When it comes to getting the most from our workforce, Australia has a thing or two to learn from the best economies in the world.
In its recently released Human Capital Report 2016, the World Economic Forum (WEF) currently ranks Australia 18th out of 130 countries in terms of how effectively we manage our workforce. We aren’t alone, though. All together, 35 per cent of the world’s workers – across generations, industries and regions – aren’t being developed or used to their full potential. This underutilisation is a symptom of one of the the biggest shifts the global economy has seen in recent years: the fourth industrial revolution.
“Today’s transition to the fourth industrial revolution, combined with a crises of governance, creates an urgent need for the world’s educators and employers to fundamentally rethink human capital through dialogue and partnerships,” says Klaus Schwab, founder and executive chairman of the World Economic Forum. “The adaptation of educational institutions, labour market policy and workplaces are crucial to growth, equality and social stability,”
Some places are getting close to a perfect score, but there is still room for improvement on all fronts. Only 19 countries tapped 80 per cent of their human capital potential or more, and an additional 40 scored between 70 per cent and 80 per cent.
For those who keep an eye on global trends, it should come as no surprise that Scandinavian countries Finland and Norway are ranked as the best economies in the world – they took first and second place. Their neighbour Sweden earned fifth. Rounding out the top five are Switzerland in third and Japan in fourth.
What’s more, all of the top 10 are repeat winners. Our Kiwi cousins sit in sixth place, followed by Denmark, The Netherlands, Canada and Belgium.
So what is the secret to their year-on-year success? Each of these countries have a few key things in common that keep their workforce active and their business community healthy. Here are three lessons from these international wunderkinds.
1. Education should always be a priority …
And a life-long endeavour, too. All of the top 10 best economies in the world have high levels of enrolment in primary and secondary education. Additionally, this carries over into tertiary education and creates a consistent pipeline of skilled labour to fill roles in knowledge- and service-based economies similar to ours. Countries like Sweden, New Zealand, Denmark and Switzerland invest heavily in staff training to a point where learning capacity for older and younger generations has reached near parity. This contributes to skills diversity and overall economic health. Although Australia ranks fifth in the 15 to 24 age group due to high tertiary enrolment rates and a declining youth unemployment rate, our lack of focus on skills diversity means we are missing an opportunity to fill labour gaps from within.
(Fun fact: In terms of skills diversity, human resources is well-placed – the profession scores near perfect for diversity and transferability of job skills)
2. Every generation has something to contribute
Many western societies are perceived as ‘youth obsessed’, but that’s especially true when it comes to businesses. Much of the focus has been on millennials, but as we move closer to five generations in the same workplace, longer life spans mean more people will start work earlier in life and retire later. Nearly 60 per cent of the workforce is above 25, according to WEF. The best economies in the world fully use the skills and knowledge of various age groups in the workplace to stem shortages and increase efficiency. Finland is the best at making the most of its 25-54 year olds, and consequently it also ranks first when it comes to ease of finding skilled employees. Japan’s ageing population has helped to boost due to the large number of 55-and-overs in the workforce; and Canada succeeds in taking advantage of its high-skilled and productive ‘silver’ workforce.
3. Close the gender gap
Of the 917 million people of working age classified as ‘inactive’, 81 per cent of those are women – a huge untapped workforce. One factor consistent among the countries that fail to adequately utilise human capital is the existence of the gender gap. It starts in secondary school and continues through working age when women tend to assume primary care responsibilities for children and other family members. However, the smaller gender gaps in the best economies in the world boost productivity, efficiency, and has knock-on effects such as innovation and employee retention. This is due in part to the availability of flexible work options and great parental leave policies in areas such as Scandinavia.
One dark horse, though, is how the gig economy is affecting gender equality. The rise of freelancers is enabled by the spread and accessibility of digital technology – 2 per cent of Australian workers identify as freelancers, which rises to 13 per cent globally. The age and gender profiles of gig economy workers are highly diverse compared to their traditional economy counterparts. Additionally, wages for gig-workers tend to be slightly higher, and role flexibility is embedded in the job. It will be interesting to see how the ‘uberfication’ of many industries continues to affect workforce participation, and if economies will respond with increased effort to reach parity.