The war of talent
Last week, I had dinner with a global research scientist. He spends most of his career conduct research on technology trends around the world. He reads more than anybody that I know and has profound knowledge of global economic. He often predicts correctly something before it happens. I always tease him that he should predict lottery number than global technology.
During our conversation, he said that in the next five years, the world will have a “war for skilled workers”. Some countries will restrict their educated people from leaving to stop the “Brain drain” issue. He said: “The skilled workers shortage will be getting worse as demand is high but supply is low. Every government knows that we are living in the information age, where knowledge is the asset for competitive advantage. To promote economic growth, skilled workers are needed and they are in high demand.”
I argued: “That is not new. Everybody know about the skilled workers shortage. However, having a “war” on talent is too much. I do not think countries will go to war just to get skilled workers?”
He laughed: “I do not mean “War” as sending in soldiers to fight or invading a country. Future war will be on the economic front such as stop trading, economic sanction, limit business, restrict imports etc. Today, developed countries such as the U.S, Western Europe, and Japan have very low birth rate but high number of aging people. This aging of the population will have dramatic effect on society and the economy. It will impact productivity, and economic growth. To maintain the strong economies, these countries need more knowledge workers so they will change their immigration laws to encourage skilled workers to come to work in their countries. If these workers live there, they pay taxes, improve businesses, grow the economies, and support the aging population.”
“However, developing countries also need these skilled workers for their own development too. So there will be conflict. Today, hundred thousands of Indian and Chinese left their countries for the U.S and Europe each year. Most are highly skilled professionals. This number will continue to increase as more jobs are opening, more opportunities, and laws on immigration are opening for skilled workers. For countries with billion people like China or India, losing few thousand people is not an issue but when this number go to several hundred thousand or half million then there will be issues. This “brain drain” issue is currently being discussed by governments in those countries but nothing happen yet.”
I told him: “We are living in a globalized work where workers can work from any places. Today millions of Indian and Chinese software engineers are working for U.S companies but they still live in their countries. Many work from home and connect to U.S companies via the internet. The number of “Virtual workers” will increase more with needs. I do not see any problem with that. From what I know, both Indian and Chinese governments prefer it because these people stay there, pay taxes there, spend money there, create jobs there. They bring in a lot of revenues to their economies. Outsourcing works bring in $97 billion dollars to India in 2010 and could exceed $100 billion this year.”
He explained: “That is correct today but not tomorrow. You need to look at the evolution of it. In the past, people have to go to find works. Many developing countries let their unskilled people go, whether it is legal or illegal, to seek works in developed countries. These people work mostly on low paying jobs, jobs that even the poorest people of that country do not want. They work hard, save money and send home to their families so it benefits their own country. Then information technology outsourcing happens. It requires skilled workers not unskilled workers but this time it is the jobs that seek people so these people do not have to leave the country because the jobs come to them. This is much better, hundred times better because higher skilled workers make more money than unskilled workers. Today, an unskilled Mexican does farmer's work in the U.S make about $20 a day. He sends home about $5 because he needs $15 to live in the U.S. The U.S government estimated that Mexican workers, legal or illegal, send home about $5 billion a years. If we look skilled workers than everything changes. An Indian software engineer in outsourcing industry make about $125 a day but he stays in India so the entire money stay there. Imagine a country has several millions workers, each make $125 dollars a day. That is why IT outsourcing is the most profitable business for any country. Twenty years ago, annual revenue for IT industry in India was less than $100 million but today it is $100 billion. That is why Indian has more millionaires and billionaires today than ten years ago. In just a short time, India's economy grew several times bigger, create more jobs, more revenues. As it grows stronger, with billion dollars in foreign investments each month, it develops more factories, creates more products then export to other Asian countries. Now India is no longer a developing country but emerges as one of the strongest economy and powerful nation in the world. This “economic miracle” happened in less than twenty years.”
“However, developed countries begin to realize that they are helping developing countries to move up and compete with them. Today both the U.S and Europe are experiencing economic depression with high unemployment so they have to restrict this kind of work. Since they still need skilled workers, they will pass laws to encourage these people to come and work in their country, pay taxes in their country and invest in their country. When immigration laws change, many skilled people will leave for better life, better opportunities then it will become an issue.”
I argued: “But it has not happened. Is it one of your predictions?”
He smiled: “No, it is not a prediction but a fact. It is will happen sooner than you think. Currently both the U.S and European countries are passing open immigration laws to allow more skilled workers to become permanent residence in their countries. In the past, immigration laws were based on a “lottery based” where governments allowed limited numbers of people “randomly selected” to immigrate to their countries. Now it has changed into “Skill based” where people can immigrate to the U.S and Western Europe based on their education background. People with degrees in Medical, Information Technology, and Healthcare will receive the highest priority to immigrate. Foreign students who graduated from U.S universities could apply for special status to stay permanently as long as there are companies that will hire them. Of course, students with degrees in medical, healthcare, information technology will not have any problem because of the critical shortage of these skilled workers. Few years ago, there is a quota of few hundred thousand visas per year but now it is changing to allow more, much more highly skilled people to live there. This “brain drain” phenomenon will create some issues. Of course, some developing countries will have to react. This is what I think is the next conflict.”
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
