Looming Talent Shortage Seen Threatening Sustained Growth

Report urges increased labor mobility to meet demands for economic growth

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Boston — January 18, 2011 — Industries and countries worldwide will require major increases of highly educated people in their workforces to sustain economic growth, argues a new report prepared by the World Economic Forum in collaboration with The Boston Consulting Group (BCG).

The report, "Global Talent Risk — Seven Responses," analyzes projected talent shortages by 2020 and 2030 in 25 countries, 13 industries and nine occupational clusters. The report concludes that:

  • Demand will be biggest for highly educated professionals, technicians and managers. Professionals will be in particularly high demand in the trade, transportation and communications industries in developing nations.
  • In the next two decades, demand for professionals in manufacturing will peak at more than 10 percent in developing countries, exceeding 4 percent across all countries sampled. (Labor-demand growth rates are compounded annually.)
  • Health care research and development alone will generate enormous demand for skilled labor worldwide.
  • Employees without critical knowledge and technical skills will be left behind.

If left unaddressed, talent scarcity will become a threat to sustained growth, particularly in knowledge-based economies, the report's authors assert. "Human capital has replaced financial capital as the engine of economic prosperity," said Hans-Paul Bürkner, BCG's president and CEO.

The roots of the global talent risk include the widely uneven quality of educational systems, erratic employability of the workers in the Southern Hemisphere, and demographic changes in the Northern Hemisphere, where retirement of the baby boomers will result in an unprecedented talent deficit, according to the report.

In Canada, Germany, the United Kingdom and the United States, expected immigration and birth rates will not offset the workforce losses caused by aging populations. Today foreign-born workers with university degrees or equivalent qualifications make up just 2 percent of the European labor market, compared with 4.5 percent in the United States and nearly 10 percent in Canada. Improved education and training must go hand in hand with increased labor migration.

"The global problem is no longer a mere talent mismatch. The scale of the predicted talent gap requires concerted action, starting with — and going well beyond — removing barriers to the mobility of talent," said Piers A. Cumberlege, senior director and head of partnership with the World Economic Forum.

The report proposes seven core responses to global talent risk:

  • Introduce strategic workforce planning to address imbalances between labor supply and demand.
  • Ease migration to attract the right talent globally.
  • Foster "brain circulation" to mitigate brain drain.
  • Increase employability by advancing technological literacy and cross-cultural learning skills.
  • Develop a talent "trellis" by focusing on horizontal and vertical career and education paths.
  • Encourage temporary and virtual mobility to access required skills easily.
  • Extend the pool by tapping women, older professionals, the disadvantaged and immigrants.

Members of the Global Agenda Council on Skills and Talent Mobility, as well as more than 100 high-level experts and practitioners, contributed to the recommendations in the report and to the talent mobility dialogue hosted by the World Economic Forum online and at meetings in Brussels, Doha, Davos-Klosters, Dubai, Montreal, New Delhi, and New York in 2009 and 2010.

The report can be accessed here (PDF, 2.2MB).

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