It's essential to nurture homegrown talent

Forget about currency wars. The dollar may go up, the yen go down and the yuan could be the next big currency. But what determines the value of the currency will be the quality of human talent. Money is manmade and the real value is not gold, not GDP, but sheer human power.  

Earlier this month, I was invited to Kiel, just outside Hamburg, to attend the 2013 Global Economic Symposium (GES), organised by the Kiel Institute for the World Economy. The purpose of the GES, sometimes called “Global Economic Solutions”, is not to think, but to “tank”, namely get a diverse group of people from all walks of life to immerse themselves in lively debate about everything. GES is not an ideas tank, but a solution tank.  

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

To 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.”

Our Hong Kong fund manager had wise and practical 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 things than just making money. Right on!

The best thing about thinktank conferences is not just the people you meet, but the material you get to read. I found a bland-looking paper 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, the US will need 25 million workers and Europe will need 45 million, equivalent to recruiting the entire labour force of the Philippines or Vietnam.  

The reason the US and Europe need to recruit is obvious – the population is ageing and the labour force shrinking. They need to up the ante through migration and skilling. In the last decade, new immigration accounted for 70 per cent of the growth in the labour force 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. The UN predicts that the most attractive countries for immigration are: the US, Canada, Spain, Italy and the UK, where the major countries for emigration are China, India, Mexico, Pakistan, Indonesia, the Philippines and Bangladesh.  

Migration is big money. The total estimated migrant remittance was US$479 billion in 2011 (probably underestimated) and just European outward remittances was 11.7 per cent of the Philippines’ GDP, 12.6 per cent for Serbia and 10.9 per cent for Albania. 

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 by 2018, with 35-41 per cent skills-based. So quite a number of countries will be training people for the US if they don’t appreciate their homegrown talent better. 

By 2021, China will be home to 28 per cent of the world’s graduates, followed by US (25 per cent), India (13 per cent), Russia (11 per cent), Japan (7 per cent), Brazil (3 per cent) and Mexico (3 per cent). However, not all of the graduates can move abroad because of quality concerns. 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 not inherent, but in the eyes of the beholder. If you think your graduates inferior, they will become inferior. Many talented individuals migrate because they think, rightly or wrong, that they are not appreciated by their own employer or country. Some go because there is less pollution, corruption or just because they are offered better pay or better opportunities for their children.  

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

Why is the talent war so critical? Because it takes more than ten years to train decent talent in any professional skill! The best brain surgeon in your country is useless without the best surgical nursing team. You lose enough of the nurses, you will lose the brain 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, using the Immigrant Employment Council of British Columbia, or the Work in Denmark Centre in India as examples.  

There are also innovative skills transfer schemes, such as the German “Senior Expert Service”, which has 8,800 registered retired experts who can go out on short-term consulting to train people around the world.  

The pull factor from advanced economies can only get stronger. The best people will get the highest pay. The top movie stars and football players are paid tens of millions. And the rare few who create the next Twitter will be worth billions. Those countries that do not retain and nurture their best talent will be stuck in the middle-income trap.  

I am delighted that the Kiel GES 2014 will be held in Kuala Lumpur. This means that the Germans are thinking globally and acting locally. Asians have much to learn from the way the German Mittelstand has been able to train workers on a lifelong learning cycle, which grooms them to be resilient against the toughest down cycles.   

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

 

Andrew Sheng is President of the Fung Global Institute.