The global economy is facing a severe talent mismatch with 18 out of 30 leading economies facing some form of skills shortages while both unemployment levels and numbers of unfilled vacancies are rising. In many markets, the labour available does not meet the skill requirements that employers are looking for.
The depth of the recent recession does not explain the root causes of unemployment or why the job market fails to deliver the skills businesses need. Countries suffering from an underperforming economy such as Spain are no more likely to be able to provide workers with the skills necessary than economies which are performing strongly.
These are the findings of the Hays Global Skills Index 2013, a report published today by Hays plc, the leading global professional recruiting group, produced in collaboration with Oxford Economics. The report, titled ‘The Great Talent Mismatch’ and based on an analysis of professional employment markets across 30 major global economies, highlights the extent to which businesses and governments have to work together to build the right skills pipeline to deliver a sustainable recovery and growth.
The problem of talent mismatch spans several continents. The situation is particularly serious in the US, struggling with a jobless recovery; Spain, Portugal and Ireland, all badly affected by the Eurozone crisis; Japan, struggling with a generation of economic stagnation and deflation, and the UK where the current economic recovery is exposing a lack of skills across multiple industries.
Sentiment is improving across a number of markets, but action from both government and the business community is required to address on-going skills shortages by allowing skilled labour markets to operate more flexibly, aligning education policy far more closely with economic needs and ensuring the widest possible group of skilled workers across all generations are participating in the labour market.
Hays’ Chief Executive Alistair Cox said: “The Hays Global Skills Index highlights a major paradox in the world’s skilled labour markets. Employers across the globe are struggling to find enough people with the right set of skills for the posts they have available, even as millions of people remain unemployed. It is too easy to lay the blame for unemployment at the door of the global recession. The fact is, there is more that governments and businesses can and should do in order to develop the right talent pipeline and assure their future prosperity.
“The supply of people with the right skills is the foundation for every successful organisation and finding the right person for a job can transform businesses, people’s lives and make societies stronger. There are no easy answers to fixing today’s problems in the world’s skilled labour markets. However, we believe the principles outlined in our recommendations are relevant across the globe and should enable real progress towards addressing structural problems within international labour markets. Each and every one of us will reap significant benefits from this in the long-term.”
Hays Global Skills Index key findings:
- There is no clear link between economic performance of a country and the efficiency of its labour markets. Employment policies and educational policies, not economic conditions are the keys to tackling the global talent mismatch
- Few countries have educational systems that deliver the skills required to provide employers with the skills they need
- Most countries have inflexible supplies of labour, indicating key groups of working age are not participating in the labour market
- Developing economies such as China and India have highly flexible workforces, but inflexible educational systems in these countries mean skills provision through education is unlikely to adapt effectively to changing economic conditions
- In most countries, skilled labour markets have tightened over the past year.
Key findings for Hungary:
Hungary’s score for 2013 is 6.3, up from last year and representative of a moderate degree of labour market pressure. After a 1.8% decline last year, Hungary’s economy is expected to grow in real terms by just 0.5% in 2013. Total output remains well below trend output based on prerecession growth rates.
A defining feature of Hungary’s labour market is low overall rates of economic participation. Just 65% of the working age population is either in a job or looking for one.
“The moderate increase in the overall score from 6.1 in 2012 to 6.3 is mainly due to increased wage pressure in high-skilled industries, particularly in IT and Engineering. While these sectors are becoming more and more candidate driven, in other areas there is generally an excessive supply of talent. Hungary is still considered to be a country with very attractive labour costs and a number of global companies have decided to set up operations in the country, enabling them to take advantage of the talent pool of young well-qualified professionals.”
Tammy Nagy-Stellini, Country Manager, Hays Hungary
Notes on methodology
The Hays Global Skills Index creates a score for each country of between 0 and 10 to measure the constraints and frictions being faced by its market for skilled labour. This is calculated through an analysis of seven components, covering areas such as education levels, labour market flexibility, and high-skill wage pressures.
A score above the mid-point of 5.0 suggests that employers are witnessing difficulties finding the key skills they need and are suffering market friction, whilst a score below 5.0 indicates a lax labour market in which there are no major constraints on the supply of skilled labour. Within these overall scores however, the scores attributed to each of the seven components can vary significantly, highlighting the different dynamics and pressures faced by each country.