Reducing reliance on physical mobility will be a key factor in the post-COVID economic recovery, according to 2020 World Talent Ranking
Lausanne, Switzerland, 12 November 2020:
With global economies in crisis, the future of hiring the best global talent is under the brightest spotlight in decades.
The future of work and workers’ rights is under scrutiny, begging the question whether it is time for a new tax and compliance environment that goes beyond borders.
The IMD World Talent Ranking 2020 sheds light on the impact of the COVID-19 crisis and regional political changes including Brexit.
and this is down to the continent’s excellent education and good mobility.
This year, the UK (#23) comes behind Germany (#11), Belgium (#16) and Ireland (#18). Uncertainties around Brexit appear to have been damaging the UK’s talent competitiveness.
North America stands out in the Appeal factor, highlighting the important economic attractiveness of both Canada and the USA for foreign highly skilled workers. (#2 USA, #11 Canada)
Switzerland leads the way for the fourth year in a row, Denmark is 2nd and Luxembourg 3rd in the IMD World Talent Ranking 2020.
Brexit’s impact on the UK’s talent competitiveness appears to be reflected in figures. In 2016, the year of the Brexit vote, the UK was in 16th position in the same ranking. This year’s 23rdposition is a likely reflection that uncertainties around Brexit have been chipping away at the UK’s talent competitiveness.
Switzerland balances a high-quality education system that earns top marks for those being channeled into university (#1) and for those embarking on apprenticeships (#1). The country is also attractive to foreign labor thanks to the high quality of life (#3) and remuneration (#1).
Denmark, in 2nd, performs well across the board and stands out for the perceived fairness of its society (e.g. justice #1).
Luxembourg, in 3rd, has seen a consistent improvement over the past five years, progressing from 11th to 3rd. This is due to a marked improvement in the Investment & Development factor, both relative to other economies but also in absolute terms.
The Institute for Management Development’s World Competitiveness Center take a three-pronged approach in measuring talent in economies. The Investment & Development factormeasures the resources earmarked to cultivate a homegrown workforce. The Appeal factor evaluates the extent to which an economy attracts foreign and retains local talent. And the Readiness factor measures the quality of the skills and competencies that are available in a country’s talent pool.
Overall, it evaluates the development, attraction and retention of human capital in 63 economies.
The current pandemic could prove to be a severe hit to those countries that base their overall competitiveness on the talent economy, as a large part of this is attracting talent from abroad. Among them are Singapore, Australia, the US and the UK, all of which have a long history of welcoming foreign students (per 1,000 population: #1 Australia, Singapore #4 UK #7, USA #23), who may then join the workforce.
“These countries cannot be sure to lure in the best workers for the time being, and may well look into other ways to be competitive. There is a risk that they will decide to turn inwards in their efforts to revitalize their economies, backtracking in their openness, which will do nothing to attract foreign talent nor retain local talent,” said Christos Cabolis, Chief Economist at the IMD World Competitiveness Center (WCC).
Education and mobility key in Europe
All of the top five economies in the IMD World Talent Ranking 2020 — Switzerland, Denmark, Luxembourg, Iceland and Sweden — have excellent education systems; and therefore rank highly (#1-4, & #7, respectively) in the Investment & Development factor.
Overall, countries in western European remain, on average, the most talent-competitive in the world. Western Europe firmly keeps the lead in both the Investment & Development and Readiness factors. But because of their aging populations, these economies need to remain open and attractive to a young, international, highly skilled workforce in order to offset future labor shortages, said the authors of the ranking.
The changing face of education
In the 2020 ranking, different criteria capture the quality of education at each key stepping stone: primary, secondary and tertiary.
Eight out of the 10 top economies are European and this is down to good quality education, but also mobility. Proof of that, the authors say, is the mediocre ranking that the UK shows this year (#23), below Germany (#11), Belgium (#16) and Ireland (#18), for example.
All of the top five economies in the IMD World Talent Ranking 2020 — Switzerland, Denmark, Luxembourg, Iceland, and Sweden — have excellent education systems for their own home-grown talent, but other nations (e.g. Canada, Singapore, the UAE and Australia) have made significant leaps in the ranking this year.
The authors, however, predict that the importance of national education systems could be about to fade, as companies contract more and more workers from beyond their borders.
North America and Eastern Asia place second and third regionally, after Western Europe. North America stands out in the Appeal factor, highlighting the important economic attractiveness of both Canada and the US for foreign highly skilled workers. (#2 USA, #11 Canada)
Canada (with improvements in Appeal), Singapore (with improvements Readiness) and the UAE (also with improvements in Readiness) and Australia (with a rise in Investment & Development) all make significant leaps in the ranking this year.
Australia jumps 3 positions to #13. The researchers believe this could be a reflection of the fact the country has for a long time implemented a Skills Migration program, which has proven extremely successful to feed Australia’s universities and job market.
Singapore also moves forward, from #10 to #9, reflecting a balanced approach to investment (#21) and appeal (#22), resulting in #1 in Readiness. Its aging population, high cost of living (#57) and pollution (#44) may be future challenges.
The data shows that impediments to fostering talent tend to be down to a lack of investment and development (South America) or not retaining homegrown talent (Eastern Europe).
“The underperformance of South America and Central Asia in the rankings continues, and it is due to a deficient investment in education, which is still not seen as a pillar of the future development of the region,” says Arturo Bris, Director of the WCC.
“In contrast, while Eastern European economies have long understood the importance of developing talent, their highly-skilled graduates flee their countries in search for better opportunities.”
He added that talent retention, for countries such as Ukraine and Romania, should be a major priority.
Notes to editors: