June 2, 2017    4 minute read

Talent Shortages: Why Do They Exist and What Can Be Done?

Solutions    June 2, 2017    4 minute read

Talent Shortages: Why Do They Exist and What Can Be Done?

Scandinavian countries are best at attracting, maintaining and developing talent. The IMD World Talent report shows that the top ten of the list included four countries from the region: Denmark took second place, Sweden fourth, Finland sixth, and Norway seventh. Switzerland has taken the top position every year since 2007.

The report was based on three main criteria: investment/development, talent attraction, and level of preparation in providing the right conditions for workers.

A Rising Star?

The report shows that Poland’s strongest advantage is the “investment/development” category, in which it took 18th position. This means an improvement by 12 places since the last report. Poland also performed well in the preparation category and came 24th.

The weakest side of the Polish labour market is its “ability to attract talented manpower”. Poland has a good ratio of teachers to students in basic education, affordable living costs (index of goods and services) and access to experienced management staff.

However, the WMD ranked Poland rather low regarding its quality of health care, retention of valuable employees, effective tax rate and percentage increase in the size of the workforce. Compared to 2012, however, Poland recorded a general improvement – which translates into an advance by nine positions.

Brain Drain

International migration is a reaction to the unevenly distributed prosperity in the world. People migrate from poor to rich countries and thus ensure a balance of the gap. But the associated brain drain, the emigration of the educated elite, is detrimental to the developing world, but it can also be a problem for rich countries competing for the best minds.

Migration is a part of globalisation and the integration of developing countries into the world economy. However, contrary to trade and capital flows, migration is highly regulated in target countries. Although migration may have a positive impact, stimulating the economy, reducing poverty and also boosting the level of education, these countries benefit from the cheap labour that does simple or risky work on dumping prices.

The exodus of the educated elite from a country endangers its economic, political and cultural development possibilities. Well-educated immigrants usually earn less than native citizens with the same qualifications. This is why people are talking about a “brain waste”, which is amplified by the fact that, in contrast to the students, the skills of migrants are usually not used in the immigration country.

Talent Shortage

Worldwide, a talent acquisition problem is currently experienced by 38% of all employers. This is the highest percentage since 2007, up 2% from the 2014 edition. In terms of access to talent, countries are divided into two groups: those who have a huge problem with the shortage of skilled and talented people – mostly Asian and Latin American countries and those who are relatively well dealing with this problem – mainly European countries.

The world’s largest shortage is in Japan, where the problem is reported by as much as 83% of companies. Just behind Japan in this unfortunate rivalry was Peru (68% of companies are struggling with vacancies), Hong Kong (65%), Brazil and Romania (61%). At the other end of the list were Ireland (only 11% of companies suffering from shortages of specialists), the UK, Holland and Spain (14%) and the Czech Republic (18%).

What to Do?

Employers’ actions are insufficient to address talent shortages. 20% of all companies in the world do not even have a strategy on how to combat the shortage of skilled professionals. Only about 5% of employees intend to introduce additional incentives that could attract the most talented workers, for example by raising wages.

What actions can companies undertake to reduce shortages? Many suggest the development of new recruitment strategies, increased flexibility, and openness to marginalised groups (candidates from other regions, seniors, women) or the development of a learning culture in companies will encourage candidates to develop their careers.

Companies must respond quickly because progressive demographic trends in some regions (including shrinking workforces in Western countries) will exacerbate the competition for workers.

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