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Saudi Arabia gains 10 spots in 2014 in Global Talent Competitiveness Index

The kingdom ranked 3rd in Middle East for ability to grow, attract and retain talent

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Saudi Arabia ranked third in the Middle East, after the United Arab Emirates (22nd) and Qatar (25th), and 32nd globally in the 2014 edition of the annual Global Talent Competitiveness Index (GTCI) by INSEAD, a leading international business school.

The study measures a nation’s competitiveness based on the quality of talent it can produce, attract and retain.

At 32nd spot, Saudi Arabia has gained 10 spots from its 2013 position putting it in to the top one third of ranked nations. It has shown consistent performance across both the Input (31st) and Output (36th) sub-indices. The Enablers (27th) and Retain (26th) pillars outperform the country’s overall ranking, whereas the Attract (34th) and Grow (42nd) pillars lag behind slightly.

Bruno Lanvin, Executive Director of Global Indices at INSEAD, and co-author of the report, said: “These three countries combine a high degree of ‘external openness’ (UAE ranks 3rd in the world in this area, Qatar 4th and KSA 9th) with a high level of performance on ‘talent and business enablers’. All three countries share the same approach in which their respective governments have given priority to making life easier for business and more attractive for external talents. This is proving a successful combination.”

Faced with constraints, largely due to the size of its economy and population, Saudi Arabia continues to grant high priority to education and human capital development, noted Lanvin.

“These are medium-term investments which will progressively enable the country to move up the ladder of talent competitiveness. The country’s tradition of producing high level talents in sciences and engineering now needs to be complemented with ‘global knowledge skills’ in areas such as entrepreneurship, leadership and innovation.”

Market Landscape (26th), Business Landscape (12th) and Sustainability (16th) are the factors underpinning the above outperformance, with Intensity of Local Competition (14th), Ease of Doing Business (22nd), Extent and Effect of Taxation (5th), Pay Level – Head of Organization (16th) and Pay Level – Head of Information Technology (8th) doing particularly well. Despite very high External Openness (9th), factors such as Tolerance to Minorities (85th), Female Graduates (62nd) and Female-to-Male Earnings Ratio (90th) combine to give the country a very low Internal Openness (78th) rank.

Paul Evans, the Shell Chaired Professor of Human Resources and Organisational Development, Emeritus at INSEAD, and co-editor of the report, added “Saudi Arabia underperforms on Formal Education (47th) and Lifelong Learning (45th) with Vocational Enrolment (77th), Tertiary Enrolment (46th), Extent of Staff Training (42nd) and Quality of Management Schools (47th) being the primary reasons for this phenomenon”.

The Output side doesn’t see significant variation between the Labor & Vocational skills (43rd) and Global Knowledge skills (35th) pillars. Employable Skills (50th) and Higher Skills and Competencies (49th) score lower than the country’s overall ranking due to weakness on Secondary-educated Workforce (66th), Secondary-educated Population (52nd), Tertiary-educated Workforce (48th) and other indicators relating to its pool of knowledge workers. Despite extremely low Vocational Skill-intensive Exports (85th), strong Labor Productivity per Employee (9th) and Relationship of Pay to Productivity (21st) offset this negative. Talent Impact (18th) also sees this kind of trade-off, with New Product Entrepreneurial Activity (3rd) glossing over stark deficiencies on Sophisticated Exports (90th).

Commenting on this year’s study, Ilian Mihov, Dean of INSEAD, said: “We live in a world where talent has become the core currency of competitiveness - for businesses and national economies alike. Yet there is an all-too-frequent mismatch between education systems and the needs of labor markets. Businesses and governments need new kinds of leaders and entrepreneurs, equipped with the skills that will help their firms and countries to thrive in the global knowledge economy. To help them making the right decisions in an increasingly complex environment, we need the kind of indicators and metrics that GTCI offers.”

Evans added: “Perhaps one of the most interesting findings this year is the renewed importance of vocational education. It’s not just higher education that is important today – vocational learning needs to be integrated into secondary education. In Switzerland, thinking about becoming employable starts off in schools at an early age. At age 15, over 70 percent of Swiss school children go on to select what’s known as the apprenticeship track, combining practical work experience with traditional theoretical learning.” He added: “Within the current Swiss government, half of the ministers have come out of the vocational stream. For future talent competitiveness, countries have to take vocational education – that is, employability – much more seriously.”

The 20 top-scoring countries in the GTCI 2014 are all high-income countries. This is hardly surprising, since rich countries tend to have better universities and a greater ability to attract foreign talents through higher quality of life and remuneration, making them more talent competitive. However, beyond this ‘top-level’ correlation of talent competitiveness with wealth, the GTCI study reveals six key factors affecting talent competitiveness across countries of different GDP per capita and development levels:

1. Openness is key to talent competitiveness: openness to trade, investment, immigration and new ideas, embracing globalization while leveraging human resources.

2. Fiscally stable countries need talent competitiveness for sustainable development: mineral or oil rich countries, or those with context-specific competitive advantage, should foster talent competitiveness to ensure sustainable prosperity.

3. Talent growth can be internal or external: some countries like the US and in Europe successfully focus on developing talent within their own borders, while others such as China attract foreign talent or send their elites abroad for further education.

4. Countries must consider employability or risk high unemployment: ‘talent for growth’ means meeting the actual needs of a national economy.
Switzerland, Singapore and the Nordic countries customise their education systems towards appropriate levels of ‘employable skills’.

5. Education systems need to reconsider traditional learning: talent development in the 21st century must go beyond traditional formal education and develop vocational skills.

6. Technology is changing the meaning of ‘employable skills’: technological changes will affect new segments of the labour market, impacting the 250 million ‘knowledge workers’ globally today.

The top of the GTCI rankings is heavily dominated by European countries. The top 10 includes only two non-European countries, namely Singapore (2) and the United States (9).

GTCI 2014 champions include a significant number of small high-income economies. Lanvin added: “It’s really quite striking that among the top three countries – Switzerland, Singapore and Luxembourg – two are landlocked and one is an island. Faced with specific geographical challenges and a quasi-absence of natural resources, these countries have had no choice but to be open economies, a critical ingredient to being talent competitive.” He added that “The top countries on this year’s GTCI have played the game of globalization and played it well.”

Many of the other economies in the ‘top 20’ have strong immigration traditions, including the United States (4), Canada (5), Sweden (6), the United Kingdom (7), and Australia(9). These high performing countries also have long prioritized education, as is the case for the other Scandinavian countries, all in the top 15: Denmark (8), Norway (11), and Finland (13).

This story was originally posted on the Saudi Gazette on Jan. 20, 2015.