European economies emerge on top when it comes to attracting, developing and retaining top talent, according to a major new study by the World Competitiveness Center at IMD, the leading global business school.

 

It was back in 1997 that Steven Hankin of consultancy firm McKinsey & Company coined the term ‘war for talent’, describing the increasingly competitive landscape for recruiting and retaining talented employees. Two decades on, securing skilled workers remains a strategic business challenge and a critical driver of corporate performance. In IMD’s World Talent Ranking for 2017, Europe continues to dominate in that respect, with 11 out of the 15 most talent-competitive economies based on the continent. Switzerland, Denmark and Belgium remain the most competitive countries, with Austria, Finland, the Netherlands, Norway, Germany, Sweden and Luxembourg all making up the top 10. 


The study draws on an in-depth survey of thousands of executives from 63 different economies, and more than two decades’ worth of data from the IMD World Competitiveness Center. The ranking is based on countries’ performance in three main categories – investment and development, appeal, and readiness – and an assessment spanning a wide range of areas (education, apprenticeships, workplace training, language skills, cost of living, quality of life, remuneration and tax rates, among others).

 

It is the outstanding education systems in European countries that set them apart from the rest of the pack, according to IMD’s study. “On average, each has a high level of investment in education accompanied by a superior-quality educational system, from primary to tertiary levels,” the report notes. “This allows them to develop local talent and at the same time attract foreign, highly-skilled professionals, which many European businesses rely upon to perform.” 

 

Europe’s talent powerhouse

 

The research suggests that Germany, Europe’s economic powerhouse, continues to play a starring role in sustaining the continent’s talent competitiveness.  

 

“Germany is one of the largest exporters of talent, and the country also attracts talent from across the world,” observes Arturo Bris, Director of the IMD World Competitiveness Center. “Despite criticism from some quarters surrounding immigration, Germany’s policies sustain its access to the international talent pool. However, with the European crisis still taking its toll on the German economy, the country has slightly decreased its total expenditure on public education.” 

 

Elsewhere in Europe, Ireland ranks 14th, the UK 21st, Portugal 24th, and France 27th. Spain is 32nd, followed by Italy (36th) in the lower half of the ranking.

 

In Eastern Europe, Estonia is the highest-ranking country at 29th, followed by Lithuania (33rd) and Poland (34th). Those nations’ fairly robust performance comes mostly from their emphasis on the investment and development factor, with Estonia also ranking relatively high on the readiness factor.  

 

USA – could do better

 

Meanwhile, the USA risks losing some of its global competitiveness if it does not increase investment in public education, the report states. 

 

On average, America invests less in developing local talent when compared with its peers on the global stage. However, the USA has outperformed most other countries when it comes to appealing to foreign talent through quality of life, opportunities for career advancement and a high level of remuneration.  

 

Lagging in Latin America

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Latin America faces challenges in developing and retaining a highly-skilled workforce, according to the IMD study. Developing domestic talent is the biggest problem facing Latin American economies today. Performances in the investment and development, and readiness categories highlight a lack of investment in education and issues in retaining a qualified workforce in the region. 

 

Chile remains the highest-ranked Latin American economy at 44th, largely because of its performance in the appeal factor. Argentina also performed relatively well (50th place) followed by Brazil (52nd), Colombia (55th), Mexico (56th), Peru (57th) and Venezuela (63rd).  

 

The need to build skillsets in BRICS

 

Looking specifically at the BRICS, South Africa must increase its investment in developing local talent if it is to deliver the high-quality workforce its businesses need to thrive. 

 

Among the BRICS countries, South Africa ranks in the middle position – 48th – performing better than India (51st) and Brazil (52nd) but lagging behind both China (40th) and Russia (43rd).

 

South Africa’s strengths are in total expenditure on education (4th), cost-of-living index (1st), personal income tax rate (2nd) and labour force growth (7th). Its main weaknesses are in the pupil-teacher ratio (primary education, 61st), implementation of apprenticeships (61st), availability of skilled labour (60th), capacity of the educational system to meet the talent needs of the economy (60th) and emphasis assigned to science in schools (60th). 

 

Other indicators that may also help us understand South Africa’s low ranking are health infrastructure (52nd); worker motivation (57th); brain drain (58th); attracting foreign, highly-skilled personnel (52nd); and availability of competent senior managers (50th). 

 

It is noteworthy that South Africa is the only African nation to appear on the list – as Dr José Caballero, Senior Economist at the IMD World Competitiveness Center, points out: “The IMD considers new entries for its competitiveness study on the request of interested countries. Unfortunately we have not received requests from other African countries,” he told us.

 

Middle Eastern appeal

 

Qatar ranks 22nd in the 2017 IMD World Talent Ranking. Like other small, high-performing economies, Qatar relies heavily on attracting and retaining foreign talent, scoring well in the appeal (9th) and readiness (18th) factors. Although Qatar continues to lag somewhat behind in investment and development (47th), it uses its expenditures efficiently – total public expenditure is low (54th) but in education the country performs exceptionally well, with class sizes being very small (9th and 11th).

 

Meanwhile, the UAE ranks 25th in the Ranking, performing better than last year. It relies heavily on attracting and retaining foreign talent, which it manages extremely well, scoring highly in the appeal (3rd) and readiness (7th) factors. As well as being attractive to employees the UAE also ranks 4th in attracting foreign students. However, the country continues to lag behind in investment and development (58th).

 

Saudi Arabia is a new entrant to the IMD World Talent Ranking in 2017. The nation performs consistently well in the overall rankings (26th) and all the three main categories (investment and development – 26th; Appeal – 31st; Readiness – 26th). Investment in education is impressive, setting the groundwork for future home-grown talent. 

 

Losing the talent contest

 

Besides Mongolia and Venezuela, which capture the last two positions in the IMD World Talent Ranking, the lower places are dominated by Eastern European countries like Croatia, Romania and the Ukraine. While the decline in the latter is due in part to the political crises that characterises the country at present, Croatia and Romania’s decline is partially explained by the decrease in the appeal and readiness factors. 

 

Back up at the top of the rankings, all the leading economies share similar attractiveness indicators. They invest significantly in their outstanding educational systems, they offer a superior quality of life, and they offer substantial opportunities for career advancement throughout the entire professional lifespan.

 

Access the full report here: https://www.imd.org/globalassets/wcc/docs/talent-ranking/Talent_Ranking_2017_web.pdf