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  • Nov 25, 2014
  • Updated: 12:17am
CommentInsight & Opinion
TALENT

The coming war over talent, the world's most valuable currency

Andrew Sheng says ageing advanced economies need to act now as their labour force shrinks

PUBLISHED : Friday, 25 October, 2013, 5:53pm
UPDATED : Monday, 11 November, 2013, 5:24pm

Forget about currency wars. The dollar may rise, the yen may fall and the renminbi could be the next big currency. But what determines the value of the currency will be the quality of talent. Real value is not gold or GDP, but sheer human power.

I was recently invited to Kiel, just outside Hamburg, to attend the 2013 Global Economic Symposium, organised by the think tank Kiel Institute for the World Economy. The symposium got together a diverse group of people to immerse themselves in lively debate about everything.

Many conferences I go to are based on a theme, populated by specialists who you know will talk about their pet themes. You could not imagine a closing plenary on the subject of success, comprising a Nigerian unionist, an Egyptian banker, a Hong Kong fund manager, an American feminist, a Polish-American economics professor and a US writer on China.

On the question of whether money is a good indicator of success, the economics professor had the last word: "Money is necessary, but far from sufficient."

The Hong Kong fund manager shared the most practical and wise insight. He had to go into socially responsible impact investing, because if he didn't, his next generation might give all the money away. The next generation cares about more than just making money.

Those countries that do not retain their best talent will be stuck in the middle-income trap

The best thing about such conferences is not just the people you meet, but the material you get to read. I found a bland-looking study funded by the Bertelsmann Foundation called "Competing for talent: The global struggle for the world's most valuable resource". But inside were four papers with stunning data on what is happening in the war for talent.

Here's a big-picture number: in order to sustain growth to 2030, an ageing US will need 25 million workers and Europe will need 45 million, equivalent to recruiting the entire labour force of the Philippines or Vietnam.

With a shrinking labour force, both the US and Europe need to up the ante through migration and training. In the past decade, new immigration accounted for 70 per cent of labour force growth in Europe and 47 per cent in the US.

Immigration is on the rise. In 1990, there were only 156 million migrants, but by 2010, there were 214 million. According to recent UN figures, the US, Russia and Germany attracted the most migrants. Migration is big money. The total estimated migrant remittance was US$479 billion in 2011. In other words, it's not just cheap labour that the importing countries will be going for, but the best talent. It is estimated that skills-based immigration to the US could triple, to over half a million annually by 2018, to make up 35-41 per cent of total migration. So, a number of countries will be training people for the US if they don't appreciate their home-grown talent better.

By 2021, China will be home to 28 per cent of the world's graduates, followed by the US (25 per cent), India (13 per cent), Russia (11 per cent) and Japan (7 per cent). However, quality concerns mean that not all the graduates can move abroad. The study suggested that only 25 per cent of Indian and 20 per cent of Russian professionals could be employable by multinationals.

Talent, like beauty, is in the eyes of the beholder. If you think your graduates are inferior, they will be of no use to you. Many talented individuals migrate because they think they are not appreciated by their own country. Some go because there is less pollution, corruption or just because they are offered better terms and opportunities.

Talent is also self-driven. Migrants are self-selected. They move because they have the most initiative, the willingness to take risks, and are probably the most creative.

Why is the talent war so critical? Because it takes more than 10 years to train decent talent in any profession. The best brain surgeon is useless without the best surgical nursing team. Lose enough nurses and you will lose the surgeon. It's not just about talented individuals, but talented clusters.

The problem is not just supply push, but also demand pull. Countries like Canada are actively going out to attract talent. There are also innovative skill transfer schemes, such as the German "Senior Expert Service", which has 10,000 retired experts who can go out on short-term consulting to train people around the world.

The pull factor from the advanced economies can only get stronger. The best people will get the highest pay. Those countries that do not retain and nurture their best talent will be stuck in the middle-income trap.

I am delighted that next year's symposium will be held in Kuala Lumpur. This means the Germans are thinking globally and acting locally. Asians have much to learn from the way the German Mittelstand, or small and medium-sized enterprises, have been able to train workers on a lifelong learning cycle, which grooms them to be resilient in downturns.

Talent will flow both ways, for the good of all.

Andrew Sheng is president of the Fung Global Institute

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whymak
"Asians have much to learn from the way the German Mittelstand..." Right on, Mr. Sheng. Chinese especially ought to learn something from Germany's apprenticeship system. When I watched those disgraceful Lingnam graduates during commencement ceremony, I inevitably conclude that they are hopelessly unemployable.
Instead of learning marketable skills and polishing off naivete and abrasiveness typical of teenagers while in a university, students are acquiring intransigence and spite from trendy Western culture at taxpayers' expense.
How many students majoring in basket weaving have elementary calculus under their belt? I have encountered German technicians not rigorously trained academically (along the Gymnasium track) mastering some calculus in calibrating laboratory equipment. Yes, they learn this from apprenticeship and not from watered down courses in our tertiary institutions. I need not remind HKers that German employees are among the world's most skilled, highest paid and motivated.
Why do so many Chinese students and their parents persist in futile paper chase when 4 years of ostensible higher "education" has proven to be a sham? Chinese culture is to blame even more than those rabble rousing pseudo intellectuals preaching democracy and human rights in our universities.
Short of a HK cultural revolution, I am not smart enough to suggest ways to get rid of yellow people's rotten attitude toward blue collar employment.
whymak
johndoe, mercedes2233:
Unfortunately, vested interests of the education establishment are unwittingly perpetrating a con game. Just read the syllabuses and course contents in HK and US universities. I find topics like Modern Portfolio Theory and Black-Scholes option pricing model. Now tell me the minimum intelligence required to understand these subjects. Yet I encounter countless number of graduates in business administration and finance without a clue on what they are, let alone using them proficiently in their jobs.
Even basic sciences adequacy of some physicians is suspect. One presumes they had a good course in biochemistry from medical school if not at least another year course before then. Yet I have met doctors recommending old wife remedies, a food supplement chondroitin glucosamine, to their patients for osteoarthritis.
CG is extracted from sugar-phosphate proteins of animal skeletal tissues. It is believed that they are beneficial for bones, cartilage and ligaments. I have always thought 以形保形 ancient myth is only good for superstitious Chinese. Apparently, these Western trained doctors don't realize ingested CG will be broken down into small groups, 4 to 6 in number of amino acids molecules, which are abundant from eating other foods.
If incompetence is not uncommon among one of the most intensely trained professions, how much faith do you put into students taught by charlatans like Chan Kin Man and Benny Tai?
Is our higher education a fraud?
johndoe
There are tens of millions of unemployed young people all around the world. The "education" system has dumbed them down. There is no need for large scale immigration to "solve talent problems". This is globalist propaganda for pushing down wages in low skilled professions further.
China is a good example. Google "ant tribe". It is not a lack of talent. It is a fondness of blowing credit bubbles and crony capitalism that blocks the development of China, not lack of talent.
Artline500
Yes it will. And there are a few countries where talent is actually so very rare that it doesn't need to consider going somewhere else, and maybe.... just maybe, I finally found a way to actually view something positively for one particular such country. Wow.
nosidam
PCC:
Yes, most of these "keys" as you describe them are. Unfortunately, creativity, initiative, and thinking"outside the box" are rarely, if ever, taught in Chinese universitie and elsewhere.Standing out in a crowd by what you say or the way you act in business rather than what you wear is a major exception.
mercedes2233
Agree with most of your points, especially about HK's young people in universities. HK's attitude to blue collar workers is easy to understand, because they do not earn enough, and because they are not 'refined'. When plumbers and builders earn more than the normal office workers, as in some western countries, then perhaps society will view them differently. I know at least three Australian ladies who are university graduates who work in middle management and human resources whose husbands are a plumber, a boiler-maker, and a mechanic on gambling machines. I cannot see that happening in HK.

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