Lynda Gratton - The Future of Work

The Skill Gap: Asian Style

One of the paradoxes of contemporary business life is that, just as unemployment soars, the number of unfilled vacancies increases. In the USA right now there are over 3 million unfilled jobs, while in countries like Spain, youth unemployment stands at a jaw dropping 47%. The extent of the gap between what employers need and what the labour market provides in terms of skills and talents seems to be continuously widening.

 

Why the skill gap is here to stay.

This is not a surprise. There are three trends that we believe will only gather momentum and, as they converge, will continue to impact on the extent of the skill gap. None of these trends will go away fast; in fact, our research suggests that they will only accelerate in their velocity.

The most obvious creator of the gap is technological advancement within work. This has been felt most in semi-skilled work, where business analytics have replaced many clerical activities, while much service work has been outsourced from the high-cost West.

Historically, these were jobs that those with minimum educational qualifications could perform.  But it’s not just about technology replacing semi-skilled work. Increasingly, the knowledge and skills that high value jobs demand has shifted to engineering, IT and the sciences. This is good news for countries like Germany and India, where these disciplines are considered a good professional choice – but bad news for the UK and the USA, where fewer students take these options. To make matters worse, the Asian students who fill the science classrooms of the West are increasingly likely to take the first plane back after graduating, rather than staying and filling those vacancies as they might have in the past.

Demography is also playing a hand in the skill gap: Over the next decade, the largest workforce cohort the world has ever seen - the Baby Boomers - will rete in their millions. Many will take with them the deep tacit knowledge that has come from a lifetime of experience, and which they have often failed to bequest to those members of Gen X who follow them. This demographic time bomb is particularly deadly in sectors such as aerospace and pharmaceuticals, which have traditionally had long apprenticeships.

 

The Asian Response

Anxieties about the skill gap are no less prevalent in Asia. With 15% compound growth rates and, in many countries, a missing management class, companies across the region are deeply aware that this could prove a significant barrier to growth.

However, what is interesting is the speed, depth and complexity of their response. Take Singapore: here is a country, with few resources save its people, with aspirations to play a significant role in the industrial life of Asia. For them, closing the skill gap is crucial. This is achieved by actively creating close ties and a constant information flow between the key stakeholders, be they in companies, the government or educational establishments. The Ministry of Manpower and the Economic Development Board have the role of coordinating this flow of information, and provide the resources to  ‘nudge’ when necessary. This could mean, for example, supporting Unilever’s opening of a major leadership campus, funding scholarships in high value skills, or working closely with pharmaceutical companies and Western universities to build a cluster around bioengineering.

In India, the speed and scale of the response has taken a very different form, spearheaded not by government, but by the private sector. Indian companies face a huge potential skill gap for, while the technical education in the Indian Institutes of Technology is of a high level, the general education standards across the country are poor. For Indian’s rapidly growing IT sector, represented by companies such as Wipro, Infosys and TCS, this could be a disaster. Yet instead of accepting this, these companies have reached out into communities across the continent to significantly impact the development millions of youngsters. Executives at Wipro, for example, work with tens of thousands of colleges across India to train teachers to develop IT skills, build state-of-the-art curricula, and encourage students to become what they term ‘work-ready’. With a recruitment target in 2011/12 of 60,000, the teams at TCS play a similar role in helping young people across India understand from an early age what the most valuable skills for the future are, and how best to acquire them. Like Infosys they also work closely with hundreds of thousands of teenagers to actively increase their skills.

The global skill gap is here to stay for as long as technological advances, globalisation and demography continue to redefine work. For some countries, it will be the government that takes the initiative to bridge the gaps. For others, it will be companies themselves who will step up to the challenge. What is clear is that, if neither of these stakeholders are actively engaged nor prepared to put significant resources into the problem, the unemployment rates now seen in Spain could become the norm for many countries in the West.

It's Education, Stupid

It’s that time of year when I spend much of my time reading the books that have been nominated for the FT/Goldman Sachs Business Book of the Year. It’s a judging duty that is both a pleasure and a pain. The pain is the sheer amount of time it takes to wade through thousands of pages.  The pleasure is reading books that would not necessarily cross my path. This year, as with the last, many of these books are written by economists and, understandably, focus on the state of the world economy. It is interesting to read how many agree that education and training are crucial to long-term economic success, for individuals, companies and countries. I made a similar argument in my most recent book The Shift, focusing in particular on the types of education and training that create specialization. Here are the two reasons why it has never been so critical to become educated:

• Rampaging connectivity - will see at least five billion people around the world using some form of mobile device to download information, access knowledge and coach and teach each other. Some will have the intellectual capacity and motivation to really make something of this extraordinary opportunity, wherever they happen to be born. These people will want to join the global talent pool and, if possible, migrate to creative and vibrant cities. By doing so, this vast crowd of talented people will increasingly compete with each other, continuously upping the stakes for what it takes to succeed.

• The technological revolution - brought mobile devices to billions, and is now transforming how work gets done. Robots are taking the place of unskilled and semi-skilled workers, while business analytics, modelling and collaborative technologies are taking away much of what has traditionally been the role of the middle manager. However, while technology may be replacing the mechanical aspects of work, it is not replacing the more complex, skilled work that involves creativity and innovation. That’s the high value piece that remains, and it is once that requires education and training. 

As high quality education becomes more of a premium, we can expect the sector to begin to transform itself even more rapidly. Just what this transformation will look like is difficult to predict with accuracy. But here are two emerging trends that I believe will shape it over the coming decades:

The Gutenberg Project: the race is on to digitalise many of the books and articles of the world, while the professors of academic institutions such as MIT are making their key lectures available on the web. Combined with hyper connectivity and the potentially global reach of the Cloud, this means that knowledge and wisdom will be available to anyone with access to the Internet. This could see the development of new ways of educating that leapfrog those of normal educational institutions, creating more fluid, virtual and vibrant networks of learning. 

Virtual Schools and Universities: there has been a great deal of research over the last decade focusing on how people learn. This has looked at e-learning, face-to-face teaching and over-the-phone coaching. What has become clear is that none of these on their own are the best; it’s the combination of all three that has the greatest impact. This is important for educational strategies since at least two of these processes are virtual, and F2F can largely be substituted by video conferencing. I saw the speed of this transformation recently when I visited UOC (Universitat Oberta de Catalunya) in Barcelona. Its sleek headquarters are the hub of a virtual university that has 60,000 students (and growing) taught by a faculty of over 3,000 virtual educators. Using simulations, games and collaborative environments, the institution is building deep expertise in supporting education across the world.

Some have argued that, of all the institutional forms, education has changed least over the past few decades. It looks as if the need for deeper knowledge and rapid advances in learning technologies may change all that.