The talent time bomb

‘It’ is the demographic dividend of countries with young populations. It is felt in many ways, from the commercial impact of an energetic and youthful entrepreneurial base to the ratio of working-age taxpayers available to fund public services.

India has one of the world’s youngest populations; more than 70% of its people are under 35. Japan, on the other hand, has a severe demographic deficit, with near zero population growth and the number of over-65 year olds predicted to reach 25% in just two years’ time.

The end of the baby boom?

Developed countries such as Russia and the UK have managed to maintain their birth rates through immigration. Others are faring less well. Germany, for example, has experienced a minus growth rate for several years.

With a young talent base that is increasingly on the move - a trend exacerbated by the financial crisis,  the competition amongst businesses for the right people is growing ever fiercer. Although it may seem counter intuitive when many countries are suffering near-record levels of unemployment, it’s becoming a serious commercial issue.

The 2011 Lloyd’s Risk Index, a global survey of business leaders, showed that a shortage of talent and skills has become the number two risk facing businesses across the world, second only to the loss of customers caused by the global downturn.

Rising Risk Awareness in the East

And it is in the Asia-Pacific region that the on-going search for talent is being experienced most acutely. 70% of Risk Index respondents in this region rated this risk as a high or very-high priority for their businesses, compared to say 45% of respondents in North America.

The problem, however, is not just confined to the Asia-Pacific region. Severe skills shortages, for example, are reported as a growing risk in the North Sea oil fields, with frequent staff movement as companies poach staff from each other. A whole new area of Human Resources is growing up around finding ways to identify specialist staff at risk of poaching and devising the right compensation packages to encourage them to stay put.

As Neil Smith, Manager of Lloyd’s Emerging Risks and Research, points out, it’s an issue that those at the top of organisations need to plan for:

“Talent shortages may not feature on every company’s risk register, but it’s no less important than many immediately visible risks – boards need to take the issue seriously and plan accordingly.”

Tackling the talent crunch

Getting, and keeping, the right talent is an issue for the insurance industry too, particularly for markets like Lloyd’s who seek the best. Lloyd’s is tackling this with a twin-track generalist and specialist graduate recruitment programme while also running a professional development programme for existing market professionals.
 
For growing economies, expansion will be ever more dependent on attracting the right talent. The demographic dividend enjoyed by some countries may well prove to be one of their most attractive exports, providing benefits for both the home and receiving countries, in the years ahead.

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