Monday, October 05, 2009

Skills Shortage Costs

With Mike Madison poised to take out his crystal ball and David Murdoch trying to rally the region around the need for talent, I'll take a look at one of the drags on India's economic growth. Even the best development schemes are only as good as the available labor pool. India suffers from a lack of infrastructure. But the real problem is finding the right people to build it:

India’s engineering graduates are frequently lured into better paid jobs in computer science, information technology and financial services. Many fail to find suitable jobs among India’s handful of big construction companies. Moreover, the family-owned nature of most of the medium-sized construction firms serves as an impediment to ambitious young civil engineers.

The warning comes as the Congress party-led government is planning $100bn investments in infrastructure over the next three years. Some estimates suggest that spending on infrastructure needs to rise from 4.6 per cent to 8 per cent of gross domestic product. It also comes as New Delhi, the country’s capital, is struggling to improve its sporting and transport infrastructure ahead of next year’s Commonwealth Games.

The World Bank singled out road building as a sector where skills shortages were particularly acute against a backdrop of falling foreign investment. Lack of skills threatens to retard the aggressive push to improve the national road network by Kamal Nath, the road transport and highways minister, who has promised to build 20km of road a day.

The government is ready to do whatever is necessary and the money is ready to be spent. Without workers, not enough can be built to sustain India's pace of economic growth. India might try to import civil engineers, but that would put even a greater squeeze on an already tight global talent market.

Nova Scotia (Canada) has a similar issue, albeit of a different demographic nature. The aging workforce is the basis for dire predictions of acute talent shortages across the board. Pittsburgh is in the same boat. Meanwhile, the executive editor of the Post-Gazette continues to fret over brain drain. He ought to read his own newspaper. There will be a massive shortfall of skilled labor and local supply won't be able to keep pace. Not even close.

The federal government is ready and willing to spend money on innovation clusters such as advanced energy. But who will start these companies? Where is the talent? Pittsburgh is far from shovel-ready.

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