Faced with a labour market in transition, industries must transform to keep pace. This chapter reviews the key barriers to transformation that organizations face, exploring the workforce strategies and practices that organizations expect to implement to achieve their business goals.

Organizations identify skills gaps and an inability to attract talent as the key barriers preventing industry transformation, with 60% of surveyed companies highlighting the difficulty in bridging skills gaps locally and 53% identifying their inability to attract talent as the main barriers to transforming their business (Figure 5.1).

These two aspects of talent availability were identified as top barriers to business transformation by every industry except Research, Design and Business Management Services, where respondents ranked outdated or inflexible regulatory frameworks as the second most limiting barrier. The inability to attract talent is particularly prevalent in the Electronics as well as Automotive and Aerospace sectors, where it is ranked as the most significant barrier. In addition to these barriers, over half (52.2%) of companies in the Media, Entertainment and Sports industry highlight insufficient understanding of opportunities by leadership as an obstacle. Company size also emerges as a factor, with SMEs 20% less likely to identify lack of skilled talent as a barrier than large corporations.

Businesses see talent as more strategically limiting to their performance than availability of capital: skills gaps in the local labour market were seen as a greater barrier to transformation than a shortage of investment capital by companies in virtually every industry. The picture is more polarized at regional and country levels. Skills gaps are reported to be most problematic in Sub-Saharan Africa, where they are seen to limit the transformation of 70% of companies – 11 percentage points above the global average. Looking at country differences, only 40% of Japanese companies report being limited by skills gaps in the workforce, while more than 80% of companies operating in the Philippines, Colombia and Sweden expect an insufficiently skilled talent pipeline by 2027.

By a wide margin, surveyed companies report that investing in learning and training on the job and automating processes are the most common workforce strategies which will be adopted to deliver their organization’s business goals in the next five years (Figure 5.2).

Four in five respondents expect to implement these strategies in the next five years, which rank first and second (81% and 80%, respectively) among workforce strategies across all industries. While trends in automation was discussed in a technical context in Chapter 1, and with regards to jobs and skills in Chapters 2 and 3, workforce development through training is a key theme of this chapter.

Examining the data across industries, both the Automotive and Aerospace and Advanced Manufacturing industries are looking to accelerating automation, whereas Electronics as well as Consumer-Goods industries will focus more on workforce development. From a regional perspective, surveyed companies in East Asia and the Pacific are particularly likely to invest in learning and training on the job, with all respondents in Republic of Korea, Viet Nam, and Hong Kong SAR, China foreseeing such investments in the coming five years. European organizations are divided. Switzerland, Sweden and Poland have a strong preference for automation process acceleration, whereas companies in the Czech Republic and France will prioritize investment in on-the-job learning and training.

Within a churning labour market, just under half (46%) of the respondents expect to transition staff from declining to growing roles. Twenty-two percent of surveyed companies expect to hire significantly more staff and just 13% expect to reduce the current workforce significantly. This finding is in line with the earlier discussion in this report that a majority of macrotrends and technological developments over the next five years are expected to lead to job creation rather than job destruction. However, the data does surface geographical disparities: in Georgia, half of surveyed companies plan to significantly reduce their workforce in the coming five years, compared to less than one-tenth of organizations in the United Kingdom.

Given that companies express skills gaps and talent availability as their greatest barriers to transformation and investing in training as the most promising workforce strategy alongside automation, it is unsurprising that surveyed companies express confidence in their ability to develop their existing workforce and moderate positivity in retaining it but are less unified regarding the outlook for talent availability in the next five years. Roughly equal proportions of companies express positivity and negativity, and few remain neutral (Figure 5.3). In general, respondents are more positive about the talent development of the existing workforce than talent retention and talent availability: 39% are optimistic about talent availability compared to 38% pessimistic, indicating a negligible net 1% positive outlook; 53% are positive about talent retention and 19% negative, indicating a net 34% positive outlook; and 77% of survey respondents are optimistic about talent development of their existing workforce, and 5% negative, indicating a net 72% positive outlook.

When comparing countries’ viewpoints on talent availability when hiring, this report finds that more than 60% of respondents in Latvia, Sweden and the Netherlands have a negative outlook, while around 60% of respondents in Austria and Saudi Arabia are more positive. Interestingly, more populous economies such as China and India are more positive than the global average. Looking at sectoral differences, Research, Design and Business Management Practices are the most optimistic in hiring talent, while the Energy Technologies and Utilities and the Medical and Healthcare Services industries are the most pessimistic on talent availability. This finding is supported by a collaboration with Indeed which reveals that social jobs in the Care, Medical and Education sectors take longer, on average, to fill than jobs in other sectors (see Box 5.1).

In terms of retaining talent, organizations in the Energy, Technology and Utilities and the Electronics sectors are less positive than the global average, with more than 30% of respondents having a negative outlook. By contrast, more than 70% of Agriculture, Forestry and Fishing organizations maintain a positive outlook on retaining their talent.

Contrary to the generally positive perception of talent development at the global level, only three of five Accommodation, Food and Leisure Services businesses are optimistic, compared with the global average of almost 80%. The Energy sector is more positive than the global average on talent development– as all organizations in the Oil and Gas and Mining and Metal sector have either a neutral or positive outlook. At the country level, Indonesia, China and France sit on the more negative side of the scale, with Pakistan having the most negative outlook globally, where only 45% of respondents have a positive outlook for talent development in the next five years. This is in line with the finding that Pakistan has a lower skills stability, 44%, compared with the global average of 56%.

Box 5.1 Labour shortages in social jobs

In collaboration with Indeed

Future of Jobs Survey concerns regarding talent availability in social jobs are reinforced by a new study, partnership with Indeed, of external data on job-board postings. A new labour-market indicator measures the median time required to fill jobs in a cross-sectoral range of occupation groups, revealing that employers operating in Medical and Healthcare Services; Care, Personal Services and Wellbeing; and Education and Training have greater difficulty than average in securing staff for open roles (Figure B5.1).

As presented in Figure 5.4, businesses consider improving talent progression and promotion processes to be the most promising way to increase the availability of talent in their organization. In fact, 48% of respondents identified this business practice, with particularly high response rates in the Automotive and Aerospace and Production of Consumer Goods sectors.

Thirty-five percent of respondents identified offering higher wages as an effective route to increasing talent availability, particularly in the Government and the Public Sector. Yet, this response was selected by less than half the global rate in the Chemical and Advanced Materials sector.

While 81% of companies consider investing in learning and on-the-job training to be a key strategy for delivering their business goals (see Figure 5.2), only 34% consider providing reskilling and upskilling to be a way to increase talent availability specifically.

Ranked the fourth highest business practice, executives see the link between articulating business purpose and impact with higher talent availability. This is particularly prevalent in Indonesia (38%) and Japan (38%), as well as the Finance Services and Capital Markets industry globally (35%).

In fact, possessing an effective employee training programme is seen as the top talent-attracting policy available to businesses in the Business Support and Premises Maintenance Services; Employment Services; Insurance and Pensions Management; and Research, Design and Business Management Services industries, though only 17% of the Mining and Metals sector see this as an effective way to increase talent availability. Across the board, effective training opportunities are seen as more attractive to prospective talent than well-communicated impact; remote and hybrid work; DEI policies; supporting employee health and well-being; improving working hours; tapping into diverse talent pools; skills-based hiring; childcare support; or support for worker representation. Although, globally, only one-third of companies identify a robust training dispensation as attractive to prospective employees, this figure rises to 40% among SMEs.

The practices that are rarely selected by respondents warrant further consideration: respondents may be sceptical of such measures’ feasibility, or they may not recognize the potential links between the following measures and talent availability. Increasing worker representation is only selected by 1.4% of the companies surveyed. Childcare for working parents is ranked the second-lowest, except in countries such as Serbia and Finland, which see a greater need to supplement childcare.

Despite the emphasis on skills in organizations’ workforce strategy and practices, only 7% of respondents agree that removing degree requirements and conducting skill-based hiring is linked to increasing talent availability. The following section explores in detail how companies assess skills when hiring.

Figure 5.5 shows that the evaluation of work experience remains by far the top skills-assessment mechanism used when business hire workers. This factor is used by 71% of businesses. Only 5% of surveyed companies do not assess the skills of prospective employees – and more companies now report using skill assessments (47%) than the completion of a university degree (45%) to select candidates. Twenty-seven percent of companies report employing psychometric testing.

Although, currently, only 20% of companies consider the completion of short courses and online certificates as one of their top-three skills assessment criteria, such “microcredentials” (such as short courses and online certificates) have the potential to accelerate skills-based talent management and open new pipelines of talent. The flexibility they offer learners opens possibilities, for example, for learners with lower incomes, learners who are seeking to return to the labour market while undertaking family responsibilities, and older learners who do not wish to enter full-time education. Furthermore, results presented in Chapter 4 suggest that encouraging the completion of such credentials by increasing their consideration when hiring has the potential to open up new talent pipelines, as the time required to complete these courses does not depend on a learner’s level of formal education (see Figure Box 4.1). The Republic of Korea and Switzerland consider the completion of short courses and online certificates at a rate of less than 5%, compared to more than twice the global average of 19% in Pakistan (41%) and Finland (40%). The fraction of employers who consider microcredentials may indeed be expected to increase, given that 82% of companies plan to adopt education and workforce development technologies in the next five years (see Chapter 2).

Nineteen percent of companies consider completion of apprenticeships as a top-three criteria, ahead of outsourcing to staffing firms, at 9%. The prevalence of apprenticeships as a mainstream route to employment varies geographically, ranging from consideration by less than 5% of companies in the Republic of Korea and the Netherlands to more than half of surveyed companies in Austria. Egypt and Colombia also consider apprenticeships at more than twice the global average rate (19%).

Survey responses suggest that university degrees as a hiring criteria remain most recognized among companies operating in Bahrain, Saudi Arabia, United Arab Emirates, Egypt, Austria and the Republic of Korea, wherein more than 60% of surveyed companies use this as a top criteria for skills assessment. By contrast, fewer than 30% of companies in Romania, Colombia, Latvia and Sweden use degrees as a top employment consideration.

Additionally, and as the following section demonstrates, comparatively few companies consider relaxing degree requirements as a means to promote DEI in their organization. Globally, only 24% of companies consider flexibility on education requirements as a means to promote diversity, less than the 33% of companies which do not have a DEI programme at all.

Under organization transformation and labour-market transitions, companies are to play a more prominent role in supporting fragile and disrupted talent groups and advancing social justice and DEI. Even though less than one-fifth of organizations intend to run DEI programmes to boost talent availability, more than two-thirds of the organizations surveyed have a DEI programme. This number is significantly higher in larger organizations: 92% of companies with more than 50,000 employees report the presence of such an initiative in their organization.

The most popular component of DEI programmes is running comprehensive DEI training for managers (42%) and for staff (37%) (Figure 5.6). A significant outlier is the real estate industry, where only around 20% of executives agree with such an approach. A considerable number of global respondents, at 33%, prioritize inclusion and accessibility across physical and virtual spaces. Most notably, more than half of respondents in the Insurance and Pension Management industry, as well as across industries in Australia and Hong Kong SAR, China, expect these to be significant components of their DEI programmes. There are, however, divergent opinions on the least adopted DEI measure: recruiting a DEI officer. Globally, only 12% of respondents regard this as a priority, while half of the respondents in Egypt are in favour of such a measure, and more than 30% of Advanced Manufacturing businesses prefer this approach.

Globally, women are the most common priority group for surveyed organizations’ DEI programmes across all regions and industries, with four of five respondents identifying them as a priority for DEI programmes (Figure 5.7). Youth from Gen Z (under 25 years old) are the second-most common priority group in every region, with an average of two of three respondents identifying young workers as a priority – these DEI strategies are a constructive way to address the effect on young people’s labour-market participation of recent disruptions (see Chapter 1). Those from a low-income background are the lowest priorities for all organizations. Less than one-third of the companies surveyed dedicate DEI programmes to this particular group.

Responses return differences when it comes to DEI-programme priorities across regions. Three of the five economies where women are reported to be the highest priority group for DEI programmes are in Europe, including the Netherlands where all respondents identify them as a priority. Middle Eastern and North African countries focus predominantly more on young workers. More than 80% of organizations in Saudia Arabia, Egypt, Bahrain and the United Arab Emirates prioritize the young labour force. East Asia and Pacific countries are strongly represented in LGBTQI+ inclusion; this focus is strongly present in organizations in the Republic of Korea, Malaysia and Taiwan, China.

Businesses see funding for skills training as the most effective governmental intervention for connecting talent to employment (Figure 5.8). Funding for reskilling and upskilling ranks first among public policies with the potential to improve talent availability for all company sizes, regions and industries except Health and Healthcare and Accommodation, Food and Leisure (which seek greater flexibility on hiring and firing practices) and Agriculture and Natural Resources (which seeks greater flexibility on setting wages). Notable exceptions include China, Indonesia, Germany and the Philippines, which favour changes to immigration laws on foreign talent as more likely to promote talent availability, and Argentina, Brazil and Colombia, which seek flexibility on hiring and firing practices. Government funding for reskilling and upskilling is considered a relatively low priority only in Colombia and Argentina, where only about 10% of companies indicate its potential to increase talent availability.

The second-most welcomed public policy is increased flexibility on hiring and firing practices, with one-third of organizations surveyed recognizing its impact. Such flexibility is most desired in the Electronics (50%) and Oil and Gas (48%) sectors. Childcare availability and better access to transport are seen as less effective, with several exceptions, such as in Israel, where 40% of the respondents identified an increase in the quality or access to transport as key to improve talent availability. Meanwhile less than one in five respondents expect changes to labour laws to accommodate remote work as a key policy for talent availability. Here, the outliers are organizations in Telecommunications and Non-Profit sectors, and those in Switzerland that seek a better policy and regulatory environment for remote work domestically and across borders.

While companies tend to focus primarily on government help with adult skills training, they do not neglect the importance of better connecting childhood education to evolving workplace skill sets. Improvements to school systems was ranked the most promising public policy to improve talent availability in the Telecommunications industry, and the second-most promising in the Chemical and Advanced Materials; Education and Training; Financial Services and Capital Markets; Government and Public Sector, Insurance and Pensions Management; Non-Governmental and Membership Organisations; and Research, design and Business Management Services industries. Notably, improvements to school systems were valued as a means to attract skilled talent by a greater fraction of SMEs than large corporations.

A majority of companies in every country and industry express a net positive outlook for talent development of their existing workforce in the next five years.

As shown in Figure 5.9, workforce development is most commonly considered the responsibility of workers and managers, with 27% of training provision to be furnished by on-the-job training and coaching. This share may be compared to the 81% of companies noted at the beginning of this chapter that will employ learning and on-the-job training as a key strategy to deliver their business goals – with a particularly strong prevalence in the Electronics and Consumer-Goods Production industries, where companies almost unanimously express that this is a key part of their business strategy.

At 24%, companies assert that almost as a large a fraction of training will be provided by internal training departments. Fifteen percent will be provided by employer-sponsored apprenticeships. External training solutions complete the list, with licensed training from professional associations (13%), private-sector online-learning platforms (12%) and universities and other educational institutions (10%) comparatively disfavoured compared to company-led initiatives for closing skills gaps. This trend is most apparent in the Employment Services sector, which will look to on-the-job training and coaching for 38% of skills training, and external solutions at a rate 15% below the global average.

As shown in Figure 5.10, companies overwhelmingly expect to fund their own reskilling and upskilling programmes, with a few notable geographic exceptions, such as Georgia, where this funding mechanism ranks third, behind co-funding across the industry and public-private hybrid funding. At 16% engagement among surveyed companies globally, co-funding across the industry is forecast to be the least utilized funding model for skills training, with particularly low uptake in the Netherlands (2%), Switzerland (4%) and Romania (5%). On average, Europe exhibits the highest uptake for intra-industry co-funding, with this mechanism least common in Sub-Saharan Africa, East Asia and the Pacific, and Latin America and the Caribbean.

Other common funding mechanisms including free-of-cost training, which is a key funding mechanism for more than half of Employment Services and Mining and Metals firms; government funding, which is expected to be utilized by more than half of Electronics firms; and public-private hybrid funding, which is emphasized by almost half of surveyed Non-Governmental and Membership organizations as well as companies operating in Agriculture, Forestry and Fishing.

Learning habits are evolving to make training faster and more flexible. Figure 5.11 shows that companies expect 25% of their training programmes to last less than one month during 2023–2027. Only 17% will last longer than a year. Following training, just under two-thirds of employers expect an ROI within a year. Another one-third expect a ROI within six months of training. Notably, large companies tend to be more optimistic on this measure than SMEs. On balance, companies are slightly less certain and slightly more pessimistic about when to expect a ROI compared to results from the 2020 Future of Jobs Survey.

Reported skills gaps remain wide despite accelerating investments in skills training. Surveyed organizations report that only 41% of current workers have completed training that has effectively bridged skills gaps – a 1% decrease on the share reported by respondents to the 2020 edition of the Future of Jobs Survey.

Figure 5.12 summarizes the upskilling and reskilling strategies of companies responding to the Future of Jobs Survey for 2023 to 2027. For a representative sample of 100 employees, businesses estimate that 39 will not require training before 2027; 12 will need training that will not become accessible to them until 2027; 15 will require training which will not be accessible for the forseeable future, likely leaving their skills gaps unclosed beyond 2027; and 18 will be upskilled in their post by 2027. Companies expect that 16 of the representative 100 employees will be reskilled and successfully redeployed to growing roles within their organization by 2027.

Assessments of training requirements are uniform across industries and countries, with a few geographic exceptions, such as Egypt, where companies judge just 38% of employees to require training. More broadly across industries, the fraction of employees judged to have access to adequate training varies slightly, from two-thirds of workers in Employment Services to two in five in Accommodation, Food and Leisure. The largest variation is in companies’ expected ability to redeploy upskilled and reskilled workers to new jobs within their organization. Just one-quarter of respondents in Egypt believe this while more than half do in Georgia and Mexico.

These workforce development strategies will be supported by technology adoption. As outlined in Chapter 2, more than four in five companies plan to adopt education and workforce development technologies in the next five years – the second highest ranked technology after digital platforms and apps among the 28 emerging technology solutions put to survey respondents in 2023. While uptake is expected to be near ubiquitous in Employment Services and the Public Sector, it dips nearer to three in five companies for the Real Estate, Agriculture, and Oil and Gas industries. Almost half of companies believe that deploying education and workforce development technologies will have a knock-on effect to create jobs – optimism which rises to 70% in geographies such as Egypt and Pakistan. The greatest variance in opinion is found between industries. For example, 85% of companies in Education and Training believe in the technology’s job creation potential, but just one in three Telecommunications companies and two in five Oil and Gas companies foresee it will lead to layoffs.

This section presents companies’ readiness to develop their workforce to meet business goals over the 2023–2027 period. In general, most workers will need to be trained during this period. Roughly half of those can currently be trained, but Human Resources functions will have to accelerate their current plans if the remaining workers’ skills gaps are to be closed. Companies seldom expect external funding for training and will avail themselves of external training solutions far less frequently than looking to internal solutions, especially via on-the-job training and coaching. Most training programmes will be short, and a return on investment is expected within a year.

Beyond these considerations, companies’ readiness for the 2023–2027 period can be evaluated through a simple cross-sectoral survey of CHROs, CLOs and other C-suite executives on their workforce’s expected level of motivation and productivity in the 2023-2027 period. Figure 5.13 ranks industries’ expected performance on motivation and productivity, based on the net difference between the share of companies in each sector that foresee a positive outlook minus those that foresee a negative outlook.

Survey results suggest that the strongest performance may be expected in Advanced Manufacturing; Insurance and Pensions Management; and Agriculture, Forestry and Fishing. Surveyed companies operating in Telecommunications as well as Media, Entertainment and Sports reported the least positivity across these two measures. Executives in Mining and Metals and Electronics expect workers to be highly productive but not strongly motivated. Respondents expect workers in Government and the Public Sector to be well motivated but show less optimism regarding productivity.