Why skillset matters in Industry 4.0

Simon Matthews, country manager of ManpowerGroup in Vietnam

Vietnam has seen some recent improvements in labour quality. According to the Total Workforce Index 2019 from ManpowerGroup, the Vietnamese highly-skilled workforce in 2019 makes up 11.6 per cent of the local total workforce of 57.5 million, an increase from 10.8 per cent the previous year.

Vietnam ranked 57th across the globe in 2019 (down from 43rd in 2018) and 13th across the Asia Pacific region (compared to 12th in 2018) for sourcing, hiring, and retaining workforce skills.

Despite the improvement, the quality of the local workforce remains a big challenge. While the country has an abundant young workforce, skills remain low thus not yet meeting with national development and global integration.

In fact, training and education have yet to satisfy market demands. Unemployment among young people, especially among university graduates, remains high and is an alarming issue. This has urged Vietnam to take more actions to upskill its workforce.

Preparing for a new decade

This year marks a new decade of development which will see the rapid scaling of digital initiatives across industries. It is also the last year of Vietnam’s current development period, and comes while preparing for the new 2021-2025 term in which Vietnam will sets a number of socio-economic development targets.

In particular, the country is working on a new foreign direct investment (FDI) attraction strategy in a move to increase its quality. Thus, to achieve these all development goals, Vietnam needs a strong enough workforce to increase its attraction.

Among the government’s policies to develop and upskill its workforce, training and education should be listed among the top priorities. Moreover, businesses should take initiatives in working with training institutions to meet their labour demands.

Nowadays, automation is changing the skills companies need from workers, yet the speed with which this is happening across functions within organisations varies. The demand for IT skills is growing significantly and with speed: 16 per cent of companies expect to increase headcount in IT – five times more than expect a decrease. Meanwhile the availability of tech talent is increasingly scarce, and the education and experience employers require versus what exists is presenting a mismatch.

According to ManpowerGroup’s annual survey in over 40 countries, in 2019 talent shortages sat at 54 per cent, the highest in a decade from a mere 30 per cent in 2009. With new skills appearing as quickly as old ones disappear, more companies are planning to build talent than ever before. Companies are realising they can no longer expect to find just-in-time talent, on tap.

To cope with this talent shortage, the role of human resources needs to continue to evolve to help organisations drive growth and profitability. We need a new talent strategy to help all companies integrate automation with human skills in Industry 4.0.

Companies need to be able to adapt to quicker talent cycles than they have done in the past. They need to create agile teams, multi-functional and multi-skilled. People need to use quality assessments and data to predict performance and have full transparency of others’ capabilities.

That’s how they can know an individual’s skills, strengths, and styles, beyond just the manager-worker perspective. And that’s how they can know where to move talent around so people can perform to their potential.

People will need to do new work with new skills. This will require continuous learning and it is why learnability is so important. People with high learnability will be able to develop in-demand skills, while those without will need to be developed in their job or helped to move elsewhere.

Companies can no longer be purely consumers of talent. They need to be builders of talent, helping people develop their resilience and ability to move from this role to that. In the skills revolution, this is how people will augment robots rather than be replaced by them.

Talent strategies for the skill revolution focus on the 4B solutions of build, buy, borrow, and bridge. More companies are planning to build talent within their workforce than ever before. Around 84 per cent plan to upskill employees this year – an exponential increase from 21 per cent in 2011. Companies are realising they can no longer expect to find last-minute talent, even if they are willing to pay the premium for it.

By 2022, over half (54 per cent) of all employees will require significant reskilling and upskilling. Of these, about 35 per cent are expected to require training of up to six months, 9 per cent will take from six to 12 months to reskill and 10 per cent will require additional skills training of more than a year.

Learning will be essential, and companies are deploying a myriad of approaches to address this. To really compete in the skills revolution, companies need to promote a culture of learning, provide career guidance, and offer short, focused upskilling opportunities. People need to know how to prepare for high growth roles of the future and that their employer supports their learning.

The return on investment for upskilling is clear: in North America the cost of turnover and replacement can exceed 30 per cent of wages, while the cost of training remains less than 10 per cent of wages.

Wages are rising for those in demand. 79 per cent of employers plan to buy the skills they need, either paying higher market prices or improving compensation for existing staff.

Organisations have long been used to being able to spend to find the skills they need, when they need them – but not so today. Companies are happy to pay more for sought-after skills. Nearly a third (29 per cent) are offering higher salary packages to solve recruitment problems and 46 per cent are paying more to attract and retain existing staff. The challenge comes when those skills are not available.

Regarding the borrow solution of the 4B’s, digitisation has created new ways of working and new generations of workers who are increasingly comfortable clocking in part-time, working on a contract or project basis and pursuing other forms of alternative labour.

But here’s the rub: 87 per cent of workers say they are open to these next-generation work approaches yet only 32 per cent of employers are offering alternative ways of working. Companies need to address this disconnect to be able to attract next-gen workers while retaining and motivating those they have today.

The bridge solution, meanwhile, refers to redeploying, reassigning, or releasing. Over half of organisations (56 per cent) are helping people move on, move up, or move out to new roles inside or outside the organisation.

Bridging requires tools including assessment, big data, and predictive performance to define adjacent skills, identify strengths, and help workers create clear career paths. Companies need to treat workers fairly and with compassion if their skills are no longer required.

Recruitment trends

Talent shortage is growing around the world, and Vietnam is not an exception. Our Talent Shortage 2020 report shows that in 2019, 36 out of 44 countries (82 per cent) reported talent shortages. Slovenia, Sweden, Finland, Hungary, and the United States reported the greatest increases compared to 2018.

In Vietnam, the country was estimated to lack 70,000-90,000 IT workers last year when it saw a trend of digital transformation among businesses in Vietnam, thus resulting in an increase in recruitment of IT workers.

The top 10 most in-demand roles in 2019 globally are trending each year: 80 per cent of them were also in short supply in 2018. Healthcare professionals enter the top 10, reflecting an ageing population. Meanwhile office administrators, contact centre staff, project managers, lawyers, and researchers fall out of the short list, reflecting the rise in automation of routine tasks. And as technology disrupts work the most in-demand roles may look similar, yet the skills required continue to evolve rapidly.

The demand for tech and digital skills is growing across all functions yet employers place increasing value on human strengths as automation scales and machines prove better at routine tasks.

While 38 per cent of organisations say it is difficult to train in-demand technical skills, 43 per cent said it is even harder to teach the soft skills they need such as analytical thinking and communication. Candidates who can demonstrate higher cognitive skills, creativity, and the ability to process complex information together with adaptability and likeability can expect greater success throughout their careers.

According to ManpowerGroup’s report Humans Wanted: Robots Need You, by 2030, demand for human strengths – both social and emotional – will grow across all industries by 26 per cent in the US and by 22 per cent in Europe.

We believe that Vietnam will be no exception.