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Shortage of skilled workers in Asia

Talent pool runs dry

ASIA NEEDS TO COUNTER SEVERE SKILLS SHORTAGES WITH BETTER EDUCATION PROGRAMS AND A STRONG FOCUS ON NEW TECHNOLOGIES
PEDESTRIANS CROSS A ROAD IN THE CENTRAL DISTRICT OF HONG KONG ON MARCH 30, 2016. AFP PHOTO / ANTHONY WALLACE

By KARL WILSON in Sydney

It is hard to imagine that in Asia, home to more than half the world’s population, there is a shortage of skilled workers.

The region’s rapid economic growth has drained the talent pool, while schools and universities struggle to produce enough people with the skills needed by businesses in the 21st century. In many sectors such as finance, banking and IT, the shortages are becoming serious.

The skills shortage is real and it isn’t going away by itself.

A survey of some 3,000 Asian employers by global recruitment agency Hays found a staggering 96 percent of those interviewed feared the lack of skilled workers may impact on their business operations as early as this year. A further 34 percent said they do not have the talent needed to meet current business objectives. The findings were outlined in the 2016 Hays Asia Salary Guide, considered one of the most comprehensive surveys of its type in the world.

The survey revealed that many companies were finding it difficult to locate suitable people to fill middle management roles in accountancy, finance, engineering, IT, marketing and human resources.

The report confirmed data which has been in the public domain for some time, said Bruno Lanvin, executive director of global indices at INSEAD and co-editor of the Global Talent Competitiveness Index — an annual benchmarking study that measures the ability of countries to attract talent. “The skills shortage is real and it isn’t going away by itself,” Lanvin told China Daily Asia Weekly. “This isn’t a problem confined to Asia.” He added that new technologies are creating new challenges for workers at different skill levels.

“Low-skill jobs are being destroyed by automation and medium-skill jobs are being displaced by algorithms.” Lanvin said the difficulty facing governments is being able to produce the people needed to meet these challenges. “That will require greater focus on education from the primary through to the tertiary level. It means making sure kids — all kids — have access to education.

“Secondary education needs to look at vocational skills as well as the common-ground stuff such as reading, writing and math. And at the tertiary level we must encourage students to go abroad.” Lanvin pointed out that students going overseas can gain knowledge to bring back home — effectively brain circulation rather than brain drain.

The long-term issue is the lack of training and education to develop the skills of homegrown talent.

Christine Wright, managing director for Hays in Asia, said: “Asia’s labor markets are under strain in a realm of continuous change due to political, economic, technological and regulatory developments which are ramping up skills shortages.”

She said many markets have small talent pools which are “exacerbated by localization efforts restricting hiring of overseas talent”. The long-term issue, Wright said, is the “lack of training and education to develop the skills of homegrown talent”.

“Demand for candidates within high-skill industries such as IT, engineering or life sciences are being driven by niche skill shortages where employers are competing for top talent in a limited candidate pool.”

About 65 percent of employers would consider hiring or sponsoring a qualified expatriate or overseas candidate to fill the skills gap.

The entry of more and more multinational organizations into Asia is another factor driving skills shortages. Hong Kong and Singapore are financial and commercial hubs in Asia that require a readily available talent pool, and Malaysia is becoming more attractive as a low-cost regional hub location for multinationals — another factor driving demand for skilled talent.

“In China, despite a slowing economy, a severe shortage of skilled candidates in certain industries is resulting in fierce competition and wage pressures, with employers doing their utmost to retain and hire qualified talent,” Wright said. “The booming e-commerce and digital media sectors are having a massive impact on China’s job market as strong demand for skilled candidates amid the latest IT technologies redraws the country’s commercial landscape.”

She said China’s efforts to transform its growth model by making the most of Internet technologies have given rise to the rapid expansion of established Web giants and ushered in vigorous entrepreneurship.

“Such conditions have led to an extremely competitive talent landscape in Asia, and employers are facing challenges with balancing the wider regional economic setting, skills shortages and wage pressures,” Wright said.

According to the Hays survey, about 65 percent of employers would consider hiring or sponsoring a qualified expatriate or overseas candidate to fill the skills gap. “Skilled migration is a vital short-term solution to filling specific skills shortages where suitably qualified local workers are not available,” Wright said.

She added that employers are looking at other ways to counter the skills shortage, such as “up-skilling existing staff”, aiming to make jobs more attractive and “developing their pipeline of female talent”.

People being able to work smarter, rather than longer, will make the most of the skills a business has at its disposal.

Wright explained that China’s lifting of the labor-policy obligation of obtaining a professional certification has contributed to making the employment market more flexible and enabled better transfer of skills. “But in the long term, however, more needs to be done by governments and businesses to ensure better training for employees and closer collaboration with schools, universities and technical colleges to deliver the skills pipeline of the future.”

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Governments and business leaders should also consider how investment in new and advanced technologies can help employees work more efficiently and thereby boost productivity, Wright added. “People being able to work smarter, rather than longer, will make the most of the skills a business has at its disposal. People must feel empowered to invest in and embrace new technologies to make this happen.”

Wright said enabling more and easier skilled migration will allow businesses access to workers with key skills. “Countries need to look beyond their borders to allow businesses to access the talent they need.

“Governments must make a clear distinction between general immigration and the movement of skilled workers across borders.”

She added that this should include fast-track visas for roles that cannot be filled by local workers and showing clear public support for the mobility of skilled labor.

Japnit Singh, a senior director with Spire Research and Consulting for Singapore and India, said the Hays report highlights a “real challenge” to all Asian governments. “It stems from an Asian education system that focuses on knowledge as well as academic achievements rather than producing an ‘industry-ready’ workforce,” Singh told China Daily Asia Weekly.

“The largest gaps are seen in the roles requiring self-leadership, multitasking and soft skills. There is also a gap in very specialized technical skills due to a lack of hands-on training.” Singh explained that this gap extends across both junior- and senior-level staff as employers have tended to engineer their processes around the skills available rather than focus on skills development. He added that the shortage is particularly pronounced in finance, sales and technical fields like engineering.

But the problem is starting to be addressed.

“Multinationals are increasingly developing regional/global value-chains to effectively exploit skills that may reside in different parts of the world.

“We have seen roles that require higher innovation, softer skills and greater technical expertise being led from Japan, Europe and the US, while Asia plays a supporting role.” Singh emphasized that this approach is only possible in large multinational organizations.

He said that some small and medium-sized enterprises are addressing the issue by developing in-house training programs and working with independent institutes that help employers with basic skills training before the “employees are taken into the organization”. But in the mid to long term, governments should support skills development that offer higher value and help sustain economic growth, Singh added.

This can also be achieved by exerting more pressure on foreign investors to not only create more jobs, but also develop a more skilled workforce, he added.

Asked whether the skills shortage will impact on regional growth, Singh said: “In the past this challenge was not so pressing since most Asian industries followed the more developed regions, or were outsourcing destinations for simpler, less complex parts of the business.

“The current dynamic is dramatically different and Asia has become the growth engine for the global economy.

“It is imperative that Asia is ready with a capable workforce to bear this responsibility.”

Tech skills crunch in Lion City SCARCITY OF TALENT IN IT AND LIFE SCIENCE SECTORS STANDS IN THE WAY OF 'SMART NATION' OBJECTIVE

A WOMAN WALKS OUT FOR LUNCH PAST A SCULPTURE AT THE RAFFLES PLACE FINANCIAL DISTRICT IN SINGAPORE ON MARCH 24, 2016. AFP PHOTO / ROSLAN RAHMAN

By KARL WILSON in Sydney

Singapore has a reputation for having the most highly educated population in Southeast Asia, but even the tiny island state is having trouble getting enough skilled professionals as it positions itself as a ‘smart nation’.

Small and medium-sized enterprises are struggling to find IT specialists, particularly in software coding, cybersecurity and data analytics fields, while schools and universities are finding it difficult to meet the demand.

Unanticipated high demand for skills in any area tends to result in a skills shortage.

According to the state-run Infocomm Development Authority of Singapore, some 15,000 vacancies currently exist in the technology and IT sectors. On April 4, the Singapore government announced that it would set aside S$120 million ($88.8 million) over the next three years to support the training of current and future IT professionals.

Walter Theseira, a lecturer with SIM University’s School of Business in Singapore, said: “The basic reason why Singapore tends to have a skills shortage is that we are a small country with a limited talent pool, and there are significant training lags to acquire skills. “As a result, unanticipated high demand for skills in any area tends to result in a skills shortage.”

Local universities in Singapore, explained Theseira, produce about 15,000 graduates each year. Yet there are serious constraints on how quickly enrolment numbers in different disciplines could be adjusted to changes in demand for skills. He said another aspect contributing to the deficit is that skilled Singaporeans often take up careers outside of their academic discipline.

The need for professionals in the technology sector is expected to see an additional demand of 30,000 jobs by 2020.

“In previous years, the earnings available from jobs in skilled technical professions such as engineering and IT were not as attractive as jobs in finance and related industries,” he said. This, Theseira continued, further eroded the talent pool for skilled technical positions.

“So part of the reason for a skills shortage would be the difficulty adapting to changes in demand in the short run, and another factor is that relative wages need to adjust to reflect the increased demand,” he said, before graduates with sufficient skills resort to better paid jobs in other sectors.

In a speech to parliament on April 11, Yaacob Ibrahim, Singapore’s Minister for Communications and Information, said the “current rate of demand for infocomm professionals has outpaced the rate of supply”. He said the need for professionals in the technology sector is expected to see an additional demand of 30,000 jobs by 2020.

“As demand far outstrips current supply, and because the landscape is changing so rapidly, it is difficult to meet company needs for skilled manpower without non-Singaporeans entirely,” he said.

Historically, Asian countries were seen as talent exporters but the trend is starting to change as global tech companies open offices in the region and pay higher salaries.

SIM University’s Theseira said that, historically, the skills shortage in Singapore had been addressed by using foreign manpower. However, he pointed out that recent government policy has been set to significantly restrict the availability of foreign talent. This has been done by raising entry requirements, increasing minimum wages needed to qualify for employment permits, and encouraging the hiring of Singaporeans first.

In terms of its competitive advantage for talent, Singapore is the only Asian country to appear in the top 10 countries in the Global Talent Competitiveness Index 2015-2016 which was released in January. Published by INSEAD, a global business school, in partnership with the human resource and staffing company Adecco and the Human Capital Leadership Institute of Singapore (HCLI), the report said the city-state continues to outperform all its regional neighbors.

Historically, Asian countries were seen as talent exporters but the trend is starting to change as global tech companies open offices in the region and pay higher salaries.

Wong Su-Yen, the CEO of HCLI, said the establishment of the Association of Southeast Asian Nations’ Economic Community was a major milestone in economic integration. It offered opportunities to more than 622 million people in the region and would impact on talent competition in Singapore.

“Singapore’s attractiveness as a talent hub has in recent years faced strong competition from its neighboring countries, and that is likely to intensify when talent is completely mobile in this region,” she said in a statement alongside the report.

“The country (Singapore), which has seen a 33 percent increase in the number of its citizens working and living abroad, signals that policymakers can increase efforts to attract them back.” Wong added that this talent would bring an important mix of overseas work experience and strong local knowledge.

Theseira said that companies in Singapore are actively engaged by the government to identify areas for economic growth and potential manpower needs. The government then also engages universities and the training industry to attempt to fulfill these needs.

“An increase in university or training places in a particular field, however, doesn’t guarantee that the graduates will actually take up positions in that area,” Theseira said. “The time lag between starting a training program and finishing it means that skills could be no longer in demand by the time graduates are produced.

“Nonetheless, in Singapore the model is that the companies and the government work together to attempt to fulfill future manpower needs.”

Local talent remains a preference among employers due to their knowledge about local regulations and processes as well as employee stability.

One area where the demand for talent is also growing is in the life sciences sector, according to the latest Hays Quarterly Report which was released in April. Manufacturing capacity is growing in Asia at a quicker pace than other parts of the world, resulting in an increased number of pharmaceutical and healthcare plants setting up in Singapore, the report said.

The city-state’s strategic location makes it an ideal regional hub, and setups are in dire need of the technological know-how that is crucial to their success.

Lynne Roeder, managing director for Hays in Singapore, said: “This has led to companies sending local talent abroad to facilitate technology transfer between their headquarters and Asia.” Local talent remains a preference among employers due to their knowledge about local regulations and processes as well as employee stability. “Those with technical expertise and excellent soft skills are able to command a premium as companies seek commercial-minded talent with strong technical backgrounds,” she said.

It will continue to be a candidate-short market given the keen interest from investors in the life sciences sector.

Support industries in the life sciences, including medical instruments and laboratories, are also growing in tandem with the pharmaceutical industry. “We expect to see a higher need for technical specialists who are customer-focused to drive deeper relationships between the support and life sciences industries,” Roeder said. “As Singapore invests heavily in healthcare, we see more hospitals open or undergo upgrading and planning. This in turn fuels the competition for talent in the medical and healthcare instrument businesses.”

In terms of candidate trends, Hays reports that life sciences professionals are now more open to job changes after the bonus season. “Many candidates are willing to work at upcoming new plants for the career progression opportunities they provide,” Roeder said.

Some candidates will accept lower salaries to join new projects, she added, as newly established firms and plants offer them the full spectrum of exposure in research development and operations management.

“It will continue to be a candidate-short market given the keen interest from investors in the life sciences sector.”

Sky-high demand for pilots ASIA FACES A SEVERE SHORTAGE OF AVIATORS AND TECHNICIANS AS AIRLINES STRUGGLE T KEEP UP WITH FAST-GROWING MARKET

A VISITOR WATCHES AN AIRBUS A250 XWB COMMERCIAL AIRCRAFT DURING AN AERIAL DISPLAY AT THE SINGAPORE AIRSHOW IN SINGAPORE ON FEBRUARY 17, 2016. AFP PHOTO / ROSLAN RAHMAN

By KARL WILSON in Sydney

Twenty years of rapid economic growth in Asia has bolstered income levels, creating a new wave of demand for air travel from middle-income households while market liberalization has enabled regional low-cost carriers to thrive. The world’s biggest commercial aircraft manufacturer Boeing estimates that more than 100 million new passengers will enter the Asia aviation market annually for the foreseeable future.

Amid all this growth, one question looms large: Where are the pilots and engineers going to come from?

Between now and 2034, Asia will need 226,000 new pilots and 238,000 technicians.

According to Boeing, between now and 2034, Asia will need 226,000 new pilots and 238,000 technicians or roughly 40 percent of the global need — more than North America, Africa and Europe combined. The figures were featured in Boeing’s 2015 Pilot & Technician Outlook published last September.

Boeing said China alone will need an extra 100,000 pilots and 106,000 technicians while Southeast Asia will require 57,000 additional pilots and 60,000 technicians. Other parts of the region will also continue to see long-term demand in the tens of thousands for pilots and technicians. As with personnel demand, the Asia-Pacific region also leads the demand for new commercial aircraft deliveries over the next 20 years.

According to Boeing’s Current Market Outlook 2015-2034, 14,330 new aircraft worth $2.2 trillion will be needed in the Asia-Pacific region by 2034.

A spokesperson for Boeing told China Daily Asia Weekly that airlines are responsible for their own recruitment and training of pilots.

“We are, however, working with partners across the industry to address the forecasted demand with training solutions that enable the best of what Boeing and our subsidiary, Jeppesen, bring to the table,” the spokesperson said without going into specific details.

“Most recently we have launched a pilot development program to take a prospective pilot all the way through a training regimen to where she or he is operationally qualified to begin indoctrination at an airline.

“We are currently in conversations about the program with customers around the world.”

According to Boeing’s 2015 Current Market Outlook, Chinese airlines will require about 6,330 new aircraft worth around $950 billion over the next two decades, which will account for about 17 percent of the global total. Airbus China said since 2010 the number of new aircraft deliveries have remained above 100 every year, with a total of 158 aircraft delivered last year, representing about one quarter of the total number in the Asia-Pacific region.

Over the next 20 years, Airbus expects China to require about 5,400 new aircraft, comprising 40 percent of deliveries for the whole Asia-Pacific region, the manufacturer said in February.

Speaking at the CAPA Americas Aviation Summit last year, Zhihang Chi, Air China’s vice-president and general manager for North America, described the pilot shortage in Asia as “serious” and “severe”. At the same conference, held by the Centre for Asia Pacific Aviation, Hainan Airlines vice-president Hou Wei agreed that securing pilots is a problem for Chinese airlines.

A recent report by South Korea’s Yonhap News Agency said the country’s carriers were suffering a serious loss of pilots. It said dozens of senior pilots had been “poached” by Chinese carriers which doubled their salaries. Yonhap said: “While an average pilot-in-command (captain) makes around 100 million won ($87,000) annually at Korean Air, Chinese companies reportedly offer up to 300 million won or even 400 million won depending on the type of aircraft”.

At the opening of the world’s biggest pilot-training facility in Singapore on April 18, Airbus chief executive Fabrice Bregier told CNBC that Asia faced a “severe shortage” of well-trained pilots as the region’s demand for air travel skyrockets. He told CNBC the region will need 200,000 commercial pilots over the next 20 years. There are currently 65,000 commercial pilots registered in Asia.

A spokesman for Airbus said that the Airbus Asia Training Centre in Singapore (a joint-venture between the European aircraft manufacturer and Singapore Airlines) when fully operational will have eight full-flight simulators and six cockpit training devices. Airbus has similar facilities in Toulouse, Miami and Beijing.

The average duration of a course at the training center will be two weeks. When the center becomes fully operational, Airbus expects to be able to process 10,000 pilots a year. Some 17 airlines, including the Australian national carrier Qantas, have already signed up to use the facility.

Around the region, flying schools have sprung up to train the next generation of commercial airline pilots but it is still not enough. “It’s getting very difficult to attract the right type of people,” said Geoffrey Thomas, editor of Airline Ratings.com, an airline safety and products website. “When looking at the commercial aviation sector today, you have to put it into perspective,” Thomas said. “If you go back 50 years or so, there was a readily available pool of well-trained pilots who were leaving the military after World War II.”

As that pilot pool dwindled, the airlines turned to the military, he noted, adding: “Here you had a good source of well-trained young men who were eager to move to (commercial airlines such as) Singapore Airlines and Cathay Pacific … where the pay was much better than the military.”

These days the military aviation sector has become a lot smarter. The length of service at these national air forces is much longer than it used to be and the pay has improved, Thomas said.

“So you are not getting as many pilots moving from that pool anymore (to commercial airlines),” he said. “Apart from that, more and more people are traveling now and the (commercial) airline sector has grown enormously and continues to grow in regions like Asia.”

Thomas said being a commercial airline pilot use to be a “very attractive” job once. However, with the emergence of the low-cost carriers, crews are worked hard and “it is stressful, exhausting work”.

“Sure, good pilots will still gravitate to the major carriers such as Cathay Pacific and Qantas while the not-so-good (pilots will move) to the low-cost carriers,” Thomas said.

In the early days of commercial aviation, five people worked in the cockpit while long-haul flights had relief crews as well. But, as the aircraft became safer and more sophisticated, the airlines put two people in the cockpit while also relying on computers to fly the aircraft.

“Yes, flying is a lot safer than it once was but, when something goes wrong, it ends up being a big story,” Thomas added.

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