Talent versus Capital in the Twenty-First Century

When financial policymakers attempt to promote economic growth, they almost invariably focus on looking for new ways to unleash capital. But, though this approach may have worked in the past, it risks giving short shrift to the role that talent plays in generating and realizing the ideas that make growth possible.

GENEVA – When financial policymakers attempt to promote economic growth, they almost invariably focus on looking for new ways to unleash capital. But, although this approach may have worked in the past, it risks giving short shrift to the role that talent plays in generating and realizing the ideas that make growth possible. Indeed, in a future of rapid technological change and widespread automation, the determining factor – or crippling limit – to innovation, competiveness, and growth is less likely to be the availability of capital than the existence of a skilled workforce.

Geopolitical, demographic, and economic forces are relentlessly reshaping labor markets. Technology, in particular, is changing the nature of work itself, rendering entire sectors and occupations obsolete, while creating completely new industries and job categories. By some estimates, almost half of today’s professions could be automatable by 2025. Speculation about what will replace them ranges from predictions of unexpected opportunities to forecasts of large-scale unemployment as machines displace most human labor.

The first signs of this disruption are already visible. Global unemployment has topped 212 million, according to the International Labor Organization, and another 42 million new jobs will need to be created each year if the world economy is to provide employment to the growing number of new entrants into the labor market. Meanwhile, last year, 36% of employers worldwide reported facing difficulties in finding talent, the highest percentage in seven years.

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