The Innovator’s Hunt for Talent
COVID-induced early retirement contributed to a labor shortage squeeze, the TSG Global Innovation Report 2023 reveals.
Across industries and regions, the shortage of skilled workers is a major bottleneck for revenue growth. This is one of the results of a survey The Singularity Group (TSG) conducted amongst about 1'700 executives of companies worldwide as part of their TSG Global Innovation Report 2023. The high demand for qualified staff in data analytics and IT has been a longer trend, and is mostly felt in IT and Communication Services, but increasing demand for talent from other industry sectors such as Health Care, Industrials, and Finance — where digitalization is now also in full swing, and increasingly a matter of competitive advantage — has added to the squeeze. Smaller companies are affected more strongly than larger, higher paying companies, as our findings show.
While certain pockets of the economy were already overheated prior to the pandemic, COVID aggravated the current labor shortage. Notably, the pandemic set off a wave of early retirements, especially in the US with about 2.4 million additional Americans retiring during the first 18 months of the pandemic beyond what could normally be expected — a majority of the 4.2 million who left the work force between 2020 and 2021. Early retirement contributes to a drop in labor force participation and increases the challenge of shortage of labor and talent across sectors, as our findings support.
In Europe, record-high labor shortages were also mainly associated with the uptick in demand that firms faced in the post COVID-19 reopening of the economies. In the services domain, migration of workers away from contact-intensive branches such as accommodation and food service activities further contributed to the shortage, according to reports of the European Commission’s Directorate-General for Economic and Financial Affairs.
Financial Industry is becoming more attractive again
However, according to some reports, many of those retired employees are now being drawn back into the workforce due to labor shortage, higher wages, and lower COVID-19 concerns, in particular in industries where Industries where physical, on-site work is required. The recent wave of layoffs in traditional Big Tech companies is another component in the equation and suggests that the tide is turning. Yet, tech experts hitting the job market are likely to be snatched by new employers in Retail, Professional Services, Health Care, and Finance, where the demand for technology knowledge and skills continues to be high.
“There’s a scarcity of skills across the board,” says AI and Singularity Think Tank (STT) expert Alexander Stumpfegger. “But take the financial industry, they realize very well that this time around they need to be attractive enough to hire good tech experts. Finance has an advantage because their pockets are probably deeper than some other industries they compete with for talent.”
Energy is another area where the shortage of skilled workers is felt. Energy transition challenges have become a broad concern not only for energy companies but across industries, creating further pressure on building and specialized construction companies to employ energy specialists.
Energy and Advanced Materials and STT expert Andres Gujan notes that “We really see there’s a fight for the best people in the industry. With the electrification trend and electricity production, an awful lot of electrical engineers are needed. Another element here is that many countries have a hydrogen strategy, nowadays, and with projects taking off and scaling up, skilled workers and specialists with the right knowledge are in high demand. On the technical side, you see the same demand squeeze for skilled labor for the installation of solar and heat pumps, where demand for engineers is booming.”
“You have all these highly experienced people in their late fifties who are about to retire, and not enough supply of new talent”
IoT and Smart Buildings and STT expert Tyson Soutter explains: “The requirements of expertise have greatly increased. Especially in areas such as Cloud Computing, IT, and data processing and engineering, one can no longer be a jack-of-all-trades. And when specialization is increasing, companies need to expand their workforce as well. Take Cloud Computing, a few years ago most organizations prohibited storing data outside of their premises, and now it’s completely normalized. So, you see a shortage of skills required to maintain such systems. In the Energy sector, the sheer volume of demand and the high pace of change in market requirements mean that non-energy companies now need energy experts on their workforce to help with sustainability goals and capital projects such as solar panels. This causes a lot of shortage of expertise and experience.”
“In the specialty materials and chemicals industry, like in other industries, we face a significant shortage of talent. This really applies for all sorts of functions and levels, ranging from material engineers, chemists to manufacturing staff and business service functions,” notes Advanced Materials and STT expert André Hugentobler. “There are just not enough people in the industry. You have all these highly experienced people in their late fifties who are about to retire, and not enough supply of new talent to both backfill the retiring people and bring new know-how and capabilities into the organization to address today’s challenges. The ways of working and expectations of the job and employer have changed and will evolve further. Companies that provide exciting opportunities, flexibility, attractive packages, visibility, purpose, and an outstanding culture will be the winners in this competition.”
The TSG Global Innovation Report 2023
Over the past months, we asked nearly 1'700 executives of listed companies across industries and regions about their innovation challenges and enablers. We enriched the findings with our proprietary Innovation Scoring data and added commentaries from our Singularity Think Tank experts. The result: The TSG Global Innovation Report 2023. 52 pages of analyses and expert commentaries on the state of applied innovation and technology.
About The Singularity Group
The Singularity Group (TSG) makes applied innovation investable in listed equities. TSG is the initiator of the Singularity Index™ (Bloomberg ticker: NQ2045), a global, all-sector benchmark and gold standard for applied innovation. The Singularity Strategies include The Singularity Fund (UCITS Lux), Singularity Reshoring (UBS AMC), and the Singularity Small&Mid (UBS AMC). The Swiss investment advisory boutique works closely with the Singularity Think Tank, a network of entrepreneurs and academics with deep insights into innovation value chains. Their input forms the foundation of TSG’s proprietary innovation scoring system that quantifies the engagement of companies within a set of curated Singularity Sectors worldwide across all market capitalizations and industries. The Singularity Innovation Score (SI-Score; see below) defines how much value listed companies are generating through applied innovation.
More: www.singularity-group.com
The Singularity Innovation Score (SI-Score): A company’s SI-Score represents the percentage of its revenues associated with innovation. It reflects a company’s ability to create innovation- versus commoditized -business and -cash flows, and its ability to participate in technological evolution. Changes in the SI-Score are just as important as the absolute value. A company’s SI-Score relative to its overall GICS sector can say a lot about the competitive standing and ability to gain and maintain market share. Regional SI-Scores can be used to evaluate the innovation power of markets as well as to gauge companies’ standing in different regions.
Innovation Revenues: 4% of a 74 trillion USD global market: In 2022, the total revenues generated by the World’s listed equities amounted to USD 74 Trillion. TSG’s unique expert-led innovation screening and scoring methodology allows us to divide that amount into innovation revenues and non-innovation revenues. In 2022, roughly 4% (USD 3 Trillion) of global revenues qualified as innovation revenues.
