What is changing?
Major changes in both the nature and skills required of the workers and the dynamics in the global labour market are creating both uncertainty and opportunity.
- For decades work has been moving from developed to developing economies, this shift is starting to slow and in some cases reverse. The rationale for locating manufacturing and service operations overseas is not as clear due to a number of factors including rising labour costs, less reliance on labour due to more automation, and rising transport costs. For many industries and markets the risks are rising and the rewards are dwindling. Research and statistics show service roles and manufacturing returning to advanced economies.
- Advances in technology are enabling the next wave of automation and changing the dynamics of using humans and machines to deliver services and produce products. Virtualisation, telecommuting, and advances in robotics have reached a level of maturity which enables organisations to realise benefits from pursuing technological solutions. It is changing both what tasks and roles humans now perform and influencing decisions about where to locate aspects of the organisation.
- Sourcing skills from the global labour market is changing: demand for skilled and unskilled labour as well of the cost and availability of labour is changing both in terms of location and numbers. Companies that made strategic decisions only a couple of years ago to locate operations abroad due to labour costs and availability have found the rationale for their decision no longer exists.
- Numbers of unemployed are rising, at the same time organisations report the inability to fill open positions indicating that skills available are not matching employer demand. Depending on industry and geography this may be a temporary imbalance or indicative of fundamental changes in the labour market. Many organisations are changing their training and recruitment strategies to ensure the skills they need will be available in the future.
- For those people about to enter the workforce or displaced workers, understanding the skills and capabilities that will be in demand can increase both job security and also income levels. There are still large numbers of students focusing on skills and jobs that are declining in demand and large numbers of workers at risk in industries and roles that are becoming redundant.
Why is this important?
Few things are more important than labour to an organisation when determining where to locate operations, deciding which markets to pursue for expansion or contraction, acquiring or selling all or part of a business and ensuring future success. The quality of the workforce, the ability to service customers, and sales channels utilised are all directly related to and impacted by the workforce.
Failing to understand, anticipate and manage changes in the workforce and labour market can be costly to an organisation or it can deliver huge rewards. For example, moving customer service or manufacturing operations overseas, only to move them back again can be costly in terms of damage to a brand, the negative impact on productivity and hinder the ability to attract quality workers to an organisation. Common reasons for reversing outsourcing and off-shoring decisions include labour availability, costs, and quality issues all of which are directly related to labour. Understanding how the workforce and labour market dynamics are changing and then exploring the implications of issues such as outsourcing reduces the chances of making costly mistakes. It is about investing in what is so often described as a company’s most important asset.
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