China’s Looming Talent Shortage

I'm on a "world is flat" tangent these days, so here is more. The McKinsey Global Institute released a study on what it calls China’s “looming talent shortage.” McKinsey’s data lend backing to anecdotes one hears about the bidding-up of the cost of managerial labor, particularly among foreign companies, which often require English language skills of their managers in addition to leadership and technical ability. McKinsey estimates that, over the next five years, about 70% of the capable grads could be taken up by multinationals alone, never mind domestic firms. Hence, it predicts a “war” for talent. Yet, the study points to a mismatch between the educational system and the needs of the workforce. McKinsey’s study cites the example of engineering: this year, China will graduate 600,000 engineers. However, of the country’s total of 1.6 million young engineers, barely 10% could qualify for work in a multinational company, about the same number as in the U.K. The problem is that engineering programs in China focus too much on theory and not enough on projects and working as part of a team. Another flaw identified by the study relates to archaic residency requirements that mean the vast majority of places are saved for local students, denying some highlyqualifiedstudents university access. I guess this must mean that the world is not quite as flat as Friedman would have us believe. Engineering talent is clearly not an undifferentiated commodity, and there is value in looking under the covers of some of the broad statistics he cites.