed, newly industrialized, BRIC, and developing countries—demand is soaring for these professions. Professionals will be in particularly high demand by companies in trade, transport, and communication in developing nations. Healthcare research and development (R&D) will generate enormous demand for skilled labor worldwide, mining companies will need project planners, and web designers will be in demand throughout many industries. Demand for other jobs will taper off as technologies render them obsolete. Filling higher demand positions will require improved and more extensive vocational training, starting today.
To be employable in 2020, graduates must be technologically literate and acquire transferable, cross-cultural learning skills. Any nation or company that continues to rely on conventional learning and routine, siloed work without fostering a culture of continuous learning will face an ever-deepening talent gap.
Talent mobility is inevitable. Despite protectionist attitudes that have intensified during the downturn, labor migration will rise over the long term. Globalization is fuelling mobility, as more companies expand abroad and people consider foreign postings as a natural part of professional development. Beyond the positive effects that talent circulation brings to both developed and developing countries, the larger point is that mobility will persist in inclusive societies, enabling equal opportunities.
Companies and countries will compete for the best and the brightest. Talent scarcity is driving the growth of an internationally mobile creative class that encompasses five generations of workers1 Notes: 1 These five generations include: Traditionalists, born prior to 1946; Baby Boomers, born 1946-1964; Generation X, born 1965-1976, Millennials, born 1977-1997; and Generation 2020, born after 1997; see U.S. Census Bureau, 2007, American Community Survey, cited in The 2020 Workplace, Meister J.C. and Willyerd, K., 2010 . Competition for talent will come not only from the company down the street, but also from the employer on the other side of the world. It will be a seller’s market, with talented individuals having many choices. Both countries and companies will need to brand themselves as locations of choice to attract this talent.
The concept of mobility extends beyond labor migration. Many government and business leaders have long relied on migrant workers to fill their talent gaps. But migration alone cannot make up for the massive talent shortfall we will soon face. The solution lies in expanding the definition of talent mobility to encompass movement across both geographical and non-geographical boundaries.
A holistic approach to the global talent risk will help companies and governments structure their efforts to solve the talent gap. This study proposes solutions around seven responses to global talent risk identified during a review of best practices. More than 320 current practices of countries and organizations have been evaluated and, along with additional quantitative and qualitative research, condensed into blueprints for action on how to attract, move, develop, diversify, and retain talent. The seven responses to global talent risk are:
1.Introduce strategic workforce planning. Strategic workforce planning means modelling labor supply and demand for different job families to understand current and future imbalances and develop strategies for addressing them.
2.Ease migration. The economic downturn and rising unemployment rates have further soured attitudes toward migrants, with countries reducing quotas, setting tougher entry requirements, refusing to renew temporary work permits, and even paying workers to go home. Innovative points-based migration systems and a “migration-friendly” branding by states and companies are necessary to attract the right talent globally.
3.Foster brain circulation. Brain drain has long been a nagging concern of developing countries. However, there are strategies that can help turn the brain drain into a brain gain, as students and professionals come home to apply skills learned abroad.
4.Increase employability. Governments and companies can do more to boost the skills levels of both the current and future workforce. What is needed is an adaptable but efficient education system that includes practical and theoretical skills, lifelong learning, and upskilling.
5.Develop a talent “trellis.” Talent development is key to ensuring a sustainable pool of highly skilled resources. Governments and companies must focus on going from career tracks to a trellis, building the skills required for the jobs of tomorrow and offering horizontal and vertical career and education paths.
6.Encourage temporary and virtual mobility. Temporary mobility covers short-term work or study in another location, offering relatively easy opportunities to access required skills, while virtual mobility is made possible by a networked world, enabling individuals to carry out their profession regardless of their location.
7.Extend the pool. Large pools of developed talent are currently underutilized. Countries and companies need to establish policies to tap into the skill sets of women, older professionals, the disadvantaged, and immigrants. Easily available childcare, flexible work schemes, mentoring and advisory roles, and improved options for licensing and recognizing credentials represent solutions to barriers faced by these groups.
Global mobility of talent is becoming as critical as the global mobility of goods and capital. The seven responses to the global talent risk are indispensable for companies and countries to win their share in tomorrow’s global high-skills marketplace. The largest gains, however, will come from coordinated efforts among states, companies, international organizations, academia, and civil societies worldwide as they think beyond national borders and recognize the global benefits of mobile talent.
Given the limitations of international collaboration in the area of talent mobility, concerted, multistakeholder action is needed to raise awareness of the impending talent crisis, increase best practices and information sharing, and advocate for policy changes.
A pragmatic, result-driven and content-based approach focused on effective sharing of good practices can provide opportunities to tackle imbalances of human capital markets. An action built around such concept, supported by governments, businesses, and thought leaders, can accelerate change and make a concrete impact.
The World Economic Forum seeks to catalyse this action at the World Economic Forum Annual Meeting 2011 in Davos-Klosters.