Developing human capital
- September 09, 2011
What is behind the trend?
• Nations that are home to “the next billion” need to invest in their social infrastructure (healthcare and education) or risk stunting their development into more balanced economies, both in terms of stalling workforce productivity and consumer spending power.
• Creating a consumer class in China (followed by India and Indonesia) will require social safety net investments in healthcare and education. An aging population requires either additional savings to support itself in retirement or a public support alternative.
• In advanced economies, growth will be strongest in sectors like technology and healthcare that require skilled labor and entrepreneurship. Opportunities for the poorly educated in advanced economies continue their long-term decline.
What does it mean for business?
• Expect a shortage of management talent for some time in emerging markets as economic growth outstrips home-grown talent growth and managers in advanced countries choose entrepreneurship in increasing numbers.
• Hire to grow—companies that plan to expand in China, India, Indonesia and other fast-emerging markets need to hire promising managers early and invest in their training and retention, as finding fully capable managers in-market will be extremely challenging.
• For advanced economies, the US in particular, the talent shortage means more enriching career opportunities for the elderly and for university graduates, a majority of whom are now women. Work models better able to adapt to the needs of women raising children will create an advantage in the hiring and retention of this majority group.
• Financial services companies may have an opportunity to create better savings vehicles (public or private) to create or augment a retirement safety net.
China has the largest absolute and relative gap in its healthcare system among major emerging markets, split between the products side and the service-delivery side
Education spending among emerging economies significantly lags that of the advanced economies…
…ultimately leading to talent gaps that acutely show up in service sector fields like management, sales and medical care
If BRIC countries move toward private pensions like many OECD countries, it will create a multi-trillion dollar opportunity for financial services companies