A new study by McKinsey Global Institute indicates that, despite the growing global population, companies should anticipate skills shortages around the world. The problem, McKinsey suggests is not a people shortage, but rather that people will not have the skill sets that companies need in the coming decades.
The authors, by Richard Dobbs, Anu Madgavkar, Dominic Barton, Eric Labaye, James Manyika, Charles Roxburgh, Susan Lund, and Siddarth Madhav, write that skills scarcity should encourage corporations to partner with governments on ensuring that future workers are equipped to operate in tomorrow’s workplace.
They explain, “While market forces will move to eliminate projected imbalances before their full impact is felt, they cannot be avoided entirely without a concerted, global effort by governments and businesses to raise educational attainment and provide job-specific training.”
According to MGI, by 2020, employers can anticipate a shortage of 38 million to 40 million workers college or postgraduate degrees. There could also be a shortage of 45 million workers with high school educations in developing economies. And finally, MGI says, there will be 90 million to 95 million too few low-skill workers in both advanced and developing economies globally.
Additionally, the writers point out, 360 million people will be aging out of the workforce in this time period.
Exacerbating these challenges, they continue, is the global movement from “farm to factory” in many areas of the world where rapid development has outstripped the supply of educated workers. Initially, companies were able to out-smart the issue, by investing in new technologies, but that solution has now been exhausted.
In advanced economies, people without the education companies need of their workers are part of a growing group of unemployed or underemployed. They write:
“In advanced economies, demand for high-skill labor is now growing faster than supply, while demand for low-skill labor remains weak. Labor’s overall share of income, or the share of national income that goes to worker compensation, has fallen, and income inequality is growing as lower-skill workers—including 75 million young people—experience unemployment, underemployment, and stagnating wages.”
The mass mismatch is creating inequality for individuals and talent shortages for employers.
MGI suggests that companies will need to work more closely with governments in developing areas to ensure people are receiving adequate education and job training for the careers of the future.
“Businesses will also need to significantly step up their activities in shaping public education and training systems in order to build pipelines of workers with the right skills for the 21st-century global economy,” the writers explain.
In advanced economies, the number of people receiving college degrees will have to increase – and those degrees should be focused in areas like science and engineering. MGI says, “these workers will be in high demand, and their contributions will be critical for meeting the rising productivity imperative.”
Additionally, economies will have to look at the ways employees redevelop skill sets as times change. “Secondary and vocational training must be revamped to retrain mid-career workers and to provide job-specific skills to students who will not continue on to college.”
In developing economies, employers will have to work with governments to ensure that people are being appropriately educated for next-generation careers, that schools are anticipating the skills their students will need when they graduated, not necessarily the skills that are needed in the country right now. The writers explain:
“Solutions include moving up the value chain in developing economies (food processing creates more employment than growing export crops, for example) and finding opportunities for workers without a college education to participate in fast-growing fields—such as health care and home-based personal services—in advanced economies.”
In order to avoid a vast skills shortage that could stall global growth, employers will need to start planning and investing in geographies for the long term. Finding adequately trained and educated workers has become a key talent challenge. By planning more strategically about tomorrow’s workforce needs, companies can meet the talent shortage head on.