Leading Job Growth in the Digital Economy
by Claudio Fernández-Aráoz

Last week I visited Finisterre, an ancient Spanish port and fishing village, where my grandfather was born.  He, like many others, was forced to emigrate to Argentina at the end of the 19th century, leaving land, family, and friends in search of employment, since jobs were increasingly scarce at home.  This photograph from the period, O home e o neno, shows a man and his son crying as some of their dearest relatives board the boat to Buenos Aires.

 

The heart-wrenching scene reminded me of the terrible challenges that today’s job-seekers face thanks to the advance of technologies that make human labor obsolete. In many ways, the situation is even worse than it was in my grandfather’s time. While the men of Finisterre could flee economic conditions in Spain, there is no escaping employment market upheaval in the digital age.

 

Consider the global trends cited by Erik Brynjolfsson and Andrew McAfee in a recent interview with HBR. In most countries, both developed and developing, private employment and median family income have stopped growing at the same pace as labor productivity and real GDP per capita—mostly due, they argue, to technological advances. In emerging markets, labor’s share of GDP is declining in 42 out of 59 countries, including China, Mexico and India. These are areas with 90% of the world’s population, higher birth rates, more young people, and lower education standards. Scarcer jobs and diminishing wages can only lead to greater inequality and global instability.

 

So what are we to do?  Learn from the countries that are bucking the trend. In Singapore, median income, GDP per capita and labor productivity have all grown dramatically and in tandem over the past 30 years; unemployment stands at just 3%; wages account for a larger percentage of GDP than they did in 1980; and middle-income earnings have increased six-fold in the past five decades. With the highest median wage among newly industrialized Asian nations, the city-state also ranks first globally in worker productivity and attitude.

 

Although it has no natural resources, Singapore has succeeded by investing large portions of its public budget in education, a strong civil service, and the development of great leaders, proactively moving its economy away from basic manufacturing, to higher value, technology-based manufacturing, then to knowledge-based R&D sectors.

 

Prime Minister Lee Kuan Yew, who passed away earlier this year, set the tone with a speech he gave to senior civil servants, just after his country’s transition to independence from the United Kingdom in 1965:  “Singapore must get some of [the] best in each year’s crop of graduates into government,” he said.  He added that he wanted leaders with not just stellar academic records but also imagination, dynamism and, especially, character and motivation. His administration followed up by instituting massive public sector scholarship programs; rigorous assessment practices focused on potential; extensive development and training, including exemplary rotations and milestone courses; and outstanding promotion, recognition, and salary benchmarking practices to match private employers. As a result, according to HBS’s Michael Porter, Singapore developed a highly efficient civil service elite that has been able to dynamically shift policies and priorities over time.

 

Professions-based education – that which ensures future employability for students – has also been a key area for investment and innovation in the country. Today, 95% of its young people progress to post-secondary education institutes, but there are also different pathways to work, including German-style an apprenticeship and certification program. Most recently, Singapore launched the SkillsFuture initiative, including a fund where the government provides a yearly stipend to be used for continuing education at all levels. Government expenditure on education remains dramatically higher than it is in other OECD countries.

 

Can other countries follow this model?  With the right leadership, I think so. On a recent trip to Africa I was greatly impressed by the African Leadership Academy (ALA), an extraordinary institution founded in 2008, which offers a highly selective two-year pan-African pre-university program. (Out of 4,000 applicants per year, only 100 are chosen.) Nearly 800 young people have already studied there, and the goal is to develop 6,000 leaders over the next five decades – people screened for their perserverance, courage, passion and ethics, who will, it’s hoped, go on to transform Africa as country presidents, central bank governors, or CEOs of major corporations.

 

This is the sort of institution public and private organizations around the world should be looking to build because, as the title of my latest book notes, It’s Not the How or the What but the Who. We need extraordinary leaders to face the monumental challenge of preserving human dignity in the digital age.

 

About the author:

Claudio Fernández-Aráoz is a senior adviser at the global executive search firm Egon Zehnder and the author of It’s Not the How or the What but the Who (Harvard Business Review Press, 2014).

 

This post is one in a series of perspectives by presenters and participants in the 7th Global Drucker Forum, taking place November 5-6, 2015 in Vienna. The theme: Claiming Our Humanity — Managing in the Digital Age.