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Global Talent Crisis Lies at Heart of Inequality Debate

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Efforts to fully realize people’s economic potential – in countries at all stages of economic development – are falling short due to ineffective deployment of skills throughout the workforce, development of future skills and adequate promotion of ongoing learning for those already in employment.

These failures to translate investment in education during the formative years into opportunities for higher-quality work during the working lifetime contributes to income inequality by blocking the two pathways to social inclusion, education and work, according to the World Economic Forum’s Human Capital Report 2017, which is published today.

The report measures 130 countries against four key areas of human capital development; Capacity, largely determined by past investment in formal education; Deployment, the application and accumulation of skills through work; Development, the formal education of the next generation workforce and continued upskilling and reskilling of existing workers; and Know-how, the breadth and depth of specialized skills-use at work. Countries’ performance is also measured across five distinct age groups or generations: 0-14 years; 15-24 years; 25-54 years; 55-64 years; and 65 years and over.

According to the report’s Human Capital Index, 62% of human capital has now been developed globally. Only 25 nations have tapped 70% of their people’s human capital or more. With the majority of countries leveraging between 50% and 70% of their human capital, 14 countries remain below 50%.

A fundamental tenet of the report is that accumulation of skills does not end at a formal education, and the continuous application and accumulation of skills through work is part of human capital development. All too often economies already possess the required talent but fail to deploy it.

While much is often made of intergenerational inequalities when it comes to the realization of human capital, the report finds every generation faces considerable challenges when it comes to realizing individual potential. For example, while younger people are consistently better off than older generations when it comes to the initial investment in their education, their skills are not always deployed effectively and too many employers continue to look for ready-made talent. The problem of under-deployment of skills among the young also affects those coming towards the end of their working life. Meanwhile, few among those currently in employment – across all age groups –are gaining access to higher skilled work and opportunities to enhance know-how.

“The Fourth Industrial Revolution does not just disrupt employment, it creates a shortfall of newly required skills. Therefore, we are facing a global talent crisis. We need a new mind-set and a true revolution to adapt our educational systems to the education needed for the future work force,” said Klaus Schwab, Founder and Executive Chairman, World Economic Forum.

“Human capital is not a fixed concept – it can be enhanced over time, growing through use and depreciating through lack of use – across people’s lifetimes. This means we need a more proactive approach to managing the transition from education to employment and to ongoing learning and skills acquisition for today’s workforce. Otherwise, every country risks creating lost generations,” said Saadia Zahidi, Head, Education, Gender and Work, World Economic Forum.

“Skills are the fundamental unit of human capital. Knowing which skills are most resilient, most persistent, and most likely to remain relevant through technological innovation and economic change is key to successfully upskilling and reskilling workers. Using our data to arm governments and broader policy communities with a richer understanding of skills dynamics can and should fuel more nuanced and strategic investments in building human capital for the future,” said Guy Berger, LinkedIn Economist.

The Human Capital Index 2017

The top 10 is topped by smaller European countries – Norway (1), Finland (2), Switzerland (3) – as well as large economies such as the United States (4) and Germany (6). Four countries from East Asia and the Pacific region, three countries from the Eastern Europe and Central Asia region and one country from the Middle East and North Africa region are also in the index top 20.

At a regional level, the human capital development gap is smallest in North America, followed by Western Europe, Eastern Europe and Central Asia, East Asia and the Pacific, Latin America, and the Middle East and North Africa. The gap is largest in South Asia and sub-Saharan Africa.

North America is the strongest regional performer, with an average score of 73.95. The United States (4) ranks in the top 10 and Canada (14) in the top 20.

Western Europe has an overall average score of 71.10, the second highest after North America. The rankings are dominated by the Nordic countries –Norway (1), Finland (2), Denmark (5) and Sweden (8), as well as Switzerland (3) and Germany (6) –which collectively take the region’s top spots. Twelve countries have crossed the threshold of developing at least 70% of their human capital. The Netherlands (13) and Belgium (15) rank ahead of the United Kingdom (23) and France (26) to make up the mid-range of the regional league table, while three Mediterranean countries – Portugal (43), Spain (44) and Greece (48) – take the bottom ranks.

Eastern Europe and Central Asia ranks in third place globally, with an overall average score of 67.36. Three countries from the region rank in the top 20: Slovenia (9), Estonia (12) and the Russian Federation (16). The Czech Republic (22), Ukraine (24) and Lithuania (25) all score above the 70% threshold. The bottom-ranked countries in the region, Macedonia, FYR (67) and Albania (85), are held back by high unemployment and underemployment rates across all age groups.

East Asia and the Pacific region scores towards the middle of the range of the index, with an overall average of 65.77. The best-performing countries in the region, such as Singapore (11), Japan (17) and the Republic of Korea (27), are global strongholds of human capital success, while countries such as Lao PDR (84), Myanmar (89) and Cambodia (92) trail behind despite their high degree of human capital utilization across the deployment pillar. ASEAN economies such as Thailand (40), Vietnam (64), Indonesia (65) and Malaysia (33) score towards the middle range. China (34) ranks well ahead of the other BRICS nations except for the Russian Federation.

Latin America and the Caribbean scores in the lower middle range of the index, with an overall average score of 59.86. The gap between the best and worst performers in the region is smaller than for any other region. The two best-performing countries in the region are Argentina (52) and Chile (53). The region’s two largest economies, Mexico (69) and Brazil (77), rank in the middle and lower half of the index overall along with Peru (66) and Colombia (68). The bottom ranks of the region are made up of Venezuela (94) and Central American nations such as Honduras (101).

Middle East and North Africa has an overall average score of 55.91. Only one country, Israel (18), from the region makes it into the top 20. Three gulf states – the United Arab Emirates (45), Bahrain (47) and Qatar (55) – outperform the rest of the region’s Arab-speaking countries and score in the mid-range of the index overall. Turkey (75) scores at 60%. Saudi Arabia (82), the region’s largest economy, ranks ahead of Egypt (97), its most populous one. Algeria (112), Tunisia (115) and Morocco (118) make up the lower end of the rankings, ahead of Mauritania (129) and Yemen (129).

South Asia scores second lowest in the index, with an overall average score of 54.10. Sri Lanka (70) is the top performer, while Nepal (98), India (103), Bangladesh (111) and Pakistan (125) lag behind. With the exception of Sri Lanka, the rest have yet to reach the 60% threshold with regard to developing their human capital.

With an overall average score of 52.97, sub-Saharan Africa is the lowest-ranked region in the index. Rwanda (71), Ghana (72), Cameroon (73) and Mauritius (74) have developed more than 60% of their human capital. South Africa (87), the region’s second largest economy, comes towards the middle in the region. Nigeria (114) ranks in the lower midfield and Ethiopia (127) is the lowest performer, fourth from the bottom on the index overall.

The Specialization of Skills – an Analysis

A research partnership with LinkedIn sheds new light on education and skills around the globe.

Within the broader scope of expansion of higher education between generations, there has been a shift in the choices made by students on which subjects to specialize in as well as an expansion of the set of degrees on offer. Some fields of specialization, such as business administration and management see continued substantial representation by age group across all generations. Others such as economics have declined as the proportion of degrees amongst younger generations. Degrees such as computer science have been growing as a proportion of the degrees held by younger generations. Finally, degrees such as psychology have resurged as a proportion of the degrees held by the youngest cohorts, matching the popularity they once held amongst the oldest cohorts after having dipped among the middle cohorts.

Business, administration and law, social sciences, journalism and information as well as information and communication technologies (ICT) dominate the most popular specializations across all labour markets. Economies in South America are among the most likely to have a focused specialization in business, administration and law, especially in some of South America’s largest economies such as Argentina, Brazil, Chile and Colombia. On the other hand, some of the countries in which students are more likely to have pursued a specialization in arts and humanities are the United Kingdom, Ireland, Denmark, the United States, Canada, New Zealand and France. Countries that are home to large tertiary-educated talent pools specialized in engineering, manufacturing and construction include economies with high demand for petrochemical engineers, such as Qatar, Brunei Darussalam, Kuwait, the United Arab Emirates, Malaysia and Bahrain.

When it comes to Information and Communication Technologies talent, data from LinkedIn’s global membership shows that there has been a considerable expansion of this particular set of specialist skills. Yet, this boom in ICT talent is not equally distributed across countries and generations. Economies such as Sweden, Australia, the United States, Switzerland and the United Kingdom have relatively more mature ICT talent; others such as Lithuania, Brazil, Romania and Estonia have predominantly young pools of ICT talent.

While expanding education access and undertaking curricula reform are critical for ensuring that future generations are prepared for a changing labour market, the Human Capital Report 2017 emphasizes the vital nature of continuous skilling, upskilling and reskilling through the workforce. This requires employers to provide learning opportunities to their workers and see these as investments, governments to take a holistic view to broadening and deepening the skills-specialization and complexity of work across their economies, and individuals to see learning as a lifelong activity.

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Economy

What are Market Anticipations and Policy Expectations as Shares Tumble?

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On April 21st, the three major A-shares indices saw a severe drop due to a combination of local and global causes. The Shanghai Composite Index dropped 2.26%, the Shenzhen Component Index dropped 2.7%, the ChiNext Index dropped 2.17%, and the CSI 300 Index dropped 1.84%. More than 4,400 stocks fell in both cities, while industrial categories led by tourism, fertilizer, agriculture, and photovoltaics almost across the board.

As April started, the Shanghai Composite Index has fallen 7.5%, down 10.5% from the beginning of March. The CSI 300 Index has dropped 13.40% from 4,614 in early March to the current 3,995.83, which tumbled 21.31% from 5,078 in mid-December last year. Because incremental funds were not injected into the market anymore, only stock funds were up for grab. Since the middle of March, A-shares stock trading has been declining, indicating a lack of investor trust.

Researchers at ANBOUND believe that this demonstrates the market’s pessimism about the future economic situation. With the downward pressure on the economy increasing, market confidence restoration and expectations stabilization are critical to helping in the healthy development of the capital market, as well as important in maintaining growth and averting risks.

Figure 1: The Shenzhen Component Index plunging more than 4,200 in the past 4 months

Source: Sina Finance

Market institutions have generally accepted the several factors that have caused the recent severe falls in the stock market. First, the worldwide geopolitical risk of distorting the supply chain and affecting company earnings is rather high. Second, since the Federal Reserve has escalated monetary tightening, the quick reduction of the interest rate gap between China and the U.S., as well as the inversion of the RMB exchange rate, is driving the RMB exchange rate to alter, raising concerns about capital flows. Next, the resurgence of the domestic pandemic has a substantial negative influence on China’s economy, particularly in consumption and real estate as indicated in the first-quarter economic statistics, which has heightened concerns about the country’s macroeconomy. Finally, the pessimism has been accentuated by a substantial disparity between recent central bank macro policy actions and market policy expectations. As a result, as long as present internal and external concerns persist, the A-shares market is unlikely to improve much in the immediate term.

Figure 2: The Shanghai Composite Index shedding more than 600 in the past 4 months

Source: Sina Finance

Historically, the fluctuations and transformation of China’s stock market couldn’t fully reflect China’s overall economic situation. However, in terms of expectations, the shifting trend of the A-share market, by acting as a barometer of the economy, continues to illustrate the genuine expectations of capital market investors on future business and overall economic developments. As observed in the March market trend, changes in external variables have been absorbed, but recent stock market volatility is more likely to be aggravated by changes in internal elements. As a result, changes in China’s economic circumstances and policy expectations are undoubtedly the cause of the stock market’s dramatic volatility. Investors are increasingly concerned about the negative economic impact of the COVID-19 outbreaks, as well as a lack of trust in the stability of present economic strength and the rhythm of macroeconomic measures that sustain the economy. As things stand, despite the continued implementation of measures and policies aimed at stabilizing the capital market, these policies are insufficient to boost market confidence.

The pandemic and policy declarations are not only harming the capital market but are also major variables influencing China’s economic future. Notably, the recurrence of COVID-19 is concentrated in those economically developed regions such as the Yangtze River Delta and the Pearl River Delta. The scope and depth of its economic impact may surpass that of the outbreak in Wuhan in 2020. In such a case, we believe that there is a demand to put dedicated unconventional policies into place. In this regard, it is necessary to implement targeted measures to stabilize economic fundamentals based on strengthening prevention and control. On the other hand, it is also essential to promote systematic easing among macro policies to avoid the catastrophic consequences caused by shrinking demand.

Since the beginning of the year, in the framework of the Chinese central bank’s monetary policy implementation process, it has taken a cautious approach to progressively easing, which is far from the policy expectation. Although the central bank has maintained “reasonably ample liquidity” as a whole, the reality of the domestic economy indicates the private economy and a large number of small and medium-sized enterprises are unable to obtain sufficient credit support from those “accurate liquidity provisions”. Such economic structural difference requires not only targeted structural reforms, but also overall easing to achieve the dredging effect from “loose money” to “loose credit”, which would reverse the passive situation. Zhang Jun of Morgan Stanley Securities also pointed out that the policy-level “fueling tactics” will cause a waste of policy space and may also deepen the risk to diminish the expectations.

Concerning the present external limitations that limit China’s domestic measures, ANBOUND has previously stated that variables such as interest rate spreads produced by economic and policy disparities are only one of the external factors impacting China’s economy, but not the most important one. Further concern should now be given to the fundamental factors that drive economic growth and structural improvement. In terms of policy, it is imperative to enhance the ‘autonomy’ of macro policies. We should occupy this window, fundamentally reverse the economic trend, and assist the capital market to construct stable market expectations and policy expectations before the international situation undergoes further evolution, hence coping with a better response to the changes in external factors.

It would be difficult to reverse the situation after market expectations have shifted. When combined with a self-reinforcing impact, it frequently leads to a downward spiral vicious cycle in the capital market and the actual economy. Hence, it is hard to reverse market expectations without stable policy expectations. Judging from the economic data of the first quarter, the overall economy is still resilient and possesses a stable foundation. However, to achieve the economic growth target of the current year, it is still necessary to strengthen the implementation of macro policies. This is not only conducive to the stability of the capital market but for the overall economy as well.

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Education Must Come First in our Global Economic Agenda

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A 13-year-old girl solves a maths sum at a school in Gujarat, India. © UNICEF/Mithila Jariwala

With leaders gathering at this year’s World Economic Forum, it’s time to prioritize the impact investments in education bring to businesses, economies and beyond.

As all eyes turn to this week’s World Economic Forum in Davos, we call on world leaders and world-leading businesses to put education at the heart our global social and economic agenda.

Education is our investment in the future, our investment in sustainable economic growth and global security, our investment in the vast potential of our collective humanity.

To realize our goals of delivering equitable, quality education to every girl and boy on the planet – especially those caught in armed conflicts, forced displacement and other protracted crises –  we must activate a global conscience and commitment, and create a value proposition that shows businesses, politicians and the general public just what an investment in quality education means for our world.

This means pre-schoolers can learn to read and write in safe environments. It means girls can become entrepreneurs and doctors – not child brides. It means boys can be teachers and lawyers – not soldiers.

It means refugee children and adolescents displaced by conflict, climate change and other crises in hot spots like Bangladesh, Colombia, the Sahel and Ukraine can go on to complete 12 years of education and become leaders of a peaceful and healthy society.

It means college and beyond, a smarter workforce, and greater socio-economic stability. It means an end to poverty and hunger, establishing gender-equality, and advancing human rights for all.  

Unravelling the challenge

This is one of the most complex problems ever to face humanity. When Education Cannot Wait (ECW) – the UN’s global fund for education in emergencies and protracted crises – was established in 2016, an estimated 75 million crisis-impacted children and youth did not have access to the safety, protection, hope and opportunity of a quality education. That number has risen to an estimated 200 million in recent years as we see a rise in conflicts, displacement, climate disasters and a deadly pandemic that has upended our progress to achieve the Sustainable Development Goals by 2030.

While a minority of people on the planet are enjoying all the comforts of modern life – and football teams sell for more than $5 billion – over 617 million children and adolescents worldwide cannot read or do basic math. That’s more than the total population of ECW’s three largest donors – Germany, the United Kingdom and the United States – combined. 

Nevertheless, to date, less than 3% of government stimulus packages have been allocated to education, and in low- and lower-middle-income countries, the share is less than 1%. We can and must increase this government funding three-fold, following the example of the European Union, which announced in 2019 that it would increase education spending to 10% of humanitarian aid.

Government aid alone isn’t enough

The private sector, businesses and philanthropic foundations like The LEGO Foundation, Dubai Cares, Verizon and Porticus are already activating significant investments into the space.

We need to bring in more funding from industries closely connected with education – like Google, CISCO and Microsoft – and from those which have a vested interest in ensuring global economic stability and resilience, like the Jacobs Foundation, Western Union and Hilton Foundations of this world.

As we embrace the spirit of Davos – “to demonstrate entrepreneurship in the global public interest while upholding the highest standards of governance” – it is clear that this is a global issue that won’t just impact the rights and life trajectories of the world’s most vulnerable children, it will impact the bottom line for businesses, disrupt global socio-economic stability, and affect us all if we don’t act immediately with decisive action and collective humanity at the forefront. 

Building together

Education Cannot Wait has already mobilized over US$1 billion over a few short years and reached approximately 5 million children, but it is simply not enough.  

In the next three years, with the support of donors, the private sector, philanthropic foundations and individuals, we need to mobilize at least an additional $1.5 billion. This needs to happen with the leadership of the G7, the resources and know-how of the private sector partners featured at this year’s World Economic Forum, and the enhanced commitments that will make headlines at this year’s Transforming Education Summit, convened by the UN Secretary-General.

This will enable ECW and our strategic partners to respond immediately and effectively to the education needs of at least 10 million children and adolescents – including 6 million girls.

Think about the ROI. This works out to just $150 per child. If each of the world’s Fortune 500 companies made just a US$15 million contribution, we could surpass our goals and reach 100,000 children per donation! That’s 50 million more children with an education, 50 million more children breaking the hunger and poverty barriers, 50 million more opportunities to provide certainty in the face of very uncertain economic times.

Think about the future. If you could future-proof your business for the next 30 years with such a simple investment, wouldn’t you do it? Investment in education is good for the bottom line. With increased security and economic opportunity in the Global South, we are opening new markets, increasing economic resilience and building a more prosperous world.

Think about the legacy. For every $1 spent on girls’ education, we generate approximately $2.80 in return. Making sure girls finish secondary education could boost the GDP of developing countries by 10% over the next decade.

Think about scale. For every dollar raised, ECW and our strategic partners are leveraging about a dollar. This grows impact exponentially.

Think about our place in history. This is our moment to transform education for those left furthest behind. Please join us in ensuring every girl and boy – no matter who or where they are – has the opportunity to go school, to learn, to grow and to achieve their potentials not just for a day, but for a lifetime.

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Economy

The Politics of New Global Borderless-Class

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No, they are not the immigrants; they are citizens of a country in their own habitats, but active in yours. Slow circumnavigation of our earth will only prove that at the bottom of the population of each nation now there exists a new borderless-class slowly rising. Firstly, they are effortlessly, technology supported, secondly, squeezed out of imbalances, injustices and inhuman entrapments, thirdly, engaged in ‘nouveau occupationalism’ with virtual hopping from nation-to-nation all in the same typical routines of a normal day.

Fourthly, they are screaming silently, they see the global problems in desperate need of global solutions. Nevertheless, still inaudible in the political rotundas slowly they now become the force challenging old models of governments.

Study Pakistan, Sri Lanka and dozens of population-rich nations of the free world, notice the restless citizenry and their social media centric mobilization of dissent and protest narratives. As in coming months, peak temperatures will further fry the incompetence of the lingering economic bureaucracies. The sizzle is awakening, the awareness of incompetency on the rise. Unless grassroots prosperity issues are boldly addressed the economic fakery clearly visible on trillion blinking devices. Such blinks do not prove neither fame nor popularity but points to a silent ocean ready to drown them. What are the most important and dramatic roles that these borderless-classes will play in our behavioral economies and future demographics? Observe the goals, vision and narrative of Imran Khan of Pakistan.  Notice the silent Australians and polls in dustbins… 25 more national elections ahead.

Why elitism was multinational: Observe, in contrast, for centuries, only elites allowed global games; multinational organization with multinational rules of engagements. Today common folks are on the same platforms. They, born in a country but grew up in another country, work in some other continent and eventually settle in another new country. Exposed to massive digitization, access and internalization of rules of engagement in a massive global society with residency in multiple jurisdictions they are different.

Now Face-to-Face around the world: Compared to previous generations, the new borderless-classes are extremely well informed, this significant feature makes them locally, regionally, nationally and globally interconnected and creates a game changer. Most dramatic economic behaviorism of this borderless dynamic is face-to-face engagement around the world, while remote. Previous elite borderless-class was jet- set dependent.  It will take some deep yoga exercises to figure out mathematical variations to measure the power of their productivity of these hush-hush global whisperers.

What is the world waiting for? What does all this mean to the institutionalized bureaucracies, nestled in governances of the nations of the so-called free world, awaiting a nuke-flash? Perhaps nothing, or shocking realization that masses are discovering by the day how artificially created pre planned economic dramas are hurting local grassroots prosperity. Most importantly, they are equipped and capable to see the root causes and equally to recognize the available workable options. This is the difference.  Unlike some generations fooled sometimes or some all the times but this global-generation cannot fool all the time.

Is this brain drain or invasions of skilled minds?
The coin-operated competency of the Gig-economy now takes notice…

Most difficult questions; almost numbing most bureaucracies of the free world; when billions are already displaced due to pandemic, a billion replaced due to automation and a billion in wrong mismatched mandates how such masses are handled before they move towards populists viewpoints. Such shifts measured as unemployed now occupy remote work for overseas assignments and equally when local workers pushed over by higher skilled workers at half prices but working as foreign workers without paying taxes or contributing to the local societies. Is this brain drain or invasions of skilled minds?  The answers now buried in the several decade long abundance of higher quality upskilling and reskilling in hands of the leading nations of the free world points to massive breakdown of skilled citizenry. Study Expothon on Google on such issues, notice what is changing the thinking…

Only fake economies fail, as only houses built without builders and architectural rules collapse.  Observe the root causes of the last few financial crises. How such collapses systematically occurred, how the whole world of finance, quietly went so wrong, no punishments or lessons, just silence? Now all wait for the repeat performances.

Unfortunately, the jobless cannot create green economies and jobseeker mindsets cannot build new economies, therefore, bold, authoritative narrative on entrepreneurialism needed to bring the job creator mindsets in collaboration as the new art and science and combine both mindsets are going forward strategy. Is climate change a global politics or an entrepreneurial challenge, find the answers.

Study why capitalism is not the one failing: It is actually economic development. Winners of the future not necessarily are the visible rich and power of today. Notice the rising power of the bottom societies. Value creation economies when they become beneficiaries of primarily institutionalized value manipulation economies they become open public frauds. Nations without clear and decipherable narratives on economic fronts with national mobilization of entrepreneurialism will not create a distinct advantage.  Learn fast, fail fast, but move

Nations must demonstrate superior skills to build economies and not wars, creation of armies of entrepreneurs and new valleys of new enterprises.  Only in-depth discussion and nationally televised debates about such economical mysteries will highlight the answers. The silent new borderless-classes of the free economic world are now learning how to fix their government, how to bring change and how to create grassroots prosperity. The rest is easy. 

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