Talent shortage is more pressing than job losses by robotisation

20 July 2018 Consultancy.eu 4 min. read

While many are concerned that robotisation will lead to the vanishing of jobs, it appears that the real risk lies in a shortage of talented people. By 2030, leading European economies Germany, the UK and France alone could face a combined talent shortage of more than 9 million unfilled jobs, worth an unrealised revenue of $1.2 trillion.

Huge demographic, economic and geo-political shifts are occurring at a rapid rate, placing the HR departments of private and public entities under a growing strain. Ageing populations across developed economies mean that there may soon not be enough new members of the workforce to replace retirees, while closing borders and a mounting hostility aimed at migrant workers may exacerbate this further.

According to new data analysis conducted by Korn Ferry, in partnership with Man Bites Dog and Oxford Analytica, this combination of factors is seeing developed economies faced with a rapidly growing talent shortage. The researchers looked at the effects of talent shortage and found that while the issue already comes with a massive economic cost, the development will only worsen in the coming decades, concluding that by 2030 there will be a global human talent shortage of more than 85 million people – roughly equivalent to the population of Germany. Left unchecked, in 2030 that talent shortage could result in about $8.5 trillion in unrealised annual revenues.

Talent shortage costs $8.5 trillion in foregone revenues by 2030

France and the United Kingdom risk a respective talent shortfall of about 1.5 million and 3 million qualified employees by 2030. Germany is facing a gap of nearly five million people, which could cost the EU’s largest economy as much as $538 billion in unrealised revenues, or 14 % of the German economy. In the US and China, the total labour shortfall per 2030 is forecast to amount to 6.6 million and 6.7 million respectively. This means the world’s two largest economies would subsequently miss out on more than $3 trillion in lost sales between them. Worldwide there will be a total labour shortage of 85.2 million, and €7.3 trillion ($ 8.5 trillion) in lost sales.

The talent gap is firmly grounded in the ageing population of most developed nations, making for a smaller workforce. While limits on migration are exacerbating this, there is also a marked talent gap which is making life even more difficult for recruiters. As technology continues to morph, the skills of the workforce must adapt to fit the new requirements of innovation – and this transition is often slow, and poorly supported.

Sectors hit

Of the sectors studied by Korn Ferry, the financial sector, is in line to be hardest hit across the world, with a deficit of 10.7 million employees, especially in the most developed countries in Europe. A major loser is likely to be the London financial sector, which the Bank of England recently anticipated could see 75,000 jobs leave after Brexit. Regardless of this prediction, the UK capital’s finance sector looks set to face a shortage of half a million employees by 2030, missing €77 billion in revenues, or 7% of the value of the entire sector.

The authors highlight that a real solution probably requires not only new skills, but entirely new ways of working. A flexible relationship with employees then becomes the new standard for successful companies. The labour market becomes more fluid, and staff are appointed per project. Individual employees are then responsible for ensuring that they remain constantly up-to-date. The role of the government and companies is precisely to build up and maintain talent pipelines, and to provide continuous access to (formal or non-formal) learning opportunities.

The research warns that if government and companies don’t act, by 2030 the talent shortage could become “a real crisis”. The authors conclude; “Companies now have to work on this to prevent this: staff planning is essential, as is good knowledge of the talent pipeline.”