Korn Ferry Study Reveals Talent Shortage Could Threaten Business Growth In Asia Pacific

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Hong Kong, May 3 2018|Already a major issue, skilled talent shortages will continue to impede growth and if not addressed, could have a significant impact on major Asia Pacific (APAC) economies by 2030, a study* by Korn Ferry (NYSE: KFY) reveals today. 

“Companies must work to mitigate this potential talent crisis now to protect their future,” said Michael Distefano, President, Korn Ferry Asia Pacific. “Left to run its course, this shortage will severely impact the growth of markets across APAC, 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 unrealized 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 issue could threaten economies and sectors across APAC:

●     Hong Kong has the highest unrealized output as a percentage of the economy at 2030 with a 39% deficit.

●     China will feel the talent shortage most acutely and could lose out on $1.433 trillion in annual revenue not generated by 2030 - one third of the Asia Pacific region’s total opportunity cost.

●     Although China has ambitious growth plans, talent shortages could curb this huge nation’s efforts to fulfill its potential. During the timescale (2015 to 2030), its workforce is expected to shrink by 20.5 million, as vast numbers of people reach retirement age and the impact of the one-child policy further squeezes demographics.

●     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 labor shortages are not addressed. Hong Kong’s financial services skills shortages will result in lost revenue equal to a staggering 12% of its total economy.

●     In 2030 in the TMT space, the impact of the labour shortage in Hong Kong is 16.9 billion. The unrealized output as percentage of its total economy is the highest in the region at 9%.

●     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.

●     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.

●     Across the manufacturing sectors in the 20 economies analyzed, Hong Kong will be hit the hardest. By 2030, Hong Kong’s highly skilled talent deficit will be equivalent to 80% of its sector’s workforce.

●     Asia Pacific faces an imminent labor shortage of 12.3 million workers by 2020, rising to 47.0 million by 2030 at an annual opportunity cost of $4.238 trillion.

●     China’s manufacturing sector dominance is at risk -- it faces a shortage of 1.0 million workers and losing out on $71.43 billion by 2030.

Globally, the study reveals a potential crisis with a sizable mismatch between supply of available workers and business demand:

●     The United States, Japan, France, Germany and Australia face the largest threat in the near term, with a combined opportunity cost of $1.876 trillion by 2020. 

●     Labor shortages in global financial and business services are the most acute, with a potential deficit of 10.7 million workers globally by 2030.

●     Technological advancement across all sectors of the global economy could be hindered by an acute global labor shortage of 4.3 million TMT workers by 2030.

●     Manufacturing is facing a global talent deficit crisis of 7.9 million workers by 2030, despite being the only sector with a surplus of highly skilled workers in 2020.

●     India is the only economy in the study maintaining a talent surplus in 2025 and 2030. 

May Knight, President, Asia Pacific, Korn Ferry Hay Group, said: “Companies across Asia Pacific must act now to future-proof their business. Left unaddressed, the talent crunch will severely impact the growth of key markets and sectors across the region.”

“The right talent is the greatest competitive advantage there is for an organization - and that talent is getting scarcer every day,” said Knight. “Our study reveals that there already isn’t enough skilled talent to go around and by 2030, organizations and economies could find themselves in the grip of a talent crisis. In the face of such acute talent shortages, workforce planning and a comprehensive understanding of the talent pipeline are critical.”

“The future will be built on the effective partnership between people and technology. The acute demand for workers with the right skills that businesses need, rather than the much-discussed domination of technology in business, could become the defining issue of our age,” saidKnight.

Asia Pacific markets studied

Total unrealised output 2030 (USD bn)

Total labour deficit 2030

China

1,433.5

-6,739,663

Japan

1,386.8

-13,756,592

Australia 

587.6

-4,302,201

Indonesia

442.6

-17,943,311

Hong Kong

219.8

-1,884,657

Singapore

106.8

-1,093,506

Malaysia

6.1

-93,458

Thailand

54.8

-1,191,364

India

0

+245,294,246 (Surplus)

*About The Global Talent Crunch Study 

The Korn Ferry Global Talent Crunch study is based on economic modeling designed by Korn Ferry, Man Bites Dog and Oxford Analytica and executed by Oxford Analytica. 

The study estimates the impending talent crunch by modeling the gap between future labor supply and demand at three critical milestones: 2020, 2025 and 2030. 

It scrutinizes data and business intelligence to uncover the extent of the talent shortfall in 20 major developed and developing economies. The 20 economies covered are: the Americas (Brazil, Mexico, the U.S.), EMEA (France, Germany, the Netherlands, Russia, Saudi Arabia, South Africa, U.A.E., U.K.) and Asia Pacific (Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, Thailand). 

Full methodology can be found in The Global Talent Crunch report.

 About Korn Ferry 

Korn Ferry is a global organizational consulting firm. We help companies design their organization – the structure, the roles and responsibilities, as well as how they compensate, develop and motivate their people. As importantly, we help organizations select and hire the talent they need to execute their strategy. Our approximately 7,000 colleagues serve clients in more than 50 countries.