A major commercial crisis is looming over organizations and economies throughout the world. By 2030, we can expect a talent deficit of 85.2 million workers across the economies analyzed — greater than the current population of Germany. This global skills shortage could result in $8.5 trillion in unrealized annual revenue by 2030 — equivalent to the combined GDP of Germany and Japan.

While global leaders have bet 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—they have discounted the value of human capital. Misalignment between automation, AI, machine learning, and other technological advances and the skills and experience talent needs to leverage the full potential of those advances is a main factor contributing to growing talent deficits. Technology cannot deliver the promised productivity gains if there are not enough human workers with the right skills. This has set the scene for a global talent crunch.

How we uncovered the talent crunch

To understand the global demand for skilled labor in the future of work we assessed the demand for talent versus supply in 20 developed and developing economies across the Americas (Brazil, Mexico, the United States), EMEA (France, Germany, the Netherlands, Russia, Saudi Arabia, South Africa, the United Arab Emirates, and the UK) and Asia Pacific (Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, and Thailand).

More granularly, we examined talent supply and demand in each market as a whole and within three major knowledge-intensive sectors: financial and business services (including insurance and real estate), TMT (technology, media and telecommunications) and manufacturing.

Within these knowledge-intensive sectors, we measured the gap between talent supply and demand at three distinct skill levels, referenced throughout as:  

  1. Highly skilled workers (Level A): These individuals have completed post-secondary education, such as college (or university), or a high level trade college qualification
  2. Mid-skilled workers (Level B): These individuals have attained upper secondary education, such as high school, or a low level trade college qualification
  3. Low-skilled workers (Level C): These individuals have less than upper secondary education

Level A talent is the most highly in demand and globally is in shortest supply. According to our model, by 2025 demand for Level A workers will outstrip supply by 13.6 million workers globally. This will rise to 35.1 million level A workers by 2030 across all sectors.

What does the talent crunch mean for Indonesia?

The economic picture

Indonesia is already facing a talent crunch: its Level A deficit will stand at 1.3 million by 2020 and deteriorate at a rate of 11.2% annually to 3.8 million by 2030. 3.8 million is equivalent to 29.9% of Indonesia’s Level A workforce in 2030.

Manufacturing will account for 12.8% of Level A labour shortages in 2020, which will decrease to 10.0% by 2030. Finance and technology will account for 7.1% and 13.2% of total Level A shortages in 2030, up from 5.1% and 11.1% in 2020.

By 2030, Indonesia could lose out on $442.62bn USD that will not be realized due to talent shortages.

In terms of the size of its economy, Indonesia could fail to grow by 19% by 2030.

Based on Indonesia’s strong economic performance in the first decade of the new millennium, there are clearly significant growth opportunities for the entire economy. The Government’s ambitious plans to digitize and industrialize as part of the Indonesia 4.0 initiative shows a visionary approach to securing Indonesia’s position in the global economy. As a young nation, with an average age of 28 in 2016 , Indonesia does not suffer the demographic issues that nations such as Japan will face in the future of work.  But the impending talent crunch could impair the country’s ability to take its place on the world stage.

The issue for leaders, in both government and corporations, will be – are there enough skilled people to deliver Indonesia’s potential? Unlike other nations in the region, we have a strong pipeline of talent. This should be good news for key sectors including, retail, agriculture, manufacturing and technology.

Skills shortages, however, raise the challenge of educating people to the right levels: the energy sector for example has been reporting skills shortages for the last few years. Having the pipeline is not enough. In 2030, Indonesia is projected to be the fifth largest economy in the world, with a robust working age population able to participate in the workforce. Yet the economy may fail to grow, if the talent crunch is not addressed.

There are a number of ways organisations can protect themselves from the worst impact of the talent crunch. With effective strategic workforce planning, organizations will understand the profile of their current workforce and identify any areas where there are gaps between the people they will need to deliver on their future strategy, and the people they actually have. Assessing and developing their talent, leadership and succession planning, a comprehensive total reward strategy, a compelling employer value proposition and ensuring their workforce is engaged and enabled to change when circumstances require organizations to pivot are all critical activities to mitigate the talent crunch.

Read the Global Talent Crunch report for more details on the labour deficits or surpluses by industry and country.

Speak to our experts

About the contributor

Sylvano is the Vice Chairman of Korn Ferry Indonesia. He specialises in a broad range of consulting services for organisation and people.He has consulted organisations in areas of organisation effectiveness, top team alignment, executive compensation, reward strategy, leadership transformation and development.

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