Over the past decade, human capital development across advanced economies has stagnated, although a number of developing economies have made investments in basic upgrading of education and training systems. Across developed and developing economies, talent gaps remain large, local education systems are increasingly outdated and there are limits to international mobility. For example, relative to 2008, the ability to import talent has dropped by 17% percent in advanced economies and 12% in emerging economies.

The adequacy of local secondary education systems to meet the needs of employment is rated at 59 points (out of 100) in advanced economies and 42 points (out of 100) in emerging and developing economies. A number of large economies have seen downward trends in adequacy of skill sets of all graduates in recent years (among them, India, South Africa, United States and Germany) while others such as Korea, Rep, Saudi Arabia, Turkey and China have improved their scoring (Figure 2.1).

Similarly, the adequacy of tertiary education to meet the needs of employment is rated at 68 points (out of 100) in advanced economies and 55 points (out of 100)in emerging and developing economies. In theaggregate, these figures have seen little change overthe past years. The tertiary education systems thatare rated as best placed to deliver to the needs ofemployers are those of Switzerland (82), Singapore(79), Finland (79) and Chile (71). In contrast thefollowing countries trail behind: Ethiopia (37), India(39), Brazil (45), Japan (59), Italy (62), and UnitedKingdom (63). Tanzania and China are among thebest improved, while India, Ethiopia and the UnitedStates have seen the largest decline.

As a result, the ability to find skilled employees has declined across advanced economies by 7% relative to 2016, while improving across developing economies by 3%. As presented in Figure 2.2, business leaders across geographies continue to report difficulties when searching for individuals who can fill vacancies in their enterprises and over time the trends in emerging and developing economies have converged to a similarly low base.

There is a particular shortfall in digital skills and other skills of the new economy as technology disrupts labour markets.

As new technologies are adopted by enterprises globally, skills shortages in digital skills and the skills needed for the jobs of tomorrow are set to become more pronounced as populations have switched to remote work during the COVID-19 pandemic.

The World Economic Forum’s Future of Jobs Report 2020 has projected that technological change is set to displace a range of skills in the labour market while driving greater demand for a new set of core skills such as analytical thinking, creativity and critical thinking as well as skills in the use and design of technologies (“digital skills”). While such changes are still likely to result in a net positive employment outlook in the midterm, there is significant additional disruption and stagnation in the labour market due to the COVID-19 recession.21

Since 2017 (when data was first available for this indicator) the perception of businesses on digital skills have, on average, decreased by 3.4% among advanced economies and increased by 1.8% among emerging and developing economies, while developing and emerging economies score 49 (out of 100) and advanced economies score 67 (out of 100). The largest improvements have been in Egypt, Bulgaria, Saudi Arabia and Tanzania while the United States, Norway, South Africa, Germany and Japan have seen the largest decline of digital skills relevance.

The lack of adequate digital skills not only hampers the diffusion of ICT but also exacerbates the risk of job losses related to automation. As shown in Figure 2.3, in OECD countries, at least 14% of all jobs are at “high risk” of automation and 32% of all jobs are at “significant risk” of automation. In 16 of 27 OCED countries digital skills scores have declined over the past four years, making it more difficult for workers to transition to new roles.

Among developed economies, pay is increasingly de-coupled from the overall productivity of workers, driven in part by high rates of technological adoption, yet resulting overall in an increasing polarization of wages between workers employed in different professions. In addition, as tracked by the Executive Opinion Survey over the past decade, there has been a gradual erosion of meritocracy in labour markets across economies, a decline in the assessment of professional management and lower evaluations of the ability of firms to promote and develop diverse talent. For instance, business leaders reviewed meritocracy assessment downward by 3% on average, 12% in the United States, 14% in Sweden and 23% in Brazil.

A key emerging priority of the last decade has been the reallocation of the current workforce into emerging professions in tandem with relevant reskilling and upskilling. In this context, the persistent erosion of meritocracy, as well as the new challenges posed by the COVID-19 pandemic, call for governments to support both businesses and workers in the transition to the new world of work and improve quality, wages and standards of work in the new economy.

Health services, infrastructure and talent have lagged behind two dominant demographic trends, increasing population in the developed world and ageing populations in the developing world.

Average life expectancy has jumped by four years since 2010, and by nine years since 1990. The most significant progress has been achieved in low- and middle- income (developing) economies. In these countries, life expectancy has increased by 5.62 years since the start of this century.

This progress is largely due to improved sanitation across developing economies as well as, more broadly, to the emergence of new medical technologies. Such positive figures mask persistent under-investment in health system capacity which has become more apparent during the COVID-19 pandemic.

The gap between the demand and supply of health personnel remains large. According to World Health Organization estimates, healthcare services in high-income economies are set to experience a shortfall of 78,000 professionals by 2030. In developing and emerging economies, despite a 15% increase in the average number of physicians per capita between 2000 and 2017, there is still a shortage of doctors to meet a rapidly growing demand.22