With daily headlines on how robots and artificial intelligence are making their way into a growing number of industries, a looming talent shortage may be hard to see now but new Korn Ferry research reveals that it is already a major issue and shortages of skilled talent will continue to impede growth. If not addressed, it could have a significant impact on major Asia Pacific (APAC) economies by 2030.
Companies must work to mitigate this potential talent crisis now to protect their future. Left to run its course, this shortage will severely impact the growth of markets across Asia Pacific, with an imminent talent deficit of more than 12.3 million workers by 2020, rising to a shortage of 47.0 million workers and $4.238 trillion in unrealised annual revenue across the region at 2030.
Korn Ferry’s Global Talent Crunch study estimates the gap between future talent supply and demand in 20 major economies at three milestones: 2020, 2025 and 2030, and across three sectors: financial and business services; technology, media and telecommunications (TMT); and manufacturing.
The talent deficit could threaten economies and sectors across Asia Pacific:
- Asia Pacific faces an imminent labour shortage of 12.3 million workers by 2020, rising to 47.0 million by 2030 at an annual opportunity cost of $4.238 trillion.
- Financial and business services will be hardest hit across the region, with a deficit of 3.7 million workers by 2030, resulting in an annual opportunity cost of more than $439.62 billion if labour shortages are not addressed.
- Significant talent deficits in manufacturing and TMT in China and Japan (3.2 million combined by 2030) puts the region’s global dominance at risk.
- China and Japan’s financial and business services sectors face an annual opportunity cost of $147.10 and $113.62 billion respectively by 2030 -- more than half the sector’s un-generated revenue for the region. This places them second and fourth for greatest sector opportunity cost among the 20 economies analysed (behind the U.S. at number one).
- Japan’s TMT powerhouse status is under threat -- it faces a shortage of more than a half-million workers, losing out on $47.80 billion in potential annual revenue by 2030 – equivalent to 20 percent of its entire sector -- a TMT opportunity cost second only to the U.S.
- Technological advancement across all sectors of the Asia Pacific economy could be hindered by an acute talent shortage of 2.0 million TMT workers, at an annual opportunity cost of more than $151.60 billion by 2030.
- India is the only economy among the 20 studied with a potential talent surplus, predicting an excess of 245.3 million workers by 2030.
The impact of the talent crunch is so significant that it is accelerating automation and increasing use of robotics. In fact, leaders are betting heavily on technology for future growth—a 2016 Korn Ferry survey found that 67% of CEOs believe technology will be their chief value generator in the future of work. However, business leaders cannot discount the value of human capital. Even companies that are using more robotics foresee a growing need for human talent with advanced skills; for example, redeploying people from the factory floor, where robots can perform repetitive work, to the research laboratory.
The problem, however, is the mismatch between technological advances, including automation, artificial intelligence (AI), and machine learning, and the skills and experience workers need to leverage these advanced tools. Technology cannot deliver the promised productivity gains if there are not enough human workers with the right skills. While technology will continue to reshape the future of work, the acute demand for workers with the right skills calls for a partnership of people and technology to maximise the performance of both of these assets to generate value.
For the people-tech partnership to be realised, a focus on workforce planning, a comprehensive understanding of the talent pipeline, and training and development will be critical. The onus will fall on companies to train workers, and to encourage governments to rethink education programs to generate the talent pipelines the industry will require. In the face of such acute talent shortages, the savviest organisations will be instilling a culture of continuous learning and training. Constant learning will be central to the future of work.