Sunday, August 30, 2009

Talent Shortage Panic

During an economic downturn, the tendency is to protect the labor market. In fact, protectionism on all fronts is the rule. Japan's workforce is one of the oldest in the world and the country desperately needs immigrant talent. But the opposite is happening as the polity reacts irrationally to global economic woes. In the United Kingdom, demographers and economists are fretting about the lack of skilled laborers:

"If we have got shortages even during as bad a recession as we have had in 40 years, what the hell is going to happen to the labour market on the other side of this?" asked Kevin Green, chief executive of the Recruitment and Employment Confederation.

Latent demand for skilled workers is likely to create renewed pressure for immigration in an upturn, potentially fuelling social tensions. "Even though we are in the depths of the recession, there are areas which are feeling either a general or in some cases quite an acute level of skill shortage," said Alistair Cox, chief executive of Hays, Britain's largest listed recruitment company.

The reason immigrant pools, as opposed to domestic job-seekers, are the short-term solution is education. Foreign-born talent is ready to step into the open position right now. This workforce crutch can also distort the labor market, failing to increase wages and entice adults to train in the areas with the most demand.

This dynamic should inform a new kind of geopolitics, talent trade:

If Nasscom chairman Pramod Bhasin is to be believed the Indian technology services skills, admired the world over, can change things in its own backyard. ...

... While the IT sector, with exports growing from almost zilch to $50 billion in less than a decade and employing over two million, is now set to bring the benefits of technology to the country, the Indian youth will also help address the global shortage of workers.

“There will be a shortage of 15-18 million skilled workers in the US, Japan and Scandinavian countries already faced with massive manpower shortages. These can also be met by the Indian labour pool,” he said.

India's emerging economic strategy should interest the Rust Belt, a prolific producer of talent in its own right. How does India intend to take advantage of the export of talent? I hope Cleveburgh is paying close attention.

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