What's Next: Future Global HR Trends Evolution of Work and the Worke

Posted on by Brandon Klein

Executive summary

Key findings from our research into the changing nature of work and the worker include the following:

• Demographic shifts pose conflicting challenges

An ageing population is very apparent throughout the developed world, raising concerns that the remaining working population will not be able to bear the strain of increased expenditure on elderly care and pensions.
Governments have responded to this reality through immigration and by raising the pensionable age. Meanwhile, much of the developing world is confronting a very different demographic challenge, and is seeking to devise the appropriate education systems to prepare an overwhelmingly young population for the workplace.

• Young populations neither in education nor employment will elevate concerns of a lost generation and the potential for social and political unrest in the near future

Many commentators have argued that mass youth unemployment was a contributing catalyst for the recent social and political turmoil in the Middle East and Southern Europe. Similar concerns will arise throughout the world whenever there is insufficient supply of employment opportunities to meet the demand of young populations. With a very significant proportion of the youth population unemployed or underemployed, the future workforce may be negatively impacted and lead to a shrinking labour-force participation.

• Burgeoning workplace diversity requires sophisticated managerial response

Diversity is on the rise throughout the organizational world, not just along gender, generational and cultural lines, but in companies’ working arrangements with employees. Longer life spans are likely to result in employees staying in the workplace until a later age. Meanwhile, expert opinion and workplace surveys continue to show that Generation Y or millennials, the cohort of employees who have entered the workplace in recent years, are restless and difficult to retain. Women are poised to enter the workplace in the developing world in vast numbers, posing disparate challenges for companies that have to date failed to find a way to utilize female potential fully. And a substantial proportion of these women will form a part of a growing army of temporary and part-time workers, many of whom are not physically present in the workplace. Such a surge in workplace diversity will necessitate a multi-layered, carefully thought out, managerial approach as companies strive to get the most out of their people in a highly competitive environment.

• Disconnect between educational standards and organizational demand

Educational authorities are battling to remold their systems according to the needs of the modern economy. The expansion in tertiary education in the developing world is rapid. China and India alone will account for 40 percent of young people with a tertiary education in all G201 and OECD2 countries by the year 2020. However, doubts persist about the quality of graduates in certain regions and countries. Technical and engineering skills, and the soft skills that facilitate integration into the workforce, are both deemed in short supply. Major companies are turning to rigorous internal training systems to bridge the gap between education and the demands of the modern workplace. Governments, meanwhile, are moving to relax immigration requirements for the highly skilled.

• Services sector on the rise globally at the expense of agriculture and industry

With incomes rising in both the developed and developing world, demand for basic services, healthcare and education increases, resulting in the expansion of the services sector and the declining importance of industry and agriculture. In the developing world, the growth in the services sector has been dramatic. The proportion of jobs contributed by the services sector in China, for example, has almost doubled in the last two decades. In the developed world, the employment share of the services sector has also been on an upward curve, although moving more gradually from a much higher base.

• Technology transforms workforce composition and culture

The proliferation of communication technology is slowly diminishing the proportion of employees who work from a central company location. Remote working is on the rise, particularly in the developing world, enabling companies to access a deeper pool of available labor. Technology also allows companies to maintain contact with clients in distant lands, permitting the global expansion they crave. However, the technology-dependent crossborder teams that now permeate major companies throw up wholly new and complex managerial challenges, such as how to exploit cultural differences for maximum economic advantage, while avoiding potential discord and conflict.

• Wage expectations conflict with increased focus on shareholder value

While large increases in productivity have created substantial economic growth over the last few decades, workers’ wages have not kept pace. Several factors explain this phenomenon. Technological advances allow higher returns with a fewer number of workers; globalization has allowed companies to look for cheaper labor elsewhere; and the focus on shareholder value has led to pressure for higher profits. This pressure on wages is likely to continue, resulting in lower expectations from workers and possibly to reduced expenditure by individuals on education.

• Inequality on the rise as technology decimates the mid-skilled tier

Technological advances have also automated many routine tasks formerly performed by mid-skilled workers. At the same time, companies bemoan a shortage of highly skilled workers in certain positions, such as technical workers and the senior executives entrusted with corporate decision-making. With automation of jobs set to expand further as technology advances, and a persistent skills deficit for specialized jobs, inequality is likely to increase, raising widespread concerns about social and political stability.

• Companies balance pros and cons of investment in new regions of development

Companies in the developed world are constantly investigating where best to outsource their operations. China’s steep rise in wages has made it a less obvious destination for the outsourcing of production. It is likely that India and Brazil will further consolidate their already strong position over the next five years, with relatively new players, such as Vietnam and Indonesia, also becoming more attractive. Central and Eastern Europe, meanwhile, is building its appeal as an outsourcing destination, particularly for highly skilled work. HR managers will need to find sufficiently reliable data and analytics about human-capital issues in new potential markets in order to make sound strategic business decisions and minimize risk.