Indian companies won’t have to shell out exorbitant money to attract and retain highly skilled talent over the next decade, as the country will have a highly skilled talent surplus by 2030. This is unique because every other major country will witness a massive rise in company payrolls due to a shortage of highly skilled talent. These insights are a part of ‘The Salary Surge Study’ conducted by Korn Ferry.
The Salary Surge study estimates the impact of the impending shortage between the future labor supply and demand on the payroll of 20 major global economies. The research is focused only on highly skilled labor to understand the impact on each economy at three future milestones: 2020, 2025 and 2030. Although the focus is on all sectors, three crucial sectors that are central to the study: financial and business services, technology, media and telecommunications (TMT) and manufacturing.
The study uses educational qualification as a proxy for skills. The study essentially calculates the average pay premium, which is how much organizations could be forced to pay workers, over and above normal inflation increase.
The 20 countries included in the study are as follows: the Americas (Brazil, Mexico, the U.S.), EMEA (France, Germany, Netherlands, Russia, Saudi Arabia, South Africa, U.A.E., U.K.) and Asia Pacific (Australia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, Thailand).
The following are the major findings of the study:
- By 2030, a deficit of in-demand employees could cost APAC companies more than $1 trillion as the average pay premium for skilled workers in the region could be more than $14,500 per employee annually.
- India is the only country that will have a highly-skilled talent surplus till 2030, and at every preceding milestone.
- Companies in Japan are expected to pay the most to their workforce, as they are predicted to pay approximately an additional $468 billion by 2030.
- Smaller markets with a limited talent supply are likely to bear the maximum brunt as Singapore and Hong Kong are expected to pay salary premiums equivalent to more than 10% of their 2017 GDP.
- Hong Kong could see the highest average premium pay of $40,539; Singapore is expected to pay $29,065 extra and Australia $28,625 by 2030.
- Organizations in China are expected to foot an additional wage bill of more than $342 billion.
- The surging salary could be detrimental to the growth of the manufacturing sector in emerging economies.
- Companies in the USA are expected to pay a wage premium of more than $531 billion by 2030, the highest in the world.
- Germany faces a potential wage premium of $176 billion (the highest in EMEA).
- U.K. and France are expected to do better in the short-term, but will likely reel under pressure by 2030. This is because by 2030, U.K.’s wage premium might touch 5% of its 2017 GDP levels and that of France may reach 4% of its 2017 GDP.
- Overall, the talent shortage is expected to add $2.5 trillion in salary by 2030, or an average pay premium per worker of $11,164 per year.
Dhritiman Chakrabarti, Korn Ferry Head of Rewards and Benefits, APAC explains the findings of the report, “The new era of work is one of scarcity in abundance: there are plenty of people, but not enough with the skills their organizations will need to survive. While overall wage increases are just keeping pace with inflation, salaries for in-demand workers will skyrocket if companies choose to compete for the best and brightest on salary alone.”
This is naturally a cause of concern for organizations all over the world, and they are working overtime to be prepared for the future. “Buying in talent from the market is unsustainable. Instead, companies across APAC must focus on engaging and reskilling their current workers,” said Chakrabarti. “With existing highly skilled workers, leaders must focus on what really drives retention. We know that employees who have the opportunity for career development, benefit from inspiring leadership and feel their work has purpose are more likely to stay at an organization, and – crucially – will be more engaged and productive.”
So what kind of employees will be able to reap the benefits of this salary surge? “In tomorrow’s world of work, the employees who will succeed won’t necessarily be the people with the highest level of academic achievement,” said Chakrabarti. “Instead, they will be the ones who are adaptable and willing to learn, with enough flexibility to handle rapidly shifting working environments and less hierarchical structures. Companies need to identify the talent of tomorrow and help them achieve their potential.”
You can get the complete report here.