Sunday 23 June 2024

Talent shortage could cost Saudi $33bn by 2030: study

RIYADH, July 4, 2018

Salaries for in-demand workers in Saudi Arabia and the UAE and could add as much as $33.6 billion and $5.9 billion to the total national payroll by 2030, marking wage surges of 9 per cent and over 17 per cent respectively, a report said.

Salaries for highly skilled workers could boom as talent shortages take hold across EMEA, according to The Salary Surge, a new study by Korn Ferry as part of an ongoing Future of Work research project.

Left unchecked, the salary surge could add more than $2.5 trillion to annual payrolls by 2030 in 20 leading economic markets analysed, $593 billion in the EMEA region alone. This potential salary surge is the direct the result of a shortage of an estimated 85 million highly skilled workers required for companies to succeed in the new digital economy.

“The new era of work is one of scarcity in abundance: there are plenty of people, but not enough with the skills their organizations will need to survive,” said Jonathan Holmes, managing director, Korn Ferry Mena.

“With The Salary Surge, we are putting a price tag on the deficit of highly skilled workers that threatens future profitability and business models of companies as well as national economic development and diversification strategies in the UAE and Saudi Arabia. We all face the reality that salaries for in-demand workers will skyrocket if companies choose to compete for the best and brightest on salary alone.”

Korn Ferry’s Salary Surge study estimates the impact of the global talent shortage on payrolls in 20 major global economies at three milestones: 2020, 2025 and 2030, and across three sectors: financial and business services; technology, media and telecommunications (TMT); and manufacturing. It measures how much more organizations could be forced to pay workers, above normal inflation increases.

The study reveals the significant impact the salary surge could have on Saudi Arabia and the UAE:

•    In Saudi Arabia, the TMT sector could be hardest hit, with a potential wage premium $2.4 billion by 2030. That’s followed by the Manufacturing sector which faces a potential overall payroll increase of $2.1 billion.

•    The TMT sector also faces the greatest challenges in the UAE, with a potential wage premium of $1.124 billion, followed by Financial and Business Services at $612 million.

•    Saudi Arabia ranks number eight out of 20 economies in individual wage premiums for highly skilled workers, with potential individual salaries rising by $10,700 per worker by 2030. That’s 21 per cent higher salary impact per worker than the EMEA average.

“This is a challenge facing both corporate and government leaders planning for economic success in the new economy. In the public sector, the longer-term solution starts in the education sector and how we are preparing our students with new skills more adaptable to the future of work,” said Harish Bhatia, regional director, Korn Ferry Products Mena.

“In the private sector, business leaders need to reimagine all aspects of talent management, employee engagement and reward schemes to better position them to retain top talent at lower wage premiums to protect profitability and business models.”

 “Buying in talent from the market is unsustainable. Instead, companies across EMEA must focus on engaging and reskilling their current workers,” said Vijay Gandhi, Korn Ferry Products EMEA.

“With existing highly skilled workers, leaders must focus on what really drives retention. We know that employees who have the opportunity for career development, benefit from inspiring leadership and feel their work has purpose are more likely to stay at an organization, and – crucially – will be more engaged and productive.

“Companies need to identify the talent of tomorrow and help them achieve their potential. Reward programs need to shift from short-term high fixed pay to retention pay over long-term to earn better ROI from skilled talent today in workforce.  Extending the long-term retention program not only to executives but to high potential staff in the organisation can make a difference to address the Talent crunch,” he added. – TradeArabia News Service

Tags: Salary | talent | Wages | EMEA |

calendarCalendar of Events