Posted in Human Resources Articles, Total Reads: 3642
, Published on 26 March 2014
The Changing Face of Labor demographics world-wide
The nature of the global workforce has been in a constant state of flux. The repercussions of this phenomenon have varying implication for the labor market of the economies based on its nature.
Germany, a country with a birth rate of 1.36 is estimated to have one-third of its population above 60 by 2030. The retirees are qualified for pension at almost 70% of last drawn wages. However the citizens of East Germany made their contributions in Rubles, a worthless currency at present. Therefore much strain is put on the welfare state. The new generation now looks at a pension plan where they will contribute more for less returns. However, Germany’s Professional services and businesses are heavily regulated making it difficult for foreign nationals to get work.
Image Courtesy: freedigitalphotos.net
Meanwhile, USA a country recovering from recession has seen its total job openings to have increased. However, new offers of employment remained sluggish. A. Garry Shilling of Bloomberg suggested that this is because the companies are waiting for the right-fit for the positions. Meanwhile in Australia entry under the 457 sub-class of Visa has seen controversy recently. The holders of such long term work permits are believed to have long-term implications on the opportunities of employment of Australian Citizen. The dynamics between the mixing of the old and the new workforce in recent times has also given rise to friction.
Foreign Recruitment related implications: The Tale of Two Neighbors
Certain countries like China and South Korea face workforce shortage as the existing employees retire without appropriate people to replace them. Moreover, an experienced workforce also comes with a substantial cost implication towards the companies.
China’s corporate houses are addressing the issue by automating some of their processes. These firms are thinking on these lines because of aging population coupled with annual wage hikes of 20% for nearly a decade. Companies like Lever Style are of the view that operating in Southern China is a break-even proposition at best. In 2013 Crocs reduced its share of colorful shoes to be made in China to 65% down from 80% last year. Lever Style is in the process of shifting its production to Vietnam. Outsourcing is therefore one of the results of this disparity of Labor force demographics.
The issue can be addressed by developing ways and methods to source potential candidates from countries where there is surplus workforce available. It requires changes in the visa related policies. Recruiting people from different countries would a challenge for the managers because it would involve some more formalities related with visa and citizenship of their country.
South Korea, benefiting from global integration by way of phenomenal growth in recent years still faces long-term challenges. The country also has one of the lowest birth rates in the world at 1.24 per woman as of 2011. The expatriate population in the Korea has increased from 540,000 in 2013 from 49,500 in 1990. They are provided with exceptional support from the Government by way of free medical care, counselling and child care.
However, in recent times it is struggling to attract foreign workers. The employment permit drawn nine years ago under which many workers have come are incredibly restrictive in nature. The workers under this permit are actively discouraged from settling there. The maximum stay allowed under this permit are two separate terms of four years and ten months, just two months short for five years which is the minimum time one has to stay in Korea to apply for permanent residency. The circulatory method of engaging foreign labor at the lower levels poses a significant labor issue of skill shortage, which in turn will actively harm the manufacturing sector, which is presently propelling its economy. Only recently in January Kim Choong-Soo, the Governor of the Central Bank called for a more open immigration policy.
Attrition and Migrant Workforce of Asia: The Eye of the storm
A recent study published by the Hay group conducted in association with CEBR brings up a few startling revelations. With accelerating growth and increase in employment opportunities employee turnover has been forecasted to accelerate across the globe.
The study also identifies two distinct classes of employees with respect to their proclivity to seek greener pastures. The stayers (Committed to the organization for at least 2 years or more) and the Leavers (those planning to leave their present employment by the next two years).
The factors identified that differentiated these two category of employees are as follows
• Confidence in the organization and its leadership
• Future Growth Prospects.
• A proportionate value attached by the organization on the efforts of the employee.
• An environment that leads the employee to feel that he is being substantially challenged intellectually.
• The sense of being able to exercise a certain level of autonomy and influence outcomes.
In the light of these revelations organizations must focus on Mission Critical resources and increase their Employee Value Proposition. The focus should not be only limited to the high performing employees. The efforts should focus on the core employees as well.
Gender related implications
The participation of Women in workforce particularly in the India context has been on the rise only recently. It is therefore only now a structured effort has been seen to bridge the gender divide. However this is not a problem that is particular in India. Gender issues have been felt in many major economies including the United States of America as women participation started on a significant level in the work-force. For instance a renowned corporation like IBM till as recently as 1951 required its female employees to resign after marriage and did not consider employing a married woman.
Exhibit 3: The Memo that “Temporarily Modified” IBM’s Policy on hiring and retaining married women
It was only in 1974 that the 9 of USA’s largest steel companies reached an agreement with the Equal Employment Opportunity Commission, the U.S. Department of Justice and the Labor Department that they are going to provide 20% employment to Minority groups and women.
It can be seen that historically the legislation and the judiciary has had close involvement with the process that dealt with such issues across most countries.
Though Prevention of Sexual Harassment at workplace was guided by the guidelines from the Vishaka guidelines from the Vishaka v. State of Rajasthan for the longest time. The implementation of guidelines in various state functionaries and departments was not proper as noted by The Court in the Medha Kotwal Lele v Union of India case. In April 23, 2013 the legislature finally brought into force the The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 which brought even domestic helps. The act requires setting up of LCCs at block levels and ICCs at workplace to take care of grievances among other reforms.
A breakthrough in achieving gender diversity at workplace was achieved with the new Companies Act. The new law passed in 2013 requires a certain class of companies to have at least one Woman member on board.
The act demonstrated the need of this timely inclusion by the vacuum for Indian women leaders it has exposed. Ex: - In 2013 a former partner at McKinsey, Irena Vittal has joined the boards of Axis Bank, Godrej Consumer Products, GlaxoSmithKline Consumer Healthcare, Tata Global Beverages, Wipro and Titan.
Several companies now have extended the pipe-line to train and prepare Women leaders to assume positions at the board.
In Conclusion: The Road Ahead for India
Shifts in the workforce demographic has brought about considerable impacts on strategies of work-force management globally. It has actually exposed the lacuna in personnel management that were already present for everyone to see.
India’s job market throughout the past century has always been dominated by the employers. So much so that in those situations one could get away with a lot of deficiencies in terms of employment conditions. However with the opening up of the economy and the empowerment of the employee it is only natural that such practices would change. Because this workforce is not afraid of changes and taking chances.
India by and large are going to be the talent pool of the Global Corporations. The Young Indian Workforce which values Growth above everything else therefore requires a concerted effort from the Government and the Industry to be able to carry out its responsibilities.
This article has been authored by Shaon Banerjee and Shakti Singh from Xavier Institute of Management Bhuwaneswar
• HBR, November 2013, When Hiring, First test, Then Interview
• Basic Policy on Comprehensive Economic Partnerships, http://www.mofa.go.jp/policy/economy/fta/index.html
• The Guardian March 2013, Germany faces up to problem of ageing workforce
• New York Times 1997, It's Young vs. Old in Germany As the Welfare State Fades
• Laggards and Leaders in Labour Market Reform: Comparing Japan and Australia
• Finanical Times December 27, 2013 Japan wages halt 17-month decline
• BBC November 28, 2013, Training India: Is the skills gap holding the economy back?
• Wall Street Journal May 1,2013 China Manufacturers Survive by Moving to Asian Neighbors
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