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The Hays Global Skills Index 2012
The Hays Global
Skills index 2012
Contents
An introduction by Alistair Cox
Chief Executive, Hays plc
Introduction1
Executive Summary
2
Creating the Hays Global Skills Index
3
THE Hays index by country
4
Three-point Action Plan
5
The Global Picture
6
Economic health and fragility 7
Education and the labour market
7
Talent mismatch and wage pressure
8
Shortages in key industries and occupations 8
THE REGIONAL PICTURE Europe
It gives me great pleasure to introduce the Hays Global Skills Index 2012,
our first ever in-depth review of global skills and employment trends,
produced in collaboration with Oxford Economics. The availability and
flow of skilled labour is a critical measure for employers, employees and
governments around the world. Skill shortages restrict economic growth
and investment while unemployment is not only an economic burden
but also brings distress and hardship to society. There is already a great
deal of commentary around these issues. However, to better inform the
debate, we have aimed to shed light on what is actually happening in
today’s markets around the world, looking at a range of data to outline
the issues in 27 key countries.
10
11
The euro area 11
Western Europe outside the euro
12
Eastern Europe and Russia 13
North America 13
Latin and South America 15
Asia 16
Australia and New Zealand 18
Sources 19
Contributors 20
The Hays Global Skills Index results 22
Global map 22
Country-by-country results in detail 24
What our report demonstrates is that there is a major paradox in the
world’s skilled labour markets today. We are witnessing high and chronic
levels of unemployment in many areas, while simultaneously seeing
industries and countries struggle to find enough highly skilled individuals
to fill the opportunities already available. Global shortages already exist
in areas such as engineering, energy production, infrastructure
development and healthcare and it is highly unlikely that these
shortages will be resolved in the near future. Indeed they may well get
worse as many countries are simply not educating, or proactively
attracting, the people they need to fuel their growth.
At the same time, we see significant levels of unemployment in many
countries, including those struggling with skill shortages in certain
industries and roles. This is of particular concern where we see large
numbers of long-term unemployed or high levels of unemployment
amongst under-25’s as both are difficult situations to address.
Ironically, the world currently seems short of the very skills that
would help stimulate economic growth and provide opportunities
for the unemployed.
There is no one single factor causing these imbalances. Rather, it is
a combination of factors such as the economic situation, education
systems, labour market flexibility and government policy that either
restricts or resolves the matching of skills to opportunity. Here in Hays,
we see the impact of these factors every day in our work: helping
organisations find the talent they need in a world where their
competitors are looking for the same, scarce people. Certain companies
and countries are adopting different ways of dealing with this, including
some very innovative ideas. However, not everyone is tackling the
situation effectively, so there will be winners and losers.
The Hays Global Skills Index 2012 | 2
The world has had to deal with very serious economic and social issues
over the last five years and still feels very fragile. It is understandable
that we see dislocations in the market after such a series of deep shocks.
However, as parts of the world start to return to tentative growth, it is
important that the labour market imbalances we are already seeing
start to be addressed. The alternative is that organisations and countries
fail to deliver the growth that should be achievable, investment is
restricted, wage inflation takes off in certain sectors and we continue to
see high levels of unemployment in others.
As a result of our research therefore, we propose a three-point action
plan for employers, governments and international bodies to consider
in order to better develop local skills as well as easing the international
flow of labour from areas of surplus to ones of shortage. These are not
short-term measures designed to fix the problem overnight. However,
they are key principles which we argue are relevant to every country in
the report. Equally, the data in this first report is a snapshot of the world
at a certain point in time. Markets change frequently so we expect to
see shifts in the detail of labour imbalances as sectors evolve and react
to the world they operate in. We aim to conduct this research annually
to highlight these changes. However, some of the key themes around
creating a system that allows better development and flow of skilled
labour will remain constant.
Finding the right person for a job can transform a business, as well
as that person’s life. That’s a fundamental belief in Hays. Playing a part
in helping resolve the current global skills mismatch we see every day
all around the world is important to us. That journey starts by publishing
our data on what is actually happening in the skilled labour markets all
around us right now. Hopefully, this data helps policymakers and
businesses to start to put in place the measures required, whatever they
may be. Fixing this problem will create more jobs, stimulate economic
growth and provide meaningful opportunities for millions of people.
The Hays Global Skills Index 2012 | 1
Executive Summary
The global economic downturn has led to sharp rises in unemployment
around the world, particularly in North America and Europe. However,
there is little evidence that this has led to an easing in skills shortages.
Indeed, evidence seems to point to a worsening of the situation.
To examine this issue, we collaborated with Oxford Economics to design
the Hays Global Skills Index 2012 (the ‘Index’) which shows the state of the
market for skilled labour in 27 key economies across all five regions of the
world. This data is published for the first time in this report.
The Index gives each country a score between 0 and 10.0, where a score
of 5.0 indicates a stable and balanced market for skilled labour in which
companies are neither experiencing recruitment and retention problems,
nor are they witnessing a weak demand for labour. Scores higher than
5.0 indicate companies are witnessing a degree of skills shortage, which
may lead to adverse consequences including wage inflation for example.
Scores lower than 5.0 indicate a slack labour market where skilled workers
experience difficulty in finding employment.
Clearly each country and industry sector face their own issues so the data
must be looked at in detail for each circumstance. However, there are
implications for every country in this study. 16 of the 27 countries are
already experiencing some degree of labour market tightness, as shown
by a score of 5.1 or higher. The greatest difficulties are seen in the United
States and Germany, both on a score of 6.4. Hungary and Sweden are not
far behind with a score of 6.1. Many of the countries with a score below
5.0, indicating a slack labour market, are in Europe. This is maybe to be
expected as these countries struggle with the continuing sovereign debt
and banking crises in the Eurozone.
To determine the Index for each country, we took account of a number
of factors including wage pressure (both overall and by industry sector
and profession), talent mismatch for available roles, and those factors that
contribute to skill shortages such as the quality of local education and
labour market flexibility. Strong economies tend to generate wage
pressure, and the strength of demand further tightens the local labour
market. However, talent mismatch, where companies struggle to recruit
the skills they need despite a large pool of available labour, is currently a
major issue for countries such as the US, UK and Ireland, even though
wage pressures there are weak. This should act as a warning of further
long-term skill shortages as these economies eventually recover and
demand grows further for these skills.
When looking specifically at high-skill industries, half of the countries
surveyed are currently experiencing levels of wage pressure indicative
of skills shortages. These countries are a mix of emerging nations,
predominantly in Asia, as well as certain developed economies, indicating
that wage inflation is usually a country-specific or sector-specific issue.
Skill shortages by occupation and experience level vary considerably
across countries. The US has the highest reading of all the countries
surveyed and is close to the maximum possible in the Index. This suggests
a severe dislocation between employers’ needs and the supply from the
educational and vocational training systems in place. Singapore also
witnesses wage inflation in high-skill occupations but has already
implemented far-reaching immigration systems to respond to this
pressure. At the opposite end of the spectrum, those countries most
heavily impacted by the Eurozone crisis show very little pressure on
wages, notably in markets such as Italy.
2 | The Hays Global Skills Index 2012
Regional analysis based on Index data and local input from Hays
executives shows that skills shortages are already a major issue for
employers in many countries and sectors, and that the situation is likely
to worsen without specific action taken by governments and businesses.
• Europe can be divided into three areas. Eurozone countries,
particularly those in the south are experiencing low stress levels in
skilled labour. However, high unemployment in these areas creates its
own social difficulties. Fast growing countries outside the Eurozone,
including Switzerland and Sweden, are currently experiencing wage
pressure. Other countries such as the UK suffer a severe talent
mismatch while simultaneously struggling with high unemployment
levels. In emerging Europe, Russia faces the twin difficulties of a
declining and ageing workforce, combined with a growing need for
staff with international experience or skills to support local businesses
seeking to expand overseas.
• In North America, the US has the highest score in the Hays Index,
indicating one of the tightest markets in terms of skilled labour.
Shortages are particularly evident in sectors such as oil and gas, life
sciences and information technology. Paradoxically however, the US is
also witnessing stubbornly high levels of unemployment within a weak
economic recovery. This can be explained by an excess supply of semiand unskilled workers who are not suitable for the sorts of roles that are
being created by the industries that are currently generating economic
growth in the US. Canada faces similar issues with acute shortages in
the natural resources sector in particular.
• Across Latin and South America, there are widespread skills
shortages in many sectors including natural resources, engineering,
life sciences, retail and finance. These problems are compounded by
the relative inflexibility of local labour markets as well as language
requirements which restrict the ability to attract talent from overseas
to fill the many roles currently available.
• In Asia, although economic growth is fuelling wage inflation, relaxing
labour market and immigration systems would go some way to
alleviating this pressure. And whilst the quality of the education system
can vary across Asia, schools and universities in countries such as China,
India and Singapore have scope to expand their education performance
and output to meet organisations’ demands for specific skills.
• Australia and New Zealand both face skill shortages in specific sectors,
but for different reasons. Demand for highly skilled professionals
remains high in the natural resources sector of Australia and this is the
key driver of current labour market tightness there. In New Zealand
there is a very significant demand for qualified civil engineers, and
other professionals in the construction sector, to undertake the
rebuilding of Christchurch after the earthquake of 2011 – this is having
a profound effect on employment in this sector.
Overall, very few countries currently enjoy a labour market where all seven
components are in balance. Even amongst those with weak economies,
several are witnessing shortages in certain sectors. As economies repair
over time, growing demand will exacerbate the problem, driving further
wage inflation in specific sectors. Certain countries will successfully tap
into the talent that is available globally and facilitate the free movement of
that labour toward their own industries. Others will likely maintain more
rigid labour policies and witness greater levels of unfilled roles, while
potentially maintaining high levels of unskilled unemployed.
Creating the Hays
Global Skills Index
The Hays Global Skills Index represents a standard model for assessing the key factors that contribute
to skills shortages in any country. These factors include the strength and resilience of an economy,
the health of a country’s labour market, the quality and flexibility of education, and the demand and
supply of labour (particularly in high-skill industries and occupations).
Given that skills shortages relate to the complex interaction of all these
factors, we collaborated with Oxford Economics (OE) to construct the
Hays Global Skills Index, which aims to help employers, employees and
policymakers understand the dynamics of their labour markets, and to
make comparisons across geographies.
The Hays Index is based on an aggregation of thousands of individual
data points by Oxford Economics (see page 19) that builds a picture of
the friction levels in a country’s labour market. Each country’s Hays
Index is displayed in colour-coded circles surrounded by indicators
relating to the seven components that make up the Index (see
descriptor below).
The analysis that follows in this report is supplemented by detailed
local knowledge and insight from senior Hays executives working
on the ground in the four geographies that Hays operates: Europe,
The Americas, Asia, and Australia and New Zealand.
The Hays Index illustrates specific areas currently affected by skills
shortages as well as highlighting sectors and occupations that may see
restrictions in the coming years. This enables us to draw out key policy
issues for governments, international bodies and multinational
corporations to consider when designing their long-term strategies,
reflected in the three-point Action Plan that follows on page five.
We have displayed the results of the Hays Index in a large, fold-out
infographic map at the back of this report, which we plan to update
each year.
Seven components make up the
Hays Global Skills Index
• Education flexibility. Measures whether the education system can adapt
to meet organisations’ future talent needs, particularly in the fields of
mathematics, science and literacy. A high score means there is limited
potential or capacity to increase education performance and output. A
low score indicates there is considerable scope to expand the output
and quality of the local educational system.
• Labour market participation. Measures the degree to which a country’s
talent pool is fully utilised. A high score means that the proportion of
working age people that are employed (or are available for immediate
work) is not increasing, indicating constraints on the availability of
additional resource. A low score means that the participation rate
reflects the increasing availability of talent to join the workforce.
• Labour market flexibility. Assesses the legal and regulatory
environment faced by businesses. A high score means the labour market
legislation is judged to be inflexible and there are constraints on the
ability of inward migrants to fill talent gaps. A low score means the
labour market legislation is judged to be flexible, with an openness to
immigration.
• Talent mismatch. Measures the mismatch between the skills needed by
businesses and skills possessed by the labour force. A high score means
that the numbers of long-term unemployed and vacancies are both
increasing suggesting the available labour does not have the skills
employers want. A low score implies that employers are having an easier
time finding the talent they need.
• Overall wage pressure. Whether wages are keeping pace with inflation,
which is a measure of overall labour market tightness. A high score
means real wages are increasing quickly relative to the longer term.
A low score means real wages are not rising quickly (or are even
declining) relative to the longer term.
• Wage pressure in high-skill industries. The rate at which wages in
high-skill industries outpace those in others. A high score means wages
in high-skill industries are rising much faster than in low-skill industries.
A low score means wages in high-skill industries are not rising faster
than in low-skill industries.
• Wage pressure in high-skill occupations. A measure of wage premium
paid in high-skill occupations, which is an indicator of shortages of key
talent. A high score means wages in high-skill occupations are rising
faster than in low-skill occupations. A low score means wages in
high-skill occupations are not rising faster than in low-skill occupations.
These seven criteria are all given equal weighting.
Each country’s Hays Index is surrounded by a coloured dial indicating
the score ranges for the seven labour market indicators.
Overall wage
pressure
Education
flexibility
Wage pressure
in high-skill
industries
Labour market
participation
5.1
Wage pressure
in high-skill
occupations
Labour market
flexibility
Talent mismatch
LOW PRESSURE
HIGH PRESSURE
0.0-0.9 1.0-1.9 2.0-2.9 3.0-3.9 4.0-4.9 5.0-5.9 6.0-6.9 7.0-7.9 8.0-8.9 9.0-9.9
10.0
The Hays Global Skills Index 2012 | 3
THE Hays index
by country
Three-Point action plan
There is a wide range of dynamics impacting the skilled labour market conditions across the
27 leading developed and emerging economies that make up the Hays Index.
While all 27 countries in the Hays Global Skills Index suffer from individual labour market pressures,
the analysis highlights two common significant issues that need to be addressed by governments
and businesses alike to maximise future economic growth.
The Hays Index ranges from 0 to 10.0 where a score of 5.0 indicates
a generally balanced picture for labour markets. This suggests firms are
able to recruit, retain, or replace their key talent at generally prevailing
wage rates. A score close to 0 indicates intense competition for key
vacancies. A score close to 10.0 indicates severe difficulty in finding the
right skills to fill key vacancies.
More than half (16) of the countries are experiencing some degree of
labour market tightness with a score of 5.0 or higher. As the Hays Index
is based on an aggregation of scores for the seven components, the
breakdown of each country’s Hays Index reflects the specific dynamics
of the local labour market.
The greatest difficulties were found in the United States and Germany,
both with a score of 6.4, followed by Hungary and Sweden on 6.1, which
reflects the difficulties faced by many organisations in filling skilled
vacancies in these countries.
Many of the geographies with scores below 5.0 – reflecting a lax labour
market with high competition for vacancies – were in Europe. This is
likely to reflect the impact of the on-going sovereign debt crisis in the
Eurozone, and the low levels of talent mismatch.
Although the average score of all the 27 countries is 5.1, there is a wide
divergence of scores for each of the seven components that make
up the Hays Index within each country. This indicates that the labour
markets of the world’s major economies are faced with a specific mix
of tight and lax labour market influences that impact hiring conditions
in different ways in each country.
Hays Global Skills overall Index scores
Belgium
Italy
Hong Kong
India
Netherlands
Denmark
Ireland
France
Czech Republic
New Zealand
UK
Singapore
Poland
Russia
Japan
Portugal
Switzerland
China
Spain
Canada
Brazil
Australia
Mexico
Hungary
Sweden
Germany
United States
Average
LOW PRESSURE
• There is a chronic and significant imbalance of key skills around the
world. This is exacerbated by inflexible labour and immigration
legislation in many jurisdictions. This requires policy changes to
stimulate greater labour mobility from areas of surplus supply to
areas of greatest demand.
3.3
3.3
3.7
4.2
4.2
4.3
4.4
4.5
4.6
4.8
5.0
5.1
5.2
5.2
5.3
5.3
5.4
5.5
5.5
5.6
5.7
5.9
5.9
6.1
6.1
6.4
6.4
5.1
HIGH PRESSURE
0.0-0.9 1.0-1.9 2.0-2.9 3.0-3.9 4.0-4.9 5.0-5.9 6.0-6.9 7.0-7.9 8.0-8.9 9.0-9.9
10.0
The analysis on which the Hays Global Skills Index was based utilised
data as of Q3 2012. Developments subsequent to this date are not
reflected in the 2012 findings.
4 | The Hays Global Skills Index 2012
To address these issues Hays proposes a comprehensive three-point
action plan for governments, businesses and international organisations
to consider.
• Some of the most critical and important skills for driving economic
growth (The ‘Shortage Skills’) are in shortage on a global basis
i.e. in engineering, infrastructure development and healthcare for
example. These need to be addressed to focus the workforce of
tomorrow on the roles in demand.
Hays’ three-point action plan
1.Governments must have clarity on the skills that are
required and look to attract those specific skills
Once the workers with these skills are identified governments
need to make the processes to employ them quicker and easier.
One of the principal causes of the imbalance in the global skills
market is the very real obstacles that employers and employees
alike face from immigration systems. We believe that governments
can help by both simplifying and standardising the work visa
processes for skilled workers and, critically, by speeding up
application times. Specifically we suggest:
• International agreement on a priority skills visa process,
whereby qualified individuals with priority skills should
be granted fast-track status.
• An international standard for a work visa application
of 30 days once submitted.
• Longer and more easily renewable visas for skilled individuals to
provide both them and their employers with greater security of
continued visa status.
2.Employers should be offered fiscal incentives to increase
training provision
All responsible employers offer a significant amount of vocational
training. For most this is a sunk cost; they provide expensive
training with no guarantee that the employee will stay with them
for any length of time. Indeed, if they provide training in any
Shortage Skills, they take the risk that it may accelerate an
employee’s departure to a better paid post elsewhere. We believe
that employers should be offered tax incentives to provide
training, accredited to an agreed standard and following agreed
curricula. These incentives could be made more generous for the
provision of training in Shortage Skills, such as engineering and
fast developing industries such as green energy.
3.Governments to work with employers to draw up strategic
plans to increase the provision of education in Shortage Skills
It is clear from our report that whilst many graduates are out
of work, particularly in Europe, at the same time the world is
chronically short of particular skills. This is policy failure on a major
scale and suggests there is a disconnect between higher education
bodies, employers and undergraduates about the skills and
training now needed in the workplace. We suggest:
• Governments to provide colleges and universities with fiscal
incentives to increase the provision of Shortage Skill training,
establishing measures to ensure the quality and relevance of the
courses are appropriate.
• Employers to build greater links with colleges and universities
to communicate their specific needs for skills and improve their
outreach into schools to explain the attractions of specific career
choices. Governments need to be involved in this process and drive
the agenda to ensure success.
• Colleges (backed where necessary by grants) to offer students
financial incentives to enrol in specific courses, such as reduced
fees or bursaries.
We recognise that different governments, companies and institutions
pursue a combination of all three of these initiatives to some
degree. However the overall picture shows these measures are not
sufficient and activity needs to be increased and be better
co-ordinated.
Throughout the report are specific examples of actions that are
being taken by governments that either help resolve these issues,
or in certain cases actually make them worse.
The Hays Global Skills Index 2012 | 5
Economic health and fragility
While economic data are not of themselves indicators of labour market
conditions and are not part of the Index, they are an important contributor
to how demand for labour will develop. It is therefore important to
consider the wider economic backdrop, both in terms of current health
and also of future vulnerability to shocks.
Our assessment confirms a commonly held view of a world divided
between relative weakness among the rich countries, and especially
in the Eurozone, and strength in the emerging economies. The worst
economic conditions were in Ireland, Portugal, Italy and Spain, countries
that have been subject to bailouts or that are seen as vulnerable to the
euro crisis, along with the US and UK. The same countries also posted
worrying scores in terms of their exposure to future shocks.
While none of the countries in the Index showed very strong growth,
those with a reading of at least 5.0 – indicating above average growth
– were in emerging markets. The table was headed by Brazil, China,
and Mexico. In terms of fragility, there was a more subtle picture with
the European economic powerhouses of Germany and Switzerland
topping the table along with Sweden and Mexico.
While economic theory would tell us that a weak economy is more
likely to result in loose labour market conditions and a robust economy
in tight labour conditions, this is not always the case. Sometimes weak
economies suffer skills shortages due to inflexibility in the labour
market, underperforming education systems and talent mismatches
that drive up wages and creates shortages.
The global picture
While the headline Index gives employers and policymakers
a ready measure of labour market issues within particular countries,
the breakdown of the Index into its components reveals a more
nuanced picture of where stresses are located within each economy.
By looking at the data under the four broad sub-groups – the state
of the economy; the makeup of the labour market and education;
talent and wage pressures; and shortages by industry and occupation
– we begin to see how future friction points may manifest themselves.
Chart 1: Asia gives the West a lesson on education
India
Singapore
China
Hong Kong
Japan
Average
USA
Hungary
Sweden
Russia
Czech Rep
0
1
2
3
4
5
6
7
8
9
10
Hays Index score (higher number = limited potential to increase education performance)
Chart 2: BRICs have inflexible labour markets
Singapore
Hong Kong
Education and the labour market
Countries with a high quality education system, a labour market that
encourages participation and which is flexible towards shifts in demand
and supply, are more likely to be able to deal with potential skills
shortages. Clearly having an education system that produces school
leavers with the core skills employers need is likely to reduce the pressure
on employers to have to pay higher wages to attract qualified staff. In
this case the Index measures, amongst other aspects, the improvements
in outturns of the OECD Programme for International Students
Assessment (PISA), that assesses 15-year-olds’ competencies in the key
subjects: reading, mathematics and science. As Chart 1 shows, the
biggest education-driven contributions to skills development have been
in the fast-growing Asian emerging markets such as India or China.
Labour market flexibility is especially important to head off skills
shortages as openness to inward migration and relatively light labour
regulations ensures employers can react swiftly to signs of stress in the
labour market. As Chart 2 shows, the range is more spread across
regions, with small Asian states such as Singapore and Hong Kong
showing extremely high flexibility while China and other members of
the BRIC economic grouping still being highly inflexible.
Having a high labour participation rate is also important. A low score
indicates that sufficient people are available for work in general in that
economy. The economies with the lowest levels of potential skills
6 | The Hays Global Skills Index 2012
shortages due to participation rate, were the populous nations of India
and China (2.5 and 3.0), although Italy (on 2.3) stands out as a positive
story. The countries with the largest concerns were a mixed bag: the
highest scores were in Spain and New Zealand (6.5 and 6.3) but Brazil’s
6.0 indicates that certain emerging economies are currently constrained
by an inadequate labour market participation rate.
Denmark
Ireland
Canada
Average
Mexico
Russia
France
China
Brazil
0
1
2
3
4
5
6
7
8
9
10
Hays Index score (higher number = greater level of labour market inflexibility)
Taking a simple average of the three indicators discussed above in this
area shows that emerging economies that have seen strong growth in
the recent past are least equipped to cope with the demand that growth
may bring. Brazil had the highest score of 7.1. However Russia and
Germany stand out (6.4 and 6.1 respectively), mainly over the lack of
flexibility of labour regulations.
On this measure the countries in the best position to deal with skills
shortages are the Asian economies of Singapore (2.4) and India (3.2).
India has seen tremendous improvements in its PISA score to the extent
that the Index sees education as now being at a level satisfactory enough
that it is not in itself contributing to future skills shortages. Singapore
scored very well on both education and labour flexibility but was
dragged down by its labour market participation levels.
The Hays Global Skills Index 2012 | 7
Talent mismatch and wage pressure
Chart 4: Overall wage pressure
While economic vibrancy, the level of educational achievement and
labour flexibility are important building blocks for a sustainable
long-term market, some countries are experiencing short-term
bottlenecks. By analysing mismatches between available labour and
wage pressures, both overall and by industry and occupation, the Index
reveals the wide range of skills shortages in different economies.
One early warning signal of skills shortages is ‘talent mismatch’ – an
inability of employers to find the staff they need despite an available
pool of labour. This manifests itself most obviously in the existence of a
large number of people who are long-term unemployed. This in turn can
be a sign of structural unemployment that occurs when there is a
mismatch between demand in the labour market and the skills and
locations of unemployed workers.
The Index on talent mismatch shows a wide range, as Chart 3 of the
greatest and least levels of talent mismatch shows. It ranges from close
to zero for the Czech Republic where long-term unemployment and
unfilled vacancies are falling, and a maximum score for the US where
almost a third of unemployed people have been out of work for at least a
year. However, this is a warning of future long-term rather than short
term skills shortages as the graph shows there is no direct link with
overall wage pressures, which is a more short-term indicator of stress. In
the short term, wage pressure and skills shortages are likely to be driven
by the health of the economy.
Wage pressure
(higher number = real wages increasing quickly relative to the longer term)
0
1
2
3
4
5
6
7
8
9
10
skilled labour markets at an industry level. Countries that are above
the midway points on the stress line are a mix of emerging economies
and developed nations – as well as certain Eurozone nations –
indicating that wage pressures are often a country specific issue.
Chart 5: Wage pressure in high-skill industries
Switzerland
Australia
China
Germany
Singapore
India
Russia
Canada
Wage pressure
Mexico
Health of economy
Average of 27
0
1
2
3
4
5
6
7
8
9
10
Health of economy
(higher number = weaker economy)
Shortages in key industries
and occupations
Talent mismatch
(higher number = suggests the available labour pool lacks required skills)
0
1
2
3
4
5
6
7
8
9
10
United States
Ireland
United Kingdom
Hungary
Spain
Poland
As shown on Chart 5, the results for the analysis of high-skill industries
reveals that just half of the countries in our survey are experiencing
some level of wage pressures that would indicate a skills shortage.
The majority of those are fast-growing emerging economies in Asia or
countries within Europe that have escaped the worst of the euro crisis
and are growing strongly. However there are exceptions. Countries such
as Portugal, Spain and the UK, which face a weak growth outlook,
report very high levels of wage pressure in skilled industries.
Netherlands
Italy
Talent mismatch
Belgium
Wage pressure
Czech Republic
0
1
2
3
4
5
6
7
8
9
10
Wage pressure
(higher number = real wages increasing quickly relative to the longer term)
A vibrant economy often translates into strong consumer demand, strong
corporate growth and heavy demand for labour by firms, while a weak
economy will have the opposite effect. As Chart 4 shows, overall wage
pressure is at an index point of 5.0 or greater in nine countries, indicating
that employers are having to raise wages to recruit and retain staff.
8 | The Hays Global Skills Index 2012
The real crunch for employers comes when skills shortages arise in specific
high-skill industries or occupations. In order to identify the stress factors,
we calculated the degree by which wages in industries or occupations
outpaced those in less-skilled counterparts. High numbers for the industry
analysis shows that employers in particular sectors struggle to secure
qualified staff, perhaps because that industry is experiencing a period
of success. The occupations index seeks to highlight where the demand
for particular jobs such as senior managers are being bid up beyond
the general wage inflation in the country. This may reflect rising wage
inequality across the workforce rather than across-the-board
pay pressures.
There is also a split between countries with evidence of high-skill
industry wage pressure and those where that pressure appears to
have disappeared. With the exception of India, most countries with
scores below 4.0 on the Index for industry wage pressure are troubled
members of the Eurozone, such as Belgium, Ireland and Italy,
indicating that the poor growth outlook has relieved strain on their
At the other end of the scale, two of the countries most directly
affected by the euro debt crisis, Italy and Portugal, are showing very
little wage pressure for high-skill occupations. On one level this can be
seen as a positive as it indicates that there isn’t a great deal of wage
pressure in a crucial part of the labour market. Unfortunately, this also
shows that the severe slowdown in the economy has depressed
salaries for high-skilled personnel. The danger is that, as those
economies return to growth, employers will find many candidates have
looked for work abroad, or have seen no incentive in acquiring the
specific skills required by employers.
Hungary
Mexico
New Zealand
Sweden
Portugal
Germany
Singapore
Australia
Poland
Czech Republic
Spain
Canada
Netherlands
Hong Kong
Switzerland
China
United Kingdom
Russia
France
Japan
United States
Brazil
India
Denmark
Italy
Belgium
Ireland
Average
Chart 6: Wage pressure in high-skill occupations
0
Chart 3: Talent mismatch may not drive wages
financial services executives and traders over the recent years. Since the
measure is based on the gap between the best and lowest paid jobs, it
also echoes concern that inequality is rising sharply within American
workplaces. Singapore, which is a major financial centre for Asia, also
sees wage pressures in high-skill occupations.
1
2
3
4
5
6
7
8
9
10
Hays Index score
(higher number = wages in high-skill industries rising faster than in low-skill)
But even where there is little evidence of wage pressure and skills
shortages in high-skill industries, pressure points in key high-skill
occupations can still be a major issue for employers. By looking at jobs
where wages in high-skill occupations are outpacing those in lowerskilled jobs, it is possible to see where strong demand for qualified
people is creating skills shortages and driving up wages.
The wide range in the Index scores in Chart 6 shows that shortages at
occupation level vary hugely. The US has the highest reading of any
country and close to the maximum level possible on the Index. This is
likely to reflect the large rewards that have been offered to senior
United States
Singapore
Germany
Ireland
Czech Republic
Australia
Denmark
China
India
Poland
Switzerland
Canada
Hungary
Russia
United Kingdom
Sweden
Brazil
Netherlands
Belgium
Japan
Spain
France
New Zealand
Hong Kong
Mexico
Italy
Portugal
Average
0
1
2
3
4
5
6
7
8
9
10
Hays Index score
(higher number = wages in high-skill occupations rising faster than in low-skill)
Pressures build in BRICs and G7
Much of the global economic growth since the financial crisis has
come from the so-called BRICs nations – Brazil, Russia, India and
China – and other emerging economies, while the Group of Seven
(G7) nations have suffered anaemic growth. However the instinctive
expectation that faster growth leads to greater skills shortages in the
BRICs is misplaced. The average overall score of the BRICs at 5.3
was almost identical to the 5.2 reading for Canada, France, Germany,
Italy, Japan, the UK and US.
These two blocs suffer from different vulnerabilities that leave them
susceptible to stresses in their labour markets and skills shortages
in the future. While the BRICs show a higher degree of labour
market inflexibility and overall wage pressures, the G7 has shown a
lower improvement in education and a greater degree of talent
mismatch. In terms of wage pressures for high-skill industries and
occupations the two blocs are broadly in line. It is therefore far from
clear that a country’s stage of economic development is a primary
factor behind skills shortages.
The Hays Global Skills Index 2012 | 9
The regional picture
Europe
Stretching from the west coast of the Republic of Ireland to the eastern
Siberian seaboard, Europe is not only an immense geographical area
but is also highly diverse in terms of the economic and political
make-up of its member countries.
The euro area
Given the breadth and depth of the Eurozone crisis and its impacts on
both economic growth and consumer and business confidence, one would
expect to see a decline in skills shortages especially among the most
affected countries. However the Index and anecdotal evidence points
to continued problems in key professions such as engineering, IT and
even retail.
The economic powerhouses of France and Germany that have escaped
the worst impacts of the crisis clearly suffer from skills shortages.
Germany, Europe’s largest economy, registered the equal highest reading
of all countries in the Index at 6.4. This was driven by a reading of 9.2 for
wages pressures in high-skill industries and 6.6 for pressures in high-skill
occupations, among the highest for any country.
The regional picture
The insights provided by the Index are supplemented by the
experience and knowledge gained by Hays executives leading our
business in the 27 countries featured in this report. Their insight,
coupled with the analysis of the data, reveals how specific shortages
have arisen in different regions and countries and how companies
and policymakers should move to counteract these both in the short
and medium terms.
The most severe shortages are in engineering, IT, utilities and
construction, which is not surprising given the industrial strength
of Germany. There is an estimated shortage of 76,400 engineers1 and
38,000 in the IT profession2. This has fed through to wage pressures
as employers have been forced to offer higher salaries. However there
is also a shortage of elderly care staff to help look after Germany’s
growing ageing population – at 1.38 children per mother, Germany has
the lowest birth rate in Europe, resulting in a population that is increasingly
skewed toward older people. The situation is not helped by strict labour
laws that make it difficult to bring in skilled workers from overseas.
Germany registered 7.1 in terms of labour market flexibility, one of the
highest readings. On the positive side, the education system is seen
as well-suited to getting people ready for work.
However, there are concerns that skills shortages in Germany will continue
to get worse. Germany’s demographic issues means there are too few
young people coming into the workforce and an increasing number of
elderly people who will need support and care. Employers are keen for
immigration laws to be relaxed to enable them to hire skilled workers
from overseas.
France, the Eurozone’s second largest economy, also suffers from labour
market inflexibilities (7.9 on the Hays Index) that contribute to skills
shortages. Like Germany, the country has an acute lack of experienced
engineers in civil engineering and especially mechanical and electrical,
aeronautical, and defence engineering. While the quality of the education
system is high, not enough qualified graduates are being produced.
The problem is compounded by a talent mismatch. People are drawn
into the financial and commercial sectors where there is little shortage
of skills, rather than into sectors such as engineering. The Netherlands,
which registered a score of 6.4 for wage pressures in high-skill industries,
also suffers from shortages in engineering that has forced firms to seek
engineers from overseas.
Local perspective
“In certain sectors, the number of jobs far outweighs the
number of suitable candidates. There is a distinct lack of
specialists across France with the niche skills that are
needed by employers.”
– Tina Ling, Managing Director, Hays France & Luxembourg
The Index includes four of the members of the so-called PIIGS groups of
countries worst affected by the euro debt crisis – Portugal, Ireland, Italy,
and Spain (Greece is the fifth). Overall wage pressures are less intense
than for the main three northern euro countries. The average reading
for wage pressures in high-skill industries is 4.6 for the southern euro
countries versus 6.9 for their northern neighbours; wage pressures in
high-skill occupations are only 3.3 versus 5.1 in the north.
Dutch go global
to solve staff shortages
One Dutch company that designs chips for use in mobile phone
access cards and tracker devices needed engineers qualified in
analogue rather than digital design. As few local students now
study analogue design, Hays sourced candidates abroad where
some universities still have strong curricula in analogue design.
Four out of ten of Hays’ placements for this client are sourced
internationally, mostly from the Philippines but also from
countries as diverse as China, Canada and Lebanon, indicating a
truly global market for talent.
“In recent years several French reports calling for structural reforms to boost competitiveness, job
creation and economic growth have been written by the country’s best brains. Every year, the Cour
des Comptes, the national audit office, compiles excellent studies pointing to inefficiencies in public
spending and how this cramps growth. Most such reports end up lining bookshelves and gathering dust.”
The Economist, 3 November 2012
10 | The Hays Global Skills Index 2012
1. Germany faces a shortage of engineers. John Blau. IEEE Spectrum. September 2011
2. Germany’s skilled worker shortage is growing. Sabine Kinkartz. Deutsche Welle
The Hays Global Skills Index 2012 | 11
In certain countries such as Spain, firms are recruiting fewer new staff,
as shown by the unemployment rate of 50% for 16- to 24-year-olds in
Spain. This is particularly true in property and construction that have
been hit by declining prices and the cancellation of major government
projects. However evidence still reveals significant skills shortages. In
these economies companies who need to replace skilled staff who retire
or leave are finding it difficult to identify good replacement candidates.
Meanwhile potential candidates in rival firms are unwilling to leave their
current employer because they fear they will lose the job security and
tenure they have accumulated. The divide between the need by
companies for high quality staff and the huge surplus pool of semi- and
unskilled labour is highlighted by the fact that the Hays Index reading of
the talent mismatch in Spain at 8.5 is among the highest in the survey.
There is evidence that many skilled people in these countries are leaving
to take up opportunities in faster growing emerging markets in Asia and
Latin America and in the resource rich economies of Canada and Australia
that need skilled engineers. The real danger for these economies is that
they are storing up problems further down the line when they do recover
and demand for taking on new skilled staff rebounds. The exodus of skilled
staff combined with a likely decline in the number of school-leavers willing
to pay for further education will leave employers struggling to find
candidates when the economies do recover.
Local perspective
“It can be extremely difficult to fill some roles.
Not necessarily because of the market, but more
generally because candidates don’t have the confidence
to move. Finding quality candidates is tough.”
– Mark Bowden, Managing Director,
Hays Southern Europe & Latin America
Western Europe outside the euro
The four Western European countries in the Index but not in the
Eurozone – Denmark, Sweden, Switzerland and the UK – share many
of their neighbours’ problems but have their own individual challenges.
Sweden and Switzerland have enjoyed relatively strong growth
while the UK returned to recession in 2012 and Denmark’s economy
is under pressure.
Sweden is suffering from the equal highest degree of wage pressure in
high-skill industries of any economy in the Index. The sharp widening in
industry wage differentials indicates stress in finding key talent even
though overall wage pressure is not alarming (4.4). In contrast Denmark
has relatively low levels of wage pressure. In Switzerland positive
readings on education (3.9) and labour market flexibility (4.2) have
kept wage pressures in high-skill industries and professions relatively
restrained although there is evidence that earnings are being pushed up
across the board (8.5).
While the UK economy is likely to suffer weak growth for the
foreseeable future, companies are experiencing difficulties in recruiting
and retaining skilled professionals. This is immediately evident in the
high reading of 9.0 for talent mismatch – the degree to which it is
harder to fill vacancies despite the pool of unemployed people.
Local perspective
“What we currently see is a paradox. Millions of adults in this
country are unemployed, yet employers are still struggling
to find people with the right skills, experience and aptitude.”
– Nigel Heap, Managing Director, Hays UK & Ireland
In the UK, skills shortages can be found in the energy sector, especially
oil and gas, as well as in IT. Despite the problems in the banking and
financial sectors, there are still areas of demand and skills shortages
such as risk and compliance management as increasing financial
regulation has created a demand for these skills.
However this is not leading to overall wage pressure, which is very low (1.3)
and only “moderate” in high-skill industries (5.3). Instead companies are
investing in in-house training to raise new recruits up to the level required
and are taking advantage of the UK’s relatively open migration laws to
attract staff from overseas. However many large employers of graduates
have significantly downsized the number of recruits they have taken on
over the last two to three years, which may fuel long-term skills shortages.
Back to the future
in the UK professions
In the early 1990s during the last real prolonged downturn
in the UK economy, many employers put recruitment on hold.
However, two or three years later firms of lawyers, accountants
and professional services organisations found it very difficult to
hire manager-level local staff as the pipeline of talent was not
available due to the previous graduate recruitment freeze. That
led to a spike in salaries at the entry level of those professions for
a number of subsequent years.
“The UK has recognised that the future employment and skills systems will need to invest as much effort
on raising employer ambition and on stimulating demand as it does on enhancing skills supply. It has
launched a number of initiatives including: Investors in people, Employer Ownership of Skills where
employers in England are offered up to £250 million of public investment over two years to design
and deliver their own training solutions; the Growth and Innovation Fund which will co-invest up to
£34 million to develop sustainable skills solutions and the Employer Investment Fund where some
£66 million has been committed to improve skills development in key areas.”
United Kingdom Commission for Employment and Skills; Green (2012)
OECD 2012 Better Skills, Better Jobs, Better Lives: A Strategic Approach to Skills Policies
12 | The Hays Global Skills Index 2012
Eastern Europe and Russia
Countries in the former Soviet Union are very dependent on the Eurozone
and have been affected by the financial crisis and the subsequent slump
in exports of manufactured goods. Russia itself has been less affected
as it has large reserves of oil and gas and has benefited from the recent
upturn in commodity prices.
Evidence indicates that Russian companies are expanding their businesses
globally and are keen to recruit people with international skills to give
them a better chance to compete in global markets as well as locally.
This pressure is compounded by international companies in sectors such
as retail and fast-moving consumer goods investing in Russia and seeking
to recruit skilled local personnel.
However, so far there is no evidence in the Index of wage pressures which
are relatively subdued for both high-skill industries and occupations
(5.1 and 4.8 respectively). However scores of 7.4 for education and 7.7
for labour market flexibility indicate shortages will build in the medium
term. Compounding that is the demographic trend that is seeing the
population decline by a million people per year, which will add to
pressures as the economy continues to expand.
North America
As one of the largest economic blocs in the world, North America
is a bellwether for developed economy labour market trends as its two
constituent countries, the US and Canada, are both members of the G7.
The US has the equal highest overall score in the Index, indicating it has
one of the tightest labour markets in terms of skills shortages. This might
be surprising given the scale of the recession in the US economy in the
wake of the financial crisis and the relative weak recovery.
However the US suffers from a two-speed labour market with strong
demand for qualified skilled staff in sectors such as the oil and gas
industries, life sciences and information technology. At the same time
a large number of people are either out of work or are under-employed,
as they do not have the skills employers are looking for.
Local perspective
“There is a dichotomy in this economy. What we are
witnessing is that there is high unemployment at the
same time as there are skills shortages.”
– John Faraguna, President, Hays North America
Local perspective
“The fact that firms predominantly want Russian
candidates, or candidates with local experience and
language knowledge, has made it more difficult for
overseas candidates to compete for jobs.”
– Alexey Shteingardt, Managing Director, Hays Russia
Among the smaller countries in Eastern Europe, such as Czech Republic,
Hungary and Poland, there are signs of skills shortages particularly in
high-skilled industries. Hungary and Czech Republic were badly hit by the
euro crisis and general wage pressure is almost non-existent. However
both suffer from high degrees of wage pressure in high-skill industries
with Hungary registering the highest possible reading of 10.0. The fast
growing industries in the Czech Republic tend to be IT and Engineering
and in public services such as health, social care and in back office
functions such as administration and support services. In Hungary from
2008 until the beginning of 2012 pay rises slowed down compared with
the period before 2008. Industries where wage levels were above the
average are banking & finance, pharmaceutical and telecommunications.
Poland, which is by far the largest economy in Eastern Europe, is seeing
wage pressures in high-skill industries, especially the energy sector
which is the fastest growing sector in recent years.
In many industries and occupations there are not enough experienced
and skilled professionals but an over-supply of people at entry level and
of people with a general low-skills base. While the health of the US
economy is one of the weakest in the Index, it has one of the highest
indicators for wage pressures in high-skill occupations (9.8).
In certain skilled occupations such as geologists and geophysicists in the
resources sector, the current generation of professionals with up to 20
years of experience at the highest level is nearing retirement. Within an
ageing population, that is putting pressure of companies looking to
replace them. A survey in October 2011 by Deloitte, the consultants, and
the National Association of Manufacturers (NAM), an industry body,
found US manufacturers had 600,000 unfilled qualified skilled posts, in
spite of stubbornly high unemployment rates and high numbers of
new training programmes3.
There is a similar story in Canada exacerbated by the fact that the
economy has recovered more quickly than many others in the
developed world. There are skills shortages across all industries and
professions but especially in the resources sector – oil and gas, and
mining – and also in construction and technology. At the very high-skill
level there is evidence that shortages of available candidates are so
pronounced that potential employees are able to bargain for the best
terms and conditions. Indeed once the US enters a sustainable economic
recovery, that will likely boost the Canadian economy and will in turn
increase skills shortages further.
“The risk of unemployment among recent college graduates depends on their major. The unemployment
rate for recent graduates is highest in Architecture (13.9%) because of the collapse of the construction
and home building industry in the recession. Unemployment rates are generally higher in non-technical
majors, such as the Arts (11.1 percent), Humanities and Liberal Arts (9.4 %), Social Science (8.9%) and
Law and Public Policy (8.1%).”
Georgetown University Centre of Education and the Workforce 2012
3. Skills shortage threatens US manufacturers. Hal Weitzman, Financial Times. 18 October 2011
The Hays Global Skills Index 2012 | 13
Local perspective
“Canada is moving towards a more demand-driven migration
policy. In the past there have been too many people who
arrived with eligibility to work, only to find their
qualifications and work experience gained abroad strongly
discounted on the local labour market.”
– Rowan O’Grady, Managing Director, Hays Canada
The concern raised by the Index is the talent mismatch and concerns
over the education system, in both the US and Canada. The US scores
the worst possible reading (10.0) for talent mismatch indicating that
employers cannot fill posts despite a pool of surplus labour, with Canada
also worryingly high (8.0). While US universities are generally rated the
best in the world, the US score of 6.6 for the contribution of education
levels to future skills shortages indicates that there are problems at
secondary and elementary level. In particular there is a worry that the
US college system will not be able to meet future increased demand for
skills without further investment in improvements in education.
As with many other developed economies, the challenge is to ensure
the education system meets the needs of employers. Despite the
undisputed high quality of education in North America, two issues
remain. The first is whether highly qualified graduates are leaving
college with the relevant degrees and the skills employers require. The
second is that many students are leaving university with high levels of
debt and entering a labour market where, at entry level, there is a
surplus of candidates. This means that while graduates may have the
skills needed, there are simply not enough occupations available at
junior entry level, which may compel them to take lower-skill jobs
simply to pay off their debt. This raises a fear that key skills may be lost
over the next few years.
Companies are using a range of tools to try to address the skills shortages.
Some are raising wages as shown by the high score in wage pressures
for high-skill operations. The data show wages for workers in the utilities
sector, the highest paid in the US, have risen 20% over the five years to
2012. In Canada the best-paid sectors of mining, oil and gas extraction
have seen salaries rise by 36% over the same five years. The utilities
sector, which has the second highest remuneration, has seen a 21% rise
over the same five-year period.
Some firms have looked to desegregate the jobs performed by
high-skilled professionals to split the tasks between those that can be
carried out by less skilled people or outsourced, to allow the top-skilled
professionals to focus on their core roles. This is evident in the health
services where doctors have been freed up to spend more time
with patients.
Canada reaches across the water
In February 2012, the British Columbia Construction Association,
which represents 2,000 companies, sent a delegation to attend
a number of job fairs in Ireland. The construction industry in the
west of Canada was looking to attract unemployed workers from
the former Celtic Tiger economy to fill an estimated 335,000 job
openings between 2012 and 2014 in British Columbia4.
Companies have also sought to attract high-quality candidates from
overseas and both countries rate well for labour market flexibility
(4.2 for the US and 3.5 for Canada). As highlighted, some companies
are taking imaginative steps to attract workers from overseas.
However there is concern among employers that immigration systems
are too cumbersome, requiring organisatons to invest substantially to
recruit overseas staff but still risk their potential recruits being denied
visa clearance.
The US and Canadian economies have a strong reputation for long-term
economic growth, labour market flexibility and the capacity for job
creation and are in strong positions to adapt to further pressures for
skilled labour. However there are specific reforms that would help ease
current and future bottlenecks.
While both countries rate well for labour market flexibility and have
attracted inward migration by skilled workers, it is important that the
immigration system is better suited to filling skills shortages. Moving
to a more merit-based system would help businesses meet specific
shortages. Canadian businesses would like to see the government
streamline the immigration system that can take up to three months
to complete from beginning to end.
The major economies of South and Central America have benefited
from the boom in commodity prices and their proximity to the US,
the world’s largest economy that has increasingly looked to outsource
key manufacturing and support functions to its neighbours. These twin
engines of growth, combined with domestic restrictions in the labour
and education markets, have led to skills shortages that threaten
to undermine their long-term growth potential.
Brazil and Mexico – the two countries from the region in the Index –
posted some of the most worrying scores in the survey. Unemployment
in Brazil, which had an overall score of 5.7, is low and in the key sectors
of engineering, life sciences, finance, retail and more recently oil and gas
there are broad-based shortages of skills. Wages in the extractive mineral
sector have seen extremely strong rises until very recently. However the
country suffers from inflexible labour laws and low levels of education
that threaten to fuel long-term stresses in the labour market. While Brazil
benefits from a number of good universities, they are not producing
enough people with the right skills. In sectors such as oil and gas,
employers in Brazil – along with its resource-rich neighbours Chile,
Colombia and Venezuela – depend on imported labour because they
cannot source enough people locally.
Mexico too suffers from specialist skills shortages. The country registered
the highest possible reading for wage pressures in high-skilled industries
(10.0). The industries that command the highest wages are real estate
and professional, technical & scientific services, where wages have risen
11% and 18% respectively over the year to the end of March 2012 according
to official data. Here too, many companies’ response is to seek to recruit
from overseas although this may not be a panacea.
Countries divided
by a common language
Several Latin American companies have invested money into
putting together major advertising campaigns and funding visits
to overseas countries to attract the talent they need. However
they have often only had partial success in filling their quotas.
Qualified candidates – even in countries with high unemployment
– are often reluctant to move to the other side of the world due
to the risk that the job might not work out, leaving them in limbo.
Brazil is trying to recruit engineers from Portugal because
of the shared language, while Mexico has looked to recruit from
Spain. Although they have the same language, there are significant
cultural differences. It can be a difficult transition to move from
Lisbon to Sao Paulo or from Madrid to Mexico City.
While the region is currently experiencing an economic slowdown that
may relieve pressure on skills shortages in the short-term, in the longterm the growth rates that these countries are likely to reach will mean
requirements for qualified professional people will grow. The shortage
could become acute as the economies flourish and sectors such as oil
and gas will need to adopt innovative methods to find the right people.
Local perspective
“We have to become a little sharper edged so we can
attract highly-skilled people who will advance our economy.
There is some upgrading that needs to take place.”
– John Faraguna, President, Hays North America
Governments and educational leaders will need to look at whether the
current system at both university and college level is suited to provide
the qualified school leavers businesses need. A greater focus needs
to be put on apprenticeships and there is an obligation on employers
to send out a strong message about the solid career and earnings
potential offered by semi-skilled occupations to attract more people
into those sectors.
“The number of Canadian working holiday visas available to young Irish people is to be doubled and
the length of stay extended from one year to two, under a new agreement between the Irish and
Canadian governments. A total of 6,350 visas will be available in 2013, up from 5,350 this year.
This will rise to 10,700 in 2014.”
Irish Times, 6 October 2012
14 | The Hays Global Skills Index 2012
Latin and South America
4.Canadian construction industry wants thousands of Irish workers to make the move.
Patrick Counihan. Irish Central. 27 February 2012
“The labour code in Mexico was last overhauled in 1970, and it shows. Mexico is the only country in Latin
America where it is legal to sack a woman for being pregnant. Probationary periods are not recognised.
The rigid rules are intended to protect workers. But they are so cumbersome that many smaller
businesses ignore them, leaving workers with no rights at all.”
The Economist, 1 November 2012
The Hays Global Skills Index 2012 | 15
Asia
The last decade has seen a pronounced shift in the balance of economic
power from West to East and Asia has been the most obvious
beneficiary. However it is hard to tell a single story. The region includes
two of the most populous countries in the world as well as some of the
smallest nations. It also embraces political and business structures
ranging from the one-party Communist state of China to free-market
nation states such as Singapore as well as depression-affected Japan.
While there is evidence of increasing skills shortages across Asia, it is
important to highlight trends in different parts of the region.
Japan, which is emerging from two decades of weak performance,
has a rapidly ageing population. That has the double negative effect
of increasing the demand for elderly healthcare workers while
simultaneously reducing the supply of new entrants into the
workforce. The increase in structural and long-term unemployment
has created a mismatch between the available workforce and the
more innovative skills that employers want. Japan’s talent mismatch
score of 8.1 is one of the highest for any country in the survey.
At the other end of the economic spectrum are the fast-growing states
such as Singapore and Hong Kong that have relatively young
populations. Both share very high levels of education and labour market
flexibility that has enabled employers to source candidates from
overseas. The common usage of the English language has also helped
widen the pool for talent for sectors such as financial services. However
strong levels of economic growth has fuelled demand for staff which
has led to high levels of shortages in specific industries and occupations.
While the young population should give a long-term advantage, it
means there are often not enough senior candidates coming through
the ranks to quality for the top posts. Wage pressure in Singapore is
very strong for both high-skill industries and occupations.
Local perspective
Local perspective
“In Japan more people are going overseas to study to secure
skills required by local employers. Unfortunately it is almost
five years too late because employers need the people
coming through the system now.”
“In industries like manufacturing, power and infrastructure
there are unfilled posts and the inability to hire at the pace
required. This will result in a slow-down in growth”
– Christine Wright, Operations Director, Hays Asia
& Managing Director, Hays Japan
Despite the differences in economic cultures, Japan shares with China
a need to recruit skilled staff from the international market who can
operate on the global stage. Until recently Japan was able to recruit the
staff it needed locally and could favour Japanese-speakers. The culture
of a job for life was very strong and there was a natural progression of
qualified staff rising up through the ranks.
This has now changed and employers need to look further afield for the
talent they need, particularly in those sectors or businesses that are
expanding internationally.
Despite its vast labour pool, India too has skills shortages. While it has
a working age population of around 750 million, a further 250 million
workers are expected to join the labour pool by 2025. Furthermore,
India has a target to up-skill 500 million people by 2022. However it is
an issue of quality rather than quantity that is driving specific skills
shortages. There are stress points in life sciences (also seen in Japan
and China), fast moving consumer goods, consumer health, R&D,
regulatory positions and in the construction and property industry. The
Indian auto industry is projected to be short of 300,000 skilled
personnel by 2020, while in the oil and gas sector, demand for petro
physicists exceeded supply by almost 80% in 2010.
– Gaurav Seth, Country Head, Hays India
While the Indian education system has improved massively – it was
the only nation in the survey to show no adverse impact on skills
stress due to education – employers still have to use innovative
methods to fill key gaps. While many employers resort to wage
increases, some benchmark salaries to the market, use variable
performance-based bonuses as well as longer-term incentives like
stocks and share options. Others have invested in in-house training in
order to find candidates that can be brought up to the skill level
required. Some large companies are working with universities to
increase the pool of employable graduates. Recruiting from overseas
is also important especially now India has replaced a visa quota
system with a requirement of a minimum annual salary that is aimed
at attracting only highly-skilled foreign talent.
Employers go back to university
Some of the major IT and back office processing (BPO) firms in
India are increasingly working with universities with an aim to widen
the pool of talent, often working with colleges to design specific
courses. One major BPO company that had moved operations
away from the major cities and into the smaller towns established
links with local universities and helped establish specific courses
on data analysis, with a greater focus on written and spoken
English. While the curriculum was still the standard version,
the extra courses ensured graduates knew they were learning
the right skills to make them more employable. This was a classic
win-win situation as it made the university more marketable,
the graduates were almost guaranteed a job and the employer
had first pick of the university leavers.
Overall, therefore, Asian countries have some of the best records on
education and greater access to labour than many western economies.
However they face their own challenges that threaten to add to
already problematic skills shortages without further action by
employers and policymakers.
In China the decision by Beijing to open its doors to foreign investors
and the desire by Chinese companies to expand internationally has
fuelled demand for skilled labour from the global labour market as
domestic candidates may not have the required skill sets. There is
strong demand for candidates with international experience who can
deal with different business cultures. While China has very high
education levels (1.5 on the Index), inflexible labour laws have led to
high readings for labour force flexibility (8.7) that have in turn led to a
talent mismatch (7.5) and overall wage pressure (7.2).
“Singapore is allowing students to learn at different stages in their lives and has recognised that the
academic track is not the only pathway to a successful career in the labour market. By subsidizing
both higher education and Vocational and Educational Training students in the same way, Singapore is
adjusting its skills base to suit its future growth.”
Schleicher, A. (2011), Educating for the Future, The Straits Times, Review & Forum, 9 December 2011
OECD 2012, Better Skills, Better Jobs, Better Lives: A Strategic Approach to Skills Policies
16 | The Hays Global Skills Index 2012
“The US economy is losing thousands of foreign students who have studied sciences, technology and
engineering (STEM) at American universities and then cannot get visas that allow them to stay, take jobs
or establish companies.”
Telegraph.co.uk, 18 October 2012
The Hays Global Skills Index 2012 | 17
Sources
Australia and New Zealand
The two major economies in the Oceania region both face skills shortage
issues but for different reasons. Australia scores around 8.0 in terms of
both wage pressures in the overall economy and in high-skill industries
while New Zealand scores 10.0 for wage pressures in high-skill industries,
the highest possible reading.
Labour market tightness in Australia is driven by demand for high-skilled
professionals by resource companies. While firms in the mining and oil
and gas sectors make up just 2-3% of total employment and less than a
tenth of GDP, they are a major centre for skills shortages that have driven
up wages even despite the mixed economic recovery (Australia scored
7.3 on economic health). While the resources sector is the most buoyant
and fast-growing market sector in the country, it also has a large supply
chain of firms connected to it.
Shortages are mostly found in the operational and technical areas
associated with extractive industries, but also in accountancy and finance
and other professional services for these industries. A 2012 survey by
Hays of 1,500 employers in Australia found a 10% annual increase in the
number firms reporting skills shortages for operational and technical
functions, an increase of 9% in engineering but also an increase of 7% in
firms citing skills shortages in marketing5. This is echoed by research
undertaken by the Australian Government in 2011 that found ‘national
shortages’ – the most severe rating – in 11 engineering occupations and
three managerial roles connected to the sector6. This is likely to increase
as there is an estimated AU$500bn of projects either underway or in the
pipeline at the time of writing.
Local perspective
‘‘We are experiencing skills shortages within a number of
professions from IT and procurement to highly qualified
technical engineers and geologists.”
– Nick Deligiannis, Managing Director, Hays Australia and New Zealand
In New Zealand there has been a significant demand for qualified
engineers and other professionals in the construction sector to carry
out the rebuilding of Christchurch after the earthquake in February 2011.
As the major rebuilding projects start to come on line this will add to
existing shortages in the construction industry. This will also exacerbate
the talent mismatch between the South Island and the North Island.
On an occupational basis, the shortage mainly applied to quantity
surveyors, residential project managers, senior commercial project
managers, machine operators and project managers with drainage
experience. This has led to the high wage inflation highlighted by the
Index as trade specialists demand higher pay and this squeeze is
highlighted by the maximum score of 10.0 for wage pressures in
high-skill industries.
Variable
Source
1. Labour freedom
Heritage Foundation, 2011-2012 Index of Economic Freedom
2. Barro/Lee improvements
in education
Barro, Robert and Jong-Wha Lee, April 2010, “A New Data Set of
Educational Attainment in the World, 1950-2010.” NBER Working
Paper No. 15902.
3. Change in economic participation
rate (overall)
International Labour Organisation (ILO)
4. Change in economic participation
rate (15-24 year olds)
International Labour Organisation (ILO)
5. Change in economic participation
rate (55-64 year olds)
International Labour Organisation (ILO)
6. Economic participation rate rank
International Labour Organisation (ILO)
Whether the pressure on skills shortages in Australia and New Zealand
will worsen or ameliorate will depend on the outlook for the market
for raw materials and energy. If the current slowing growth in China
and other fast-growing economies proves temporary and economic
growth recovers in the US and Europe, then pressures on recruiting
and retaining experts in that sector will intensify.
7. Output gap, % GDP
International Monetary Fund (IMF)
8. Long term unemployment rate
Organization for Economic Cooperation and Development (OECD)
9. Vacancies (000s)
Organization for Economic Cooperation and Development (OECD),
Servicio Público de Empleo Estatal, Swiss National Bank, Australian
Bureau of Statistics, Statistical Office of the European Communities,
Ministry of Human Resources and Social Security of the People’s
Republic of China
Firms in Australia have started to take measures to offset the
pressure. Companies in the resource sector have sought to recruit
staff from other parts of Australia and especially the eastern
seaboard around Sydney. To attract talent to relocate, firms need
to be increasingly innovative on flexible working rosters as well
as remuneration.
10. GDP (LC, real, billion)
Oxford Economics Global Macro Model
11. GDP growth (real)
Oxford Economics Global Macro Model
12. Population (mn)
Oxford Economics Global Macro Model
13. Unemployment rate (2011)
Oxford Economics Global Macro Model
14. GDP/head (LC, real)
Oxford Economics Global Macro Model
15. Government balance
Oxford Economics Global Macro Model
16. Current account
Oxford Economics Global Macro Model
17. Non-Accelerating Inflation Rate
of Unemployment (NAIRU)
Oxford Economics Global Macro Model
18. CPI inflation
Oxford Economics Global Macro Model
19. PPI inflation
Oxford Economics Global Macro Model
20. Imports + Exports, %GDP
Oxford Economics Global Macro Model
21. PISA reading scores
PISA 2009 Results: What Students Know and Can Do (OECD)
22. PISA math scores
PISA 2009 Results: What Students Know and Can Do (OECD)
23. PISA science scores
PISA 2009 Results: What Students Know and Can Do (OECD)
24. Average PISA rank
PISA 2009 Results: What Students Know and Can Do (OECD)
25. Net migration
The World Factbook, Central Intelligence Agency (CIA)
26. Net migration flow
The World Factbook, Central Intelligence Agency (CIA)
Australia scored well on labour market flexibility in the Index, with a
score of 3.8 against a global average of 5.4, which was based on its
openness to immigration and flexible labour laws. The country’s
points-based migration system went through a major review in July
2012 that adopted occupation-specific caps in the hope that the country
will better be able to respond to the needs of the economy. Australia’s
4.3 score on education (better than the global average of 4.8) is based
on the fact that Australia has a well-educated workforce. New Zealand
scored 4.5 on labour market flexibility and 3.7 on education, indicating
these are not sources of labour market stress.
“Australian Federal Government will fast-track the assessment process for skilled US workers coming
to Australia. Under the agreement, US tradespeople will able to complete a skills assessment before
coming to Australia.”
ABC News, Australia, 2 April 2012
18 | The Hays Global Skills Index 2012
5.http://www.hays.com.au/salary-guide/index.htm
6.Skills Shortage List Australia 2011. Department of Education, Employment and Workplace Relations.
The Hays Global Skills Index 2012 | 19
Contributors
Oxford Economics
Hays
Oxford Economics is one of the world’s foremost independent global
forecasting and research consultancies, renowned for its econometricbased consulting and extensive research services. Founded in 1981,
Oxford Economics was originally formed as a joint, commercial venture
with the business college of Oxford University, Templeton College.
Since its foundation, Oxford Economics has grown into an independent
provider of global economic, industry and business analysis,
headquartered in Oxford, UK.
Hays is the world’s leading recruiting expert in qualified, professional
and skilled work. We employ over 7,800 staff in 245 offices across
33 countries. Last year we placed around 55,000 people in permanent
jobs and nearly 182,000 in temporary positions.
Oxford Economics is a world leader in quantitative analysis, going deeper
and further than other economic advisory firms, in helping its clients
to fully assess the opportunities and challenges they face for future
strategy and direction. It specialises in global quantitative analysis and
evidence based business and public-policy advice, underpinned by
a sophisticated portfolio of business forecasting services consisting
of regularly updated reports, databases and models on countries,
cities and industries.
Our recruiting experts deal with 150,000 CVs every month and more
than 50,000 live jobs globally at any one time. The depth and breadth
of our expertise ensures that we understand the impact the right
individual can have on a business and how the right job can transform
a person’s life.
For more information, visit www.oxfordeconomics.com
For more information, visit hays.com
In partnership with:
Hays works across 20 areas of specialism, from healthcare to telecoms,
banking to construction and education to information technology,
covering the private, public and not-for-profit sectors.
Our job is to know about professional employment, employers
and employees.
Phil Thornton, Clarity Economics
Phil Thornton is lead consultant at Clarity Economics, a consultancy and
freelance writing service he set up after a 15-year career as a newspaper
journalist. Clarity Economics (www.clarityeconomics.com) looks at all
areas of business and economics including macroeconomics, world trade,
financial markets fiscal policy, and tax and regulation.
He has written for a range of publications including The Wall Street
Journal, The Independent, Independent on Sunday, The Guardian,
The Times, The Daily Telegraph, Financial Director, Emerging Markets,
City AM and PM-Select. He writes a regular economics column
for Procurement Leaders.
Recent projects include a series of report looking at the position of ethnic
minority groups within the UK workforce for Business in the Community;
drawing up proposals for reform of the EU Budget for Business for
a New Europe; and an examination of lessons learned 20 years after
Big Bang for The Centre for the Study of Financial Innovation.
In 2010 he won the Feature Journalist of the Year award in the WorkWorld
Media Awards. In 2007 he won the title of Print Journalist of the Year
in the same awards. Until 2007 he was Economics Correspondent at
The Independent newspaper of London, a post he held for eight years.
20 | The Hays Global Skills Index 2012
The Hays Global Skills Index 2012 RESULTS
è
The Hays Global Skills Index 2012 | 21
In partnership with:
The HAYS Global Skills INDEX 2012
5.5
5.2
CH
IN
A
LA
ND
PO
EN
ED
SW
DE
NM
S
ND
LA
ER
TH
NE
3.3
5.7
RU
SS
IA
6.1
4.3
AR
K
4.2
S
4.4
IRELAND
5.3
PORTUGAL
5.5
SPAIN
4.5
FRANCE
CZECH
REPUBLIC
EUROPE
4.6
5.3
HONG KONG
3.7
INDIA
4.2
SINGAPORE
5.1
AN
RL
ZE
IT
SW
IC
O
EX
M
Y
AR
Y
AN
5.4
NG
RM
THE
AMERICAS
HU
GE
5.7
Y
AL
IT
6.4
5.9
ASIA
D
UN
IT
ED
ST
AT
E
UNITED KINGDOM
JA
PA
N
CA
NA
DA
M
IU
LG
BE
5.6
5.0
6.4
3.3
6.1
BRAZIL
AL
IA
Creating the Hays Global Skills Index
•Education flexibility. Measures whether the education system can adapt to
meet organisations’ future talent needs, particularly in the field of
mathematics, science and literacy. A high score means there is limited
potential or capacity to increase education performance and output. A low
score indicates there is considerable scope to expand the output and quality of
the local educational system.
•Labour market participation. Measures the degree to which a country’s talent
pool is fully utilised. A high score means that the proportion of working age
people that are employed (or are available for immediate work) is not
increasing, indicating constraints on the availability of additional resource. A
low score means that the participation rate reflects the increasing availability
of talent to join the workforce.
•Labour market flexibility. Assesses the legal and regulatory environment
faced by businesses. A high score means the labour market legislation is
judged to be inflexible and there are constraints on the ability of inward
22 | The Hays Global Skills Index 2012
migrants to fill talent gaps. A low score means the labour market legislation
is judged to be flexible, with an openness to immigration.
•Talent mismatch. Measures the mismatch between the skills needed by
businesses and skills possessed by the labour force. A high score means that the
numbers of long-term unemployed and vacancies are both increasing suggesting
the available labour does not have the skills employers want. A low score implies
that employers are having an easier time finding the talent they need.
•Overall wage pressure. Whether wages are keeping pace with inflation, which
is a measure of overall labour market tightness. A high score means real wages
are increasing quickly relative to the longer term. A low score means real
wages are not rising quickly (or are even declining) relative to the longer term.
•Wage pressure in high-skill industries. The rate at which wages in high-skill
industries outpace those in others. A high score means wages in high-skill
industries are rising much faster than in low-skill industries. A low score means
wages in high-skill industries are not rising faster than in low-skill industries.
•Wage pressure in high-skill occupations. A measure of wage premium paid in
high-skill occupations, which is an indicator of shortages of key talent. A high
score means wages in high-skill occupations are rising faster than in low-skill
occupations. A low score means wages in high-skill occupations are not rising
faster than in low-skill occupations.
NE
W
AU
ST
R
The Hays Global Skills Index highlights the main pressure points impacting the labour markets of 27 countries.
The Hays Index ranges from 0 to 10.0 where a score of 5.0 indicates a generally
balanced picture for labour markets. This suggests firms are able to recruit,
retain or replace their key talent at prevailing wage rates. A score close to 0
indicates intense competition for key talent vacancies. A score close to 10.0
indicates severe difficulty in filling key vacancies.
ZE
AL
AN
D
AUSTRALIA &
NEW ZEALAND
These seven criteria are all given equal weighting.
Each country’s Hays Index is surrounded by a coloured dial indicating the score
ranges for the seven labour market indicators.
Overall wage
pressure
Wage pressure
in high-skill
industries
5.9
4.8
Education
flexibility
5.1
Wage pressure
in high-skill
occupations
Labour market
participation
Labour market
flexibility
Talent mismatch
LOW PRESSURE
HIGH PRESSURE
0.0-0.9 1.0-1.9 2.0-2.9 3.0-3.9 4.0-4.9 5.0-5.9 6.0-6.9 7.0-7.9 8.0-8.9 9.0-9.9
10.0
The analysis on which the Hays Global Skills Index was based utilised data
as of Q3 2012. Developments subsequent to this date are not reflected in
the 2012 findings.
The Hays Global Skills Index 2012 | 23
In partnership with:
The HAYS Global Skills INDEX 2012
AUSTRALIA
Belgium
5.9
Hays Global Skills Index
Due to Australia’s robust economic
performance during the financial crisis,
overall wages are rising which indicates
that organisations face difficulties in
recruitment and retention due to
shortages of qualified workers. This is
being felt most acutely in high-skill
industries.
Macroeconomic Indicators
Australia’s government finances and
exports appear sustainable, indicating that
the economy is not overly vulnerable to
external shocks.
7.3
Health of economy 3.3
Hays Global Skills Index
The fragile state of Belgium’s economy
and moderately-high unemployment rate
means overall wages are falling slightly.
Notably, wage differences between
high-skill and low-skill industries have
fallen, indicating there are strong pools of
candidates for many sectors.
Macroeconomic Indicators
5.4
Fragility of economy
Brazil
Although GDP growth has eased as a
result of lower demand from emerging
markets, the rate of inflation remains
moderate.
Deterioration in the government’s
finances, coupled with anaemic growth,
indicates economic fragility will remain.
7.3
Health of economy Persistent inflation in a weak economy
presents a difficult economic situation
for Belgium.
Hong Kong
Hungary
3.7
6.1
Macroeconomic Indicators
Macroeconomic Indicators
Exports and government finances appear
sustainable at current growth rates.
7.2
Health of economy The economy is operating close to full
employment and output, but there is
evidence of mounting inflation.
Sharp deteriorations to exports and
government finances reflect weak
domestic demand and a precipitous fall
in the exchange rate.
7.8
Health of economy Hays Global Skills Index
Health of economy 4.2
Hays Global Skills Index
Italy
Macroeconomic Indicators
Macroeconomic Indicators
8.3
Exports have markedly deteriorated in
recent years, while government finances
remain weak.
3.3
Macroeconomic Indicators
Fragility of economy
Growth has tipped back into negative
territory, while sharp deteriorations to
exports and government finances is
indicative of the current fragility of the
economy.
5.4
9.3
Health of economy Portugal
Russia
Health of economy 5.7
7.4
The economy will perform poorly this
year, with GDP forecast to fall by 2.3%,
while inflation remains elevated.
Singapore
Spain
5.1
Fragility of economy
Weak government finances and lacklustre
growth points to vulnerability to further
Eurozone shocks.
Health of economy 6.7
Despite a rebound since 2010, growth
has eased off and inflation remains as a
concern.
5.3
6.8
The economy is operating with a
substantial margin of low output. There
is some evidence of rising inflation – for
an economy prone to deflation, this is a
positive development.
Sweden
5.5
6.1
Hays Global Skills Index
Portugal’s economy is struggling in the
wake of severe government spending
cuts. Despite the slowdown, wage
pressures remain in high-skill industries,
reflecting shortages of key talent.
Hays Global Skills Index
Although the economy is performing
robustly, skill shortages will persist
unless reforms are undertaken to
improve the education system, lessen
red tape and inject more competition in
home markets.
Hays Global Skills Index
Singapore’s economy shows signs of
overheating, resulting in rising inflation.
Wage pressures are mounting, especially
in high-skill industries and high-skill
occupations.
Hays Global Skills Index
In the wake of a banking and
government fiscal crises, the economy is
in recession and unemployment is very
high. Yet skill shortages persist with
wage pressures in high-skill industries.
Hays Global Skills Index
Mounting wage pressures in high-skill
industries indicate shortages of key
workers. A relatively inflexible labour
market also exacerbates the effect of the
talent mismatch.
Macroeconomic Indicators
Macroeconomic Indicators
Macroeconomic Indicators
Macroeconomic Indicators
Macroeconomic Indicators
Macroeconomic Indicators
5.1
Fragility indicators suggest that, while
the Polish economy remains robust,
favourable export levels and government
finances have begun to unwind.
5.5
Health of economy Recent economic data suggests that
Poland’s economy is entering a gradual
slowdown.
7.0
Fragility of economy
Portugal is vulnerable to contagion from
the on-going Eurozone crisis.
8.0
Health of economy Government spending cuts are placing
severe pressures on the economy, which is
struggling to overcome deep seated
structural problems.
5.2
Fragility of economy
Government finances have improved,
whilst net exports, albeit lower than in the
recent past, are positive.
Fragility of economy
Relative to historical norms, growth and
government finances look weak. Exports
are strong, but the outlook is for the
trend to decrease.
5.3
Health of economy 6.5
Fragility of economy
Spain remains highly vulnerable to
contagion and shocks spreading from the
Eurozone crisis.
8.2
Health of economy There is a benign outlook of sustained
economic growth and contained inflation.
Health of economy There are signs of economic overheating,
coupled with rising prices.
LOW PRESSURE
HIGH PRESSURE
1.0–1.9
2.0–2.9
3.0–3.9
4.0–4.9
5.0–5.9
6.0–6.9
7.0–7.9
8.0–8.9
9.0–9.9
10.0
2.0–2.9
3.0–3.9
4.0–4.9
5.0–5.9
6.0–6.9
7.0–7.9
8.0–8.9
9.0–9.9
10.0
Macroeconomic Indicators Key
STRONG ECONOMY
WEAK ECONOMY
0.0–0.9
1.0–1.9
9.1
Spain is undergoing a painful adjustment
as it attempts to cut spending and
increase economic output while retaining
the confidence of international creditors.
Hays Global Skills Index Key
0.0–0.9
8.4
Fragility of economy
8.5
Compared to some Nordic countries,
Denmark’s economy has struggled,
weighed down with unemployment,
inflation and subdued growth.
5.9
Hays Global Skills Index
Reflecting the economy’s good recent
growth performance, wage pressures
have been building in high-skill
industries, a sure sign of skill shortages
in key sectors. This problem, combined
with significant outward migration, will
increasingly pose a challenge.
Fragility of economy
5.0
Growth levels are close to recent
historical averages, and there are
reassuring signs that inflation remains
under control.
6.4
After a strong rebound post-2009
recession, the growth rate is easing off,
but there are signs that inflation remains
contained.
5.4
6.8
While the economy is performing well
compared to many of its neighbours,
growth has eased off and there are
indicators that the Eurozone crisis is
weighing down on export growth.
Fragility of economy
3.5
Strong exports and improving
government finances indicate underlying
strength. Despite this, the German
economy remains vulnerable to spillovers
from the Eurozone crisis.
Health of economy 6.5
Germany’s economy has performed well in
the face of strong headwinds. Early signs
of a slowdown in growth and of hidden
inflation pose a risk looking ahead.
New Zealand
4.2
Although wages have not kept up with
inflation and unemployment is
increasing, the decline in long-term
unemployment is a positive sign.
Despite the weak economy, wage
pressures in high-skill industries
suggest increasing skill shortages for
key talent.
Hays Global Skills Index
4.8
Reflecting the weak state of the
economy, wages have not kept pace
with inflation. Despite this, employment
has held up, but wage pressures in
high-skill industries indicate skill
shortages for key talent.
Macroeconomic Indicators
6.5
Fragility of economy
The fragility score reflects the recent
deterioration in government finances,
coupled with weak consumer demand.
7.2
Health of economy The economy is in recession, with
forecasts pointing to continued weakness
over the next few years. Inflation remains
elevated but is expected to ease.
Fragility of economy
7.1
Deterioration in the government’s
finances, low exports, and muted growth
all point to underlying fragility.
Health of economy 6.2
The economy is operating with high
unemployment and lower growth,
while inflation remains elevated.
United States
5.0
Hays Global Skills Index
The economy, buffeted by the financial
and Eurozone crisis, faces a severe talent
mismatch where the high proportion of
unemployed out of work for over a year
poses a serious threat to employability
and skills.
Macroeconomic Indicators
3.0
Favourable government finances and
exports position Switzerland favourably
to withstand any further fallout from
Eurozone crisis.
Health of economy 8.5
Health of economy The economy is operating with lower
employment and output, but inflation
remains a concern. The outlook
inevitably remains dependent on
developments in the wider Eurozone.
United Kingdom
Hays Global Skills Index
While economic growth has eased off
recently, wage pressures remain. Given
Switzerland’s success at attracting key
foreign talent, skill shortages are unlikely
to become acute.
Fragility of economy
Sharp deterioration in government
finances and exports indicate fragility.
Despite an economic rebound since
2009, growth remains anaemic.
Hays Global Skills Index
6.4
Hays Global Skills Index
Germany’s economy has performed well,
but employers are facing increasing
difficulties in finding sufficient numbers
of high-skilled workers. This is particularly
evident in increasing wage levels in
high-skill industries.
Macroeconomic Indicators
9.0
Fragility of economy
Macroeconomic Indicators
4.9
There is a mixed picture of improving
exports but weakening government
finances.
Health of economy 4.5
Although France’s economy has slowed
dramatically, the labour market is
performing moderately well. The main
challenge for the labour market is the
costly legal and regulatory burden faced
by employers.
Netherlands
Macroeconomic Indicators
4.7
Balanced government finances and good
exports provide Sweden with some
measure of protection against any fallout
from the Eurozone.
Health of economy Deteriorating government finances and a
slow recovery from the sharp recession of
2008-2009 points to underlying
economic fragility.
Health of economy Hays Global Skills Index
Germany
Macroeconomic Indicators
6.4
Switzerland
Hays Global Skills Index
The Polish economy is weathering
the financial and Eurozone crisis,
although mounting wage pressures in
high-skill industries indicate shortages
in key talent.
Fragility of economy
Fragility of economy
Macroeconomic Indicators
6.8
Japan’s government finances remain
weak, while its exports have deteriorated
in recent years. Growth is expected to
remain around 2% for the next few years;
while modest, this is above the recent
historic average.
Health of economy 4.3
Despite lacklustre economic growth and
increasing unemployment, Denmark’s
labour market is performing moderately
well. Wage pressures among high-skill
occupations suggest skills shortages for
key talent.
Mexico
Hays Global Skills Index
Japan’s economy faces an improving
macroeconomic environment, but a lack
of openness to immigration, combined
with a strong talent mismatch means
that employers may face an increasingly
harder time filling posts.
Fragility of economy
Hays Global Skills Index
France
Macroeconomic Indicators
6.8
Macroeconomic Indicators
8.0
Despite some evidence of improvement,
exports and government finances remain
weak, indicating vulnerability to further
external shocks.
In the wake of 2008-2009 recession,
the economy has languished. Consumer
price inflation, whilst contained, is
trending upwards.
4.6
The labour market is in good shape but
there are some early signs of rising wages
in high-skill industries. Looking ahead, the
education system will need to improve to
meet the anticipated future demand for
high-skill workers.
Japan
Hays Global Skills Index
With the economy in recession, wages
have not kept pace with inflation. Italy
also suffers from weaknesses in its
education system and an inflexible
labour market, but there are no talent
mismatch issues.
7.9
Fragility of economy
4.9
While fragility indicators point to
increasing vulnerability, and there are early
indicators of economic weakening,
inflation remains benign.
4.4
Hays Global Skills Index
Denmark
Macroeconomic Indicators
6.4
Growth, while remaining high by US and
European standards, has eased and is
forecast to moderate. Meanwhile,
government finances and exports are
forecast to weaken.
Ireland
As the economy struggles to regain
its foothold in the aftermath of the
financial crisis, real wages are falling.
A severe problem facing the Irish labour
market is a talent mismatch, linked with
a moderate increase in wages in
high-skill occupations.
Health of economy Fragility of economy
5.2
Health of economy Although growth has eased since its peak
in 2007, the economy is operating close
to full employment and inflation is easing.
5.3
Macroeconomic Indicators
6.2
India’s economy is vulnerable to
economic shocks, but it has a relatively
well-performing labour market. While
employers continue to be held back by
red tape, the education system is
improving.
Fragility of economy
5.5
The Canadian economy is running with
lower output while inflation remains
moderate.
Weak consumer demand is weighing
down on economic growth. Inflation
remains subdued by historical standards.
Poland
5.2
7.0
Fragility of economy
5.0
Czech Republic
Hays Global Skills Index
The biggest challenge for China’s
labour market is its relatively inflexible
labour laws and large-scale outward
migration of skilled workers. As a result,
overall wages will rise and employers
will have a more difficult time finding
qualified workers.
Recent deterioration in government
finances and exports indicate fragility.
However, robust growth forecasts
indicate an improving outlook over the
next few years.
India
Hays Global Skills Index
Mounting wage pressures in key
high-skill industries is symptomatic of
talent shortages. Hungary suffers from
talent mismatch, linked to a weak
education system.
5.3
5.6
Hays Global Skills Index
Despite a positive economic outlook,
Canadian employers are facing a talent
mismatch. There is a good pool of
available workers, but employers are
finding it increasingly difficult to fill
certain posts, particularly in high-skill
industries.
Fragility of economy
At current and forecast rates of
economic growth, government finances
and exports look sustainable, which
means the economy appears well placed
to weather external shocks.
Health of economy China
Macroeconomic Indicators
5.1
Fragility of economy
Despite a recent tick down, growth is
forecast to return and inflation to
remain contained.
Hays Global Skills Index
The labour market is performing well,
with the unemployment rate lower than
before the financial crisis. Hong Kong
also benefits from a flexible labour
market and a well-educated workforce.
Rising wages in high-skill industries,
linked with a moderate talent mismatch,
present the main challenge.
Fragility of economy
5.7
Hays Global Skills Index
Although Brazil’s economy is relatively
healthy, the biggest challenge lies with
labour market regulations. The inflexible
labour market, along with outward
migration, means that employers face
difficulties in recruiting workers.
Macroeconomic Indicators
8.1
Fragility of economy
Canada
Fragility of economy
Macroeconomic Indicators
7.9
Compared to historic norms, growth
and government finances are
exceptionally weak.
Health of economy The economy is operating with low
output, and whilst inflation remains
elevated, it is easing.
6.4
Hays Global Skills Index
A jobless recovery and an increasing
number of long-term unemployed are
pressing issues. Persistent wage
pressures in high-skill occupations is
further evidence that organisations are
finding it hard to find key talent despite
the weakness of the economy.
7.5
Fragility of economy
6.9
Whilst economic growth remains
subdued, government finances and
exports indicate vulnerability to further
negative shocks.
Health of economy 8.1
The economy is operating with high
unemployment and elevated inflation
levels.
The analysis on which the Hays Global Skills Index was based utilised data
as of Q3 2012. Developments subsequent to this date are not reflected in
the 2012 findings.
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