Saturday June 23, 2012
Competition for skills will continue to intensify in the years to come
By CECILIA KOK
GLOBAL competition for skills and talent will only get fiercer in the years ahead as both advanced and developing countries are expected to face a serious shortage of skilled workers to drive their economies.
According to a study by McKinsey Global Institute (MGI), current trends in population, education and labour demand are already indicating that the global economy could face an acute skills mismatch problem a situation of too few medium-to-high skilled workers, but too many low-skilled workers by 2020.
The numbers given by the business and economics research outfit is quite staggering. It projects that in a matter of eight years, the world will face a potential shortage of 38 million to 40 million of high-skilled workers. For developing economies, there could also be a potential shortage of about 45 million medium-skilled workers.
On the contrary, the pool of low-skilled workers will likely expand further, creating a potential surplus of 90 million to 95 million of such workers in the global economy by 2020.
Such imbalances, MGI says, are expected to have undesirable implications for the global economy. For one thing, it explains, unemployment of low-skilled workers will likely continue to rise while global growth rates will likely fall because high-skilled jobs are not filled.
MGI notes that while wages could respond to the imbalances in labour demand and supply through market mechanisms, they will only further polarise employment into high-wage and low-wage jobs, and lead to greater income inequality.
Countering labour market imbalances requires massive effort by both policymakers and businesses. But even then, economists say, the measures that are implemented could only alleviate the problem over the medium term, and not totally eliminate it.
According to MGI, strains in the global labour market have become increasingly apparent, especially in the aftermath of the 2008/2009 “Great Recession”. It notes that even as some segment of societies continue to face poor employment prospects, with the less skilled workers struggling with either unemployment or stagnating wages, businesses are faced with the challenge of finding sufficient talent or high-skilled workers to raise productivity and drive economic growth.
“Demand for high-skilled labour is now growing faster than supply, while demand for low-skilled labour remains weak,” MGI argues, noting that the phenomenon is especially prevalent in advanced economies.
While the implication of an inadequate supply of high-skilled labour for advanced economies is the lack of drivers for productivity growth and high unemployment rates among low-skilled workers, for medium-income economies like China and Malaysia, the implication could be a constraint to their move up the value-added chain and an impediment of productivity growth that is crucial for their long-term economic prosperity.
The new world order requires greater knowledge to innovate and raise productivity, as skills of yester-years are increasingly losing their relevance to the present and future economic system.
To respond to the changing macro-economic environment, MGI argues, both advanced and developing economies would need to take drastic measures to reform their education system and vocational training programmes to produce more highly educated and skilled workers to meet rising industry demand. But not to neglect those who are not as highly educated, MGI says, policymakers will also have to create more jobs for the lower skilled workers.
As for the private sector, MGI says, “businesses operating in this skills-scarce world must know how to find talent pools with the skills they need and to build strategies for hiring, retaining, and training the workers who will give them competitive advantage”.
This will include finding ways to retain more highly skilled women and older workers, it explains.
“Businesses will also need to significantly step up their activities in shaping public education and training systems in order to build pipelines of workers with the right skills for the 21st-century global economy” MGI adds.
In Malaysia, efforts to revamp the education system are already underway.
“Our strategy is to make the change across all levels of our education system, beginning with pre-school,” Datuk Seri Idris Jala, CEO of Performance Management and Delivery Unit (Pemandu) and Minister in the Prime Minister's Department, tells StarBizWeek.
Malaysia is currently reviewing its education policy in collaboration with Unesco.
Jala says the Government hopes to be able to share the results from the review with the public soon.
That Malaysia lacks talent to drive its economy is nothing new.
While analysts are somewhat comforted by the fact that the Government has put in place some efforts to address the talent gap in the country, many remain concerned over the relatively short period of time available to tackle the challenge as the country aspires to become a high-income nation by 2020.
“We have put in place key initiatives to build a skilled workforce that our country requires,” Idris maintains.
“One is reforming the education system, which will take time. But there are other initiatives that will produce faster results such as linking institutes of higher education with industry groups to ensure industry-ready graduates,” he argues.
He points out that under the Strategic Reform Initiatives, Pemandu has also identified some “quick wins” to address immediate skills gaps in several key sectors such as oil, gas and energy; electrical and electronics; communications content and infrastructure; business services as well as outsourcing and data centres.
To retain and draw talent to Malaysia, Idris says, “we must be able to offer them better jobs, higher salaries and a better standard of living”.
Towards this end, he explains, various initiatives have been put in place, such as improving the liveability of the country's capital, Kuala Lumpur and its surrounding areas, as well as drawing quality investments and attracting multinational companies to set up base here and provide high-skilled, high-paying jobs to the people.
He also notes that TalentCorp the agency tasked to retain and draw talent has a comprehensive roadmap that sets out its strategic focus and initiatives through 2020.
While economists concede that most of the initiatives underlined in the Government's policies are viable measures, they reckon that more needs to be done to address the talent gap in Malaysia. These include tackling issues like meritocracy and public security. And in the midst of a fast-changing global economic environment, they say policymakers may have to be even more mindful of the fact that Malaysia is in an intense competition for talent, and to slack is to lose.