The Hays Global Skills Index (the ‘Index’) is an annual assessment of the trends impacting skilled labour markets and examines the dynamics at play across 33 markets, determining how easy or difficult it is for organisations to find the skilled professionals they need.
The seventh edition of the Hays Global Skills Index sheds new light on the multiple pressures facing today’s labour markets around the world. These include:
- Growing talent mismatch;
- The widespread productivity puzzle;
- Ageing populations;
- Gender pay gaps; and
- Shrinking share of the national income for workers.
As ever, the picture is complex. While global economic growth is forecast to increase this year, that trend has not been matched by widespread growth in the productivity or wages of global workforces.
This report highlights a number of factors that may be contributing to this sluggishness; a key example is the growing talent mismatches between the skills workers possess and those desired by employers. This is a trend identified in almost half of the 33 markets assessed in this Index – indeed, of the 17 European countries with data on job vacancies, no fewer than 16 have showed a rise in their rate of unfilled employment vacancies this year – a key indicator of talent mismatches.
But that’s only one element of the story. This report also investigates the global productivity puzzle, which has seen labour productivity levels particularly in Europe and the Middle East grow at rates far below their pre-financial crisis levels.
While this was to be expected in the immediate aftermath of the crisis, the fact that productivity has not bounced back during the subsequent economic recovery is more surprising. Some countries appear to be stuck in a low growth trap, whereby weak productivity growth has led to reduced investment in labour and capital, further weakening overall productivity levels – with troubling knock-on effects for workers.
But there are also longer-term trends to consider, notably countries’ ageing populations. This report also explores what causes such marked differences in the average working hours of countries featured in the Index, and the significant gender gaps that endure in everything from average wages to opportunities for promotion.
Another serious issue of concern is the shrinking share of national income that workers receive, which has been linked to the effects of globalisation and the increasing introduction of robots, AI and machine learning. But again, as this report explains, this is not a one-size-fits-all issue. In some industrial sectors and geographical regions, the advent of AI and robotics may potentially boost the productivity of workers. This is, in part, because technological innovation cuts the cost of producing goods and services, raising the purchasing power of consumers whose extra spending creates new jobs. In other sectors and regions, however, it is having a clear, negative impact on jobs and wage growth. Overall, a key challenge for policymakers must be to try to ensure their citizens possess the right skills to take advantage of whatever new opportunities emerge in this fast-changing work landscape.
Across the world, we are seeing a pattern of narrowing wage gaps between high- and lower-skilled occupations. But while this may serve to decrease wage inequality levels, rising wage pressures and talent mismatches, together with falling labour participation levels, means the average Index score across all 33 markets has increased this year to 5.4 – continuing the trend of the Overall Index score rising steadily on average since its inception in 2012.
Regional differences highlight how even subtle movements in the Overall Index mask a wealth of information at each individual country level. The country indices and their sub-components, not to mention the insights from Hays experts on the ground that have been provided for each country profile, are all designed to help firms hone their strategies for the selection and hiring of skilled staff. This report underlines that these issues are now more important than ever.
Europe and the Middle East (EME)
- The Index score for Europe and the Middle East has risen from 5.4 in 2017 to 5.5, suggesting employers now face slightly greater pressures in EME labour markets.
- This rise is largely due to higher overall wage pressures and an increase in talent mismatch.
- As in EME, employers are typically finding it more difficult to attract and retain talent in Asia Pacific, with the region’s average Index score rising from 4.8 in 2017 to 4.9.
- Over the past decade, participation rates have been driven up by improvements in education levels and other socioeconomic factors. This year, however, a slowdown in the growth of labour market participation rates across various age groups has been a major driver of the region’s higher score.
- Overall, labour market conditions have remained stable in the Americas, with the region’s average Index score unchanged from 2017 at 5.7.
- But beneath this apparent stability, there have been important changes in individual indicators: for example, declining wage levels for employees in high-skilled occupations, relative to lower-skilled jobs, has exerted a considerable negative impact on the Index this year.