Talent shortage to threaten business growth in EMEA

Korn Ferry Study indicates potential talent deficit of 14.3 million workers in the region by 2030

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ALREADY a major issue, skilled talent shortages will continue to impede growth and, if not addressed, could have a significant impact on major global economies by 2030, including potential unrealized annual revenue of $50.6 billion in the UAE and more than $206 billion in the Kingdom of Saudi Arabia, a study by Korn Ferry reveals.

“This talent crisis has the potential to greatly impact individual company growth as well as ambitious national economic development strategies to diversify and grow local economies,” said Jonathan Holmes, managing director, Korn Ferry MENA. “Now is the time for leaders in both the public and private sectors to proactively plan and align the workforce of the future to power the growth needs of the economy of the future.”

The Korn Ferry study, Future of Work: The Impending Talent Crunch, estimates the gap between future talent supply and demand in 20 major economies at three milestones: 2020, 2025 and 2030, and across three sectors: financial and business services; technology, media and telecommunications (TMT); and manufacturing.

This is the second Korn Ferry study looking at how to help governments and companies better prepare for future workforce demands in the new digital economy. While global leaders bet heavily on technology for future growth — the first Future of Work research found that 67 percent of CEOs believe technology will be their chief value generator in the future of work — they discount the value of human capital. The study revealed that leaders’ belief that physical capital will outperform human capital in the future of work translates into a trillion-dollar blind spot: economic research as part of the same study proved that people are set to add $1.215 trillion to the global economy, almost 2.33 times greater than physical capital, including technology. It also showed that for every $1 invested in human capital, $11.39 is added to the GDP.

The new report spotlights the challenge companies will face in finding talent with the right competencies and experience to fully realise that human capital potential as well as to maximize investments in advanced technologies that are impacting workforce needs. On a global level, the potential unrealized economic opportunity totals more than $8.5 trillion due to a talent gap of more than 85 million skilled workers. Markets across Europe, the Middle East and Africa (EMEA) account for approximately $1.9 trillion in unrealized revenue potential annually by 2030 with a talent gap of 14.3 million workers.

George Karam, managing partner, Korn Ferry Hay Group, said that countries like the UAE and KSA are already taking proactive measures to strategically address their looming talent gaps as part of long-term economic and social development platforms. In the UAE, creation of the new National Higher Education Strategy and Education and Human Resources Council, which recently launched a new partnership with the UAE private sector to promote advanced skills development for the future, as well as initiatives such as One Million Arab Coders demonstrate clear vision in future of work planning. As does the creation of the National Digitization Unit (NDU) under the Saudi Arabia Vision 2030 that is structured to add an estimated 200,000 jobs to the economy by 2025 directly related to the role advanced technology, AI and industrial automation will play in the future of society.

“The UAE is an example of a country that has a highly proactive workforce development strategy that is closely aligned with the long-term economic diversification and sector development strategy. As a result, the country is in an advantaged position compared to other global economies facing significantly greater talent gaps and much higher unrecognised economic opportunities,” said Karam.

Interestingly, no country studied, with the exception of India, will have a surplus of adequately trained talent to realize their full economic potential. Globally, the study reveals a potential crisis with a sizable mismatch between supply of available workers and business demand:

• The United States, Japan, France, Germany and Australia face the largest threat in the near term, with a combined opportunity cost of $1.876 trillion by 2020.

• Labor shortages in global financial and business services are the most acute, with a potential deficit of 10.7 million workers globally by 2030.

• Technological advancement across all sectors of the global economy could be hindered by an acute global labor shortage of 4.3 million TMT workers by 2030.

• Manufacturing is facing a global talent deficit crisis of 7.9 million workers by 2030, despite being the only sector with a surplus of highly skilled workers in 2020.

• India is the only economy in the study maintaining a talent surplus in 2025 and 2030.

Those global figures are also reflected in the talent deficit issue threatening economies and sectors across EMEA:

• Germany could experience the largest deficit in EMEA of 4.9 million workers and could lose out on $629.89 billion of annual revenue by 2030 if labor shortages are not addressed — equivalent to 14 percent of its economy.

• London’s financial market dominance is under threat -—the U.K. faces a shortage of more than half a million workers in financial and business services, losing out on $89.98 billion in annual revenues by 2030 — equivalent to 7 percent of the sector.

• Financial and business services are hardest hit across the EMEA region — losing out on more than $358.70 billion in annual revenue by 2030.

• Technological advancement across all sectors could be hindered by an acute labor shortage — TMT faces a shortage of more than 700,000 workers, with the sector losing out on annual revenues of $103.25 billion by 2030.

• Germany and the UK face the highest TMT sector opportunity cost — losing out on $30.70 and $27.70 billion in annual revenue respectively by 2030.

• Manufacturing is facing a talent deficit crisis in EMEA of more than 1.1 million workers by 2030, despite having a surplus of highly skilled workers in 2020.

• Germany’s manufacturing powerhouse status at risk, ranking highest within EMEA and second highest among the 20 markets studied for unrealized revenue within the manufacturing sector ($77.93 billion by 2030).

“The right talent is the greatest competitive advantage there is for an organization — and that talent is getting scarcer every day. Companies and countries across the globe are hotly competing for that talent from an increasingly limited pool,” said Holmes. “Our study reveals that there already isn’t enough skilled talent to go around and by 2030, organisations and economies could find themselves in the grip of a talent crisis. In the face of such acute talent shortages, workforce planning and a comprehensive understanding of the talent pipeline are critical.”

“The future will be built on the effective partnership between people and technology. The acute demand for workers with the right skills that businesses need, rather than the much-discussed domination of technology in business, could become the defining issue of our age,” said Karam.

The Korn Ferry Talent Crunch study is based on economic modeling designed by Korn Ferry, Man Bites Dog and Oxford Analytica and executed by Oxford Analytica. The study estimates the impending talent crunch by modeling the gap between future labor supply and demand at three critical milestones: 2020, 2025 and 2030.

It scrutinizes data and business intelligence to uncover the extent of the talent shortfall in 20 major developed and developing economies. The 20 markets covered are: the Americas (Brazil, Mexico, the US), EMEA (France, Germany, Netherlands, Russia, Saudi Arabia, South Africa, UAE, UK) and Asia Pacific (Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, Thailand).

Korn Ferry is a global organizational consulting firm. We help companies design their organization — the structure, the roles and responsibilities, as well as how they compensate, develop and motivate their people. — SG


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