The Hays Global Skills Index is an index scaled from 0 to 10 which estimates the national pressure in demand for skills.
This index also shows how labour markets have been affected by the crisis. Actually, by looking at a comprehensive set of macroeconomic and labour market indicators across 31 countries, the Hays Global Skills Index puts into context the dynamics of the global skilled labour market. 2015 was the fourth index publication which also enables national governments, researchers or academicians to estimate country performance compared to previous years.
The index is composed of seven main indicators equally weighted. Each of this indicator measures how much pressure specific factors are exerting on the local labour market. The higher the score, the more pressure the labour market is experiencing.
- The fist indicator measures education flexibility, a more flexible education system will meet various labour market expectations and build a solid talent pipeline in today’s world.
- The second indicator: labour market participation demonstrates that if a very small number of new workers is available to join the workforce, it is more difficult to increase the labour force in order to boost labour and economic performance.
- The third indicator measures the labour market flexibility, a more flexible market will more easily align national policies and labour market dynamics.
- The fourth indicator, talent mismatch measures the gap between the skills needed and the skills available. A smaller mismatch will help employers to find more quickly workers with the required skills and increase the overall labour force participation which will boost economic growth.
- The fifth indicator, overall wage pressure shows that skills shortage becomes exacerbate when wages are growing faster than the overall cost of living.
- The sixth indicator, wage pressure in high-skill industry demonstrates that wages in the high-skilled industry are rising faster than in low-skills industry compared to the past. This indicates the emergence of sector-specific shortages. Actually, the need in some industries of higher-skilled staff makes them more vulnerable as the number of qualified persons is lower.
- The last indicator measures the pressure on the wage in high-skilled occupations. Rising wage for specific high-skilled occupations signals a shortage of employees with the necessary skills.
Among the European countries observed, Belgium and Italy are the countries that performed the best. Belgium is performing very well in talent mismatch meaning that the variety of skills available meets the diversity of skills required. This score might be linked to the internationality of Brussels with foreign skilled persons fulfilling potential shortages in Belgian skills. Moreover, neither Belgium neither Italy is affected by pressure from wages in the high-skilled industry.
On the other hand, the four countries in Europe with the biggest pressure on labour markets are Sweden, Germany, Spain and Hungary. Sweden and Hungary are performing really bad on education flexibility while Spain, Hungary and The UK have big issues regarding talent mismatch. All of them are also facing big burdens on wages in high-skilled industries.
General conclusions of the 2015 index: The index reveals that it is getting harder for businesses to find the talent they need. In some regions of the world such as the United States and the United Kingdom, there are increasing signs of skills shortage. Skills mismatch is also a growing concern for the global economy. It harms both firms’ competitiveness and country overall productivity. A potential solution to these two problems is an increase in labour mobility. Labour mobility is essential and diversifies the labour force with various profiles that do not exist in a specific country.
More specifically in Europe, the high rate of unemployment is a major problem especially for young. There is also a clear evidence of a mismatch between the skills that jobs seekers possess and the needs of employers. This is demonstrated by the high rate of unemployment alongside with a high rate of unfilled job vacancies.
Based on the new index, 3 main recommendations were developed to address the global skills deficit for the year 2016:
- Make skilled migration easier in order to decrease the mismatch and allow business accessing to workers they need. In a more global world, every country has to look beyond borders. Skilled migration is a vital long-term solution and it is wrong to restrict access to external talents. This has already been understood by countries that created specific visa to attract high-skilled migrants.
- Have a long-term vision with targeted training for employees and stronger bridges between schools, universities and the labour market to deliver the right skills pipeline for the future. Raising the standard of education implies huge economic gains and training might upskill employees which will boost local productivity.
- Encourage employers to embrace technology and maximise the use of skills at their disposal. Investing in new and advanced technology will help employees to work more efficiently.
Making these three points priorities will dramatically decrease the skills shortage, boost the competitiveness of firms and secure a sustainable growth for 2016 and the future.