Employers must act so that emerging markets can close the skills gap says Jinuk Shin, vice president and head of Corporate Citizenship Group, at Samsung.
High levels of investment in human capital and strong education systems are drivers of economic growth. From Germany to Japan, economic powerhouses can attribute much of their success to their heavy investment in human capital. Recently in the US, President Obama authorized federal funding for cities and states to conduct job training programs via the Workforce Innovation and Opportunity Act, which stems from the wide recognition that the nation's workforce need to be future-ready and that the widening skills gap needs to be addressed now more than ever.
For all these nations and more, skills are a precious commodity and good education systems are what set them apart from other high-growth economies that simply rely on physical capital.
So here's the challenge: how can emerging economies ensure they don't stumble as they attempt to fill their skills gap, and how can developing economies ensure their skills gap does not turn into a 'skills trap' from which there is no escape?
Nowhere are skills more in demand than in emerging economies, according to a human capital study by professional services firm PwC (Key Trends in Human Capital 2012: A Global Perspective).
At one point in time, these countries relied on cheap labor to fuel their export-driven economies. But their economic model is changing and, as a result, they have to rapidly move up the value chain - or risk faltering.
According to the Talent Shortage Survey by global employment agency Manpower Group, skills shortages prevented 45% of employers in the Asia-Pacific region to fill vacancies. In India, this number soared to 67% of employers while in Brazil, 57% had trouble recruiting the right workforce (2013 Talent Shortage Survey). Developing nations have to narrow the skills gap and "produce more workers capable of doing talent intensive jobs that require higher qualifications."
While this shortage in human capital can be seen as a weakness, it is also presents a huge opportunity for economic growth. Developing and emerging economies - with populations that are overwhelmingly young and hungry for professional advancement - can turn themselves into "factories of talent," instead of being the cheaply-staffed workbenches of the developed world.
Currently, however, the education systems in many of these countries don't provide the right kind of training that would fill the skills gap. There is plenty of anecdotal evidence to support this claim: for example, developing countries do not have enough resources to purchase tools to build modern skills. There are also hard numbers: in two of the fastest growing emerging economies in the world - Turkey and Brazil - nearly 10% of all companies report that poorly educated workforces are the main constraint on their growth (Lyon, S. M. Ranzini, and F. Rosati, Skills Deficit in Developing Countries: A Review of Empirical Evidence from Enterprise Surveys).
This is particularly apparent when it comes to filling jobs that require technical skills, especially engineers, technicians and IT staff. According to the Talent Shortage Survey, a shocking 71% of companies in Brazil are struggling to recruit for such posts. And in India - despite the country's many and fabled Indian Institutes of Technology - it's still a massive 48%.
Governments and education systems should not be blamed for all these problems. Rapidly growing economies will always struggle to fill their skills pipeline in an ordered way - especially given today's rapid technological climate. Skills-training designed by civil servants at their desks five years ago are obviously already outdated.
To combat these issues, emerging economies can start with the most fundamental point: the private sector is experiencing the most skills shortages. Companies that use their assets to close the skills gap - working closely with governments to leverage the resources and structure of the education system - are best positioned to boost human capital in developing and emerging economies.
Samsung, for example, is building up a global network of Tech Institutes that helps students learn engineering and technical skills after school. The program was first launched in Africa in 2011, with the goal of educating 10,000 engineers in Africa alone by 2015. Last year alone, around 7,500 students participated in the program. Training programs are also being set up in South Africa, Kenya and Nigeria, Ethiopia.
Outside Africa, programs are also taking place in Turkey, Indonesia and Russia. Lyagaev Ivan, who participated in Russia's Tech Institute this summer and has been a long-time employee in Authorized Service Center, said it was useful to gain principle knowledge of LTEs. A trainer at the same facility, Ilya Tolstikov, noted that his experience was "a unique opportunity for [him] to provide training for [his] partners - retailers."
The program continues to be proudly powered by our own employees: just a year after the program's launch, more than 2,000 Samsung employees volunteered to guide students through an engineering-based curriculum and helped them chart their career paths. Since it's the employees that are driving the innovation behind businesses, it's only fitting that they deploy their expertise and inspiration to those in regions that are in need of it most. In turn, our employees have much to gain. Through various similar programs, Samsung employees learn and experience other markets while having opportunities to share their insight and knowledge on a global scale.
Of course, in the grand scheme of things, these numbers are still small. We need to continue to mobilize corporate citizenship arms of other businesses to help ensure that the skills gap does not harm developing harm developing nations, and does not trap them in a culture that breeds dependency.
Private businesses have a critical role to play: they not only have a moral imperative, but it also makes business sense too. Companies can't just sit back and wait for fully trained workers to appear out of thin air and start queuing at their factory gates and office doors.