Tal­ent ver­sus cap­i­tal in the 21st cen­tury

Financial Mirror (Cyprus) - - FRONT PAGE - By Klaus Sch­wab

When fi­nan­cial pol­i­cy­mak­ers at­tempt to pro­mote eco­nomic growth, they al­most in­vari­ably fo­cus on look­ing for new ways to un­leash cap­i­tal. But, although this ap­proach may have worked in the past, it risks giv­ing short shrift to the role that tal­ent plays in gen­er­at­ing and re­al­is­ing the ideas that make growth pos­si­ble. In­deed, in a fu­ture of rapid tech­no­log­i­cal change and wide­spread au­to­ma­tion, the de­ter­min­ing fac­tor – or crip­pling limit – to in­no­va­tion, com­petive­ness, and growth is less likely to be the avail­abil­ity of cap­i­tal than the ex­is­tence of a skilled work­force.

Geopo­lit­i­cal, de­mo­graphic, and eco­nomic forces are re­lent­lessly re­shap­ing labour mar­kets. Tech­nol­ogy, in par­tic­u­lar, is chang­ing the na­ture of work it­self, ren­der­ing en­tire sec­tors and oc­cu­pa­tions ob­so­lete, while cre­at­ing com­pletely new in­dus­tries and job cat­e­gories. By some es­ti­mates, al­most half of to­day’s pro­fes­sions could be au­tomat­able by 2025. Spec­u­la­tion about what will re­place them ranges from pre­dic­tions of un­ex­pected op­por­tu­ni­ties to fore­casts of large-scale un­em­ploy­ment as ma­chines dis­place most hu­man la­bor.

The first signs of this dis­rup­tion are al­ready vis­i­ble. Global un­em­ploy­ment has topped 212 mln, ac­cord­ing to the In­ter­na­tional La­bor Or­gan­i­sa­tion, and an­other 42 mln new jobs will need to be cre­ated each year if the world econ­omy is to pro­vide em­ploy­ment to the grow­ing num­ber of new en­trants into the la­bor mar­ket. Mean­while, last year, 36% of em­ploy­ers world­wide re­ported fac­ing dif­fi­cul­ties in find­ing tal­ent, the high­est per­cent­age in seven years.

Ad­dress­ing this mis­match in sup­ply and de­mand will re­quire gov­ern­ments, busi­ness lead­ers, ed­u­ca­tional in­sti­tu­tions, and in­di­vid­u­als to over­come in­cen­tives to fo­cus on the short term and begin to plan for a fu­ture in which change is the only con­stant. All must re­think what it means to learn, the na­ture of work, and the roles and re­spon­si­bil­i­ties of var­i­ous stake­hold­ers in en­sur­ing that work­ers around the world are able to ful­fill their po­ten­tial.

Hu­man-re­source ex­ec­u­tives at some of the world’s largest com­pa­nies an­tic­i­pate pro­found dis­rup­tions from the in­creased adop­tion of mo­bile In­ter­net and cloud tech­nol­ogy, the use of big data, flex­i­ble work ar­range­ments, 3-D print­ing, ad­vanced ma­te­ri­als, and new en­ergy sup­plies, ac­cord­ing to early re­sults from a sur­vey by the World Eco­nomic Fo­rum. Their view of the over­all im­pact on em­ploy­ment lev­els in their in­dus­tries was for the most part pos­i­tive – pro­vided that new work­force skills can be de­vel­oped rapidly in their own sec­tors and in the la­bor mar­ket more broadly.

As tech­nol­ogy in­creas­ingly takes over knowl­edge-based work, the cog­ni­tive skills that are cen­tral to to­day’s ed­u­ca­tion sys­tems will re­main im­por­tant; but be­hav­ioral and non-cog­ni­tive skills nec­es­sary for col­lab­o­ra­tion, in­no­va­tion, and prob­lem solv­ing will be­come es­sen­tial as well. To­day’s schools and uni­ver­si­ties, which are dom­i­nated by ap­proaches to learn­ing that are fun­da­men­tally in­di­vid­u­al­is­tic and com­pet­i­tive in na­ture, must be re­designed to fo­cus on learn­ing to learn and ac­quir­ing the skills needed to col­lab­o­rate with oth­ers. Uniquely hu­man skills, like be­ing able to work in teams, man­age re­la­tion­ships, and un­der­stand cul­tural sen­si­tiv­i­ties will be­come vi­tal for busi­nesses across all sec­tors and must be­come a core com­po­nent of fu­ture gen­er­a­tions’ ed­u­ca­tion.

More­over, with ed­u­ca­tion in­creas­ingly be­com­ing a life­long pur­suit, busi­nesses must re­think their role in pro­vid­ing for a com­pet­i­tive work­force. Some com­pa­nies have al­ready grasped this and are in­vest­ing in their em­ploy­ees’ con­tin­u­ous learn­ing, reskilling, and up-skilling. Yet most em­ploy­ers still ex­pect to ob­tain pre-trained tal­ent from schools, uni­ver­si­ties, and other com­pa­nies.

Busi­ness will in­creas­ingly have to work with ed­u­ca­tors and gov­ern­ments to help ed­u­ca­tion sys­tems keep up with the needs of the la­bor mar­ket. Given rapid change in the skill sets re­quired for many oc­cu­pa­tions, busi­ness must re­di­rect in­vest­ment to onthe-job train­ing and life­long learn­ing, par­tic­u­larly as mil­len­ni­als en­ter the work­force, seek­ing pur­pose and di­ver­sity of ex­pe­ri­ence where their pre­de­ces­sors sought re­mu­ner­a­tion and sta­bil­ity.

Busi­ness cy­cles nat­u­rally en­tail peaks and troughs in em­ploy­ment, and so­cially re­spon­si­ble busi­nesses should fol­low suc­cess­ful ex­am­ples like Coca-Cola, Al­coa, Saudi Aramco, Africa Rain­bow Min­er­als, and Google in work­ing to­ward mit­i­gat­ing job­less­ness and en­hanc­ing peo­ple’s abil­i­ties to earn a liveli­hood.

Gov­ern­ments, too, have a role to play in cre­at­ing an en­vi­ron­ment in which their cit­i­zens can reach their po­ten­tial. Pol­i­cy­mak­ers must use stronger met­rics to as­sess hu­man cap­i­tal and re­ex­am­ine in­vest­ment in ed­u­ca­tion, cur­ricu­lum de­sign, hir­ing and fir­ing prac­tices, women’s in­te­gra­tion into the work­force, re­tire­ment poli­cies, im­mi­gra­tion leg­is­la­tion, and wel­fare poli­cies. Reg­u­la­tory sup­port for en­trepreneur­ship and small and medi­um­size en­ter­prises re­mains one of the most un­der­used means of un­leash­ing cre­ativ­ity, en­hanc­ing growth, and gen­er­at­ing em­ploy­ment.

Pro­tect­ing work­ers and con­sumers is crit­i­cal, but shield­ing spe­cific in­dus­tries from the im­pact of new busi­ness mod­els will not hold off the next wave of trans­for­ma­tion. Rather than seek­ing to rein in dis­rup­tive busi­nesses such as Airbnb and Uber, gov­ern­ments should in­tro­duce reg­u­la­tions that en­able their sus­tained growth, while look­ing for ways to lever­age their tech­nolo­gies and en­tre­pre­neur­ial ap­proaches to boost so­cial wel­fare. Such poli­cies in­clude on­line ed­u­ca­tion cour­ses for the un­em­ployed, dig­i­tal work­ers’ in­sur­ance, vir­tual union­iza­tion, and tax poli­cies geared for the shar­ing econ­omy.

Un­lock­ing the world’s la­tent tal­ent, and thus its full ca­pac­ity for growth, re­quires us to look be­yond busi­ness cy­cles and quar­terly re­ports. The fu­ture is full of po­ten­tial, but only if we are smart enough – and coura­geous enough – to grasp it.

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