Whether you’re a seasoned recruiter at a large company or a small business owner growing your team for the first time, your ability to hire great talent is shaped in part by what’s happening in the global economy. Global economies are inextricably linked, and this connection has vast implications for talent acquisition teams.
Macro trends can tell us a great deal about how many candidates are out there, where talent is coming from and going to, and where the labor market is headed in the near future. Understanding the ebb and flow of talent, and what’s driving the change, is a central but often overlooked piece of successful hiring campaigns.
Here’s a guide to what’s happening in the global economy, and how it’s affecting how you hire.
1. Employment worldwide is shifting towards a service economy
In a service economy, jobs rely on people doing things as opposed to making things (physical things, that is). In Australia, the services industry has dominated for decades. As of 2010, 68% of the Australian economy was services based, an increase from 65% in 1994.
While different economies have seen different rates of change, this shift is overwhelmingly global. In 1994, 28% of China’s economy was based in services. In 2010, that same figure was 36%. This trend shows no signs of stopping: Worldwide, more people will be entering office jobs rather than manufacturing facilities. And, businesses in general will rely more and more on human resources — making talent acquisition an increasingly vital field.
2. Productivity growth is stalling.
In the simplest terms, productivity is output per hours worked. From 1999 to 2006, before the financial crisis, global productivity growth was averaging 2.6%, but in the wake of the recession, the rate has dropped to 2.1%—economists expect growth to stay at this low rate in the near future.
The global slowdown isn’t driven by just one part of the globe. We see weakened productivity in the United States and Japan, longer-term productivity slowdown in China, and severe slowdowns in Latin America, to name a few.
One potential explanation of the slower productivity growth is that it’s a symptom of the talent shortage. Critical roles in healthcare, tech and transportation are notoriously hard to fill these days, with many other industries experiencing similar strains. In Australia, 12% of job postings are still open after 60 days. Low productivity rates could be a sign that employers can’t hire fast enough to distribute the workload and that current employees are overburdened as a result.
3. The amount of time people spend at work is declining.
The Organisation for Economic Cooperation and Development (OECD) is a group of 34 countries — largely advanced economies like Australia, the United States and United Kingdom as well as some emerging markets. In 1990, people in OECD countries worked an average of 1,880 hours a year. By 2013, this had dropped to an average of 1,770 hours per year.
And although overall productivity growth is lower in countries where people work less, productivity rates are higher. This kind of trend suggests that employees and employers alike benefit from working better, not just working longer. This sentiment is often echoed by leading entrepreneurs, like Netflix CEO Reed Hastings and others who have stressed the importance of taking time off to recharge.
4. The global population is ageing.
Today, there are 901 million people aged 60 or above — 12% of the world’s population. The number of Australians aged 65 and over is expected to increase rapidly, to 6.2 million in 2042 — around 25% of the population.
This demographic shift means that more services will be aimed at those 65 and older, a trend which is already creating demand for talent in healthcare. Employers and governments alike are working to create talent pipelines to keep pace.
As the population ages, people are also working longer. 45% of women in Australia aged 60-64 were in the labour force in 2013, up from just 15.2% in 1993. For men 65 and older, it’s 17% — double the number from 20 years ago. Employers will need to keep these older workers engaged to avoid losing droves of talent to retirement. Flexible work arrangements are one way some employers are doing just that.
5. Not enough young people are learning the tech skills that are needed on the job.
Among OECD countries, 35% of people age 16-29 have no computer experience at work — an extremely troubling figure given the ageing of the global population.
While these young people are accustomed to using technology in everyday life, many have not yet had the chance to apply those skills in the workplace. While we tend to think of millennials as significantly more tech savvy than baby boomers, they might not necessarily have the skill set to fill in as the older generation retires.
What does this mean for businesses? Young hires may not come equipped with the knowledge needed for a job, and in a talent short market, employers may have to hire for aptitude and build skills along the way.
6. Migration rates are returning to rates seen before the global financial crisis.
During the peak of the financial crisis, there was a decline in migration to advanced economies. With the global economy in a slump and fewer jobs available, people were less willing to uproot themselves for work.
Today however, the worst of the recession is behind us and people are once again crossing borders in pursuit of opportunity. This is great news for employers in areas where local supply of talent isn’t meeting demand — drawing in skilled candidates from abroad can help address gaps.
7. Today’s global job seeker is well-informed about where the best employment opportunities are, and will move for the right offer.
So we know that global migration numbers are up, but where are job seekers looking to move? Today’s candidates are savvier than ever and they want to go where the opportunities are. Our research shows that the strongest indicator of interest from job seekers in a location is the number of job postings available in that place.
Why do people move across borders? 65% of people say it’s to broaden personal experience, while 58% says it’s for an overall attractive job offer.
8. As job seekers become more mobile, some countries are retaining and attracting more talent than others.
The inflow of new talent to a country is only one-half of the picture. To understand the how much talent is available in a location, knowing how much of the local population you can draw from is also key.
The Indeed Net Interest Score accounts for how many people are interested in coming to as well as leaving a country. According to this ranking of 55 countries, Australia ranks 28th—meaning that the country overall is losing talent and not attracting enough to make up the difference.
You can see the full list in our report, Labour Market Outlook 2016.
9. Tech candidates are more likely than the average candidate to search for jobs abroad.
In 2015, in the world’s 12 largest economies, tech job seekers were 50% more likely to search across borders compared to the average job seeker.
These coveted candidates are drawn to locations where they can find inspiring work, motivating peer groups and opportunities for future employment. Our research shows that tech candidates are nearly 4X as interested in working in tech hubs like San Francisco and Seattle than other cities.
10. Growing interest in flexibility is a global trend.
Interest in flexible work increased by 42.1% from 2013 to 2015 in nine of the 12 largest economies in the world.
And the people looking for flexible options are high-skill candidates. Indeed data shows that over half of the top 50 keywords associated with searches for flexible work are related to high-skill jobs — and not only that, many of these are in the tech and healthcare fields where talent is scarce.
11. People are searching for jobs all the time and they’re searching on mobile.
Job seekers today have a lot of options, and they know it. In countries around the world, 70% of the labour force is actively looking or open to a new job.* People are not only looking for their next job online, they are relying heavily on mobile devices to conduct their search — a growing trend.
In 2013, 40% of job seekers were using mobile devices. In 2016, that figure jumped to 60% of job seekers. And preferences for mobile vary from country to country, ranging from 88% of job seekers in South Korea to 29% in Poland — demonstrating that no matter where you’re hiring, you should have mobile optimised job postings.
12. The gig economy is disrupting traditional notions of employment, but these kinds of jobs still make up a very small segment of the overall labour market.
Over the last three years, the number of searches for gig jobs increased by a factor of 15 relative to other types of employment. Job seekers are definitely interested in the on-demand economy, and job postings in this sector are increasing as well.
But when you look at the larger picture of the economy, gig jobs are just a small piece of the whole labour market. The number of people making a living solely or partially from the gig economy remains marginal.
13. China’s industrial output is slowing, now growing at only half of what it was in 2010.
In 1990, China was the world’s 11th largest economy. Twenty-five years later, it is second only to the US. But there have been dramatic changes in the last half decade — industrial output growth in China is now less than half of its 2010 levels.
In early 2016, China’s shrinking manufacturing sector and stock market woes caused alarm among governments and investors. At the same time, overall economic growth slowed to its lowest rate in 25 years.
If the era of China’s rapid expansion is over, economies around the world will feel the effects of the slowdown. This could mean a continued decline in commodities pricing (see below), which would lead to job cuts in those industries.
14. Oil prices have dropped, affecting resource-dependent labour markets the world round.
In July 2015, the value of oil was more than double its value at the start of 2016. In the US, oil-producing states have been hit hard. Canada, the UK and Russia are among the other countries to suffer the effects of this slowdown.
Meanwhile, alternative energy sources are providing more and more employment opportunities. If job postings in oil continues to drop at the current rate, solar will become the primary energy job opportunity before the year is out. In light of a talent shortage, employers in solar, wind and hydroelectric may want to source candidates from the oil industry as those workers search for new roles.
15. Wage stagnation is an international phenomenon.
As employer demand for labour rises and the supply of available talent decreases, then wages usually increase. Compensation acts as a key incentive for workers considering one job over another.
But even as the global economy recovers from the financial crisis, wages are not rising. From 2011 to 2014, wage growth registered a mere 0.5% — even though employers report difficulty filling posts. The growth rate for wages of Australian workers declined to 2.2% in 2015, their weakest rate in almost two decades.
This presents a significant challenge for employers: if people don’t find wages compelling enough to accept a job, they may stay in their current role even if a better fit is out there. Some may choose to exit the workforce entirely. For the economy to continue growing, employers will need to get incentives right.
16. High skill, high-wage jobs are on the rise, middle-wage jobs are dropping out while low wage jobs are also increasing in number. This is leading to growing polarisation of the labour market.
Over the past four decades, technological advances and globalisation have created many new jobs for highly educated, highly skilled workers. On the other end of the spectrum, lower skilled jobs are also proliferating, while the growth of middle skill, middle wage jobs has stalled. During this same time period, the pay gap between the highest and lowest paid has widened.
This wage inequality is contributing to the talent gap in developed economies. The structural barriers in the economy, such as limited access to education and opportunity, are preventing people from qualifying for high skill, high pay roles.
Employers have an interest in resolving this gap, and as a result, we may see more employers invest in training to upskill more of their labour base in the coming years.