How East Asia and the Pacific's dynamic workforce is being shaped for the future

With more than one billion working-age population, East Asia and the Pacific region is one of the most diverse areas in terms of socio-economic development and stand at the forefront of changing workplaces, jobs, and skills. Apart from global trends such as digital transformation and energy transition, the region’s labour-market outlook is also shaped by factors from supply-chain disruptions and geopolitical uncertainty, to an ageing workforce and economic inequality.

Covering 45 countries globally, the World Economic Forum's Future of Jobs Report 2023 covers 12 economies in the region, ranging from global manufacturing houses like China and Viet Nam, and emerging markets like Indonesia, Malaysia, the Philippines, and Thailand, to high-income economies such as Australia, Hong Kong SAR, Japan, South Korea, Singapore, and Taiwan, China.

Human capital stands out as a more pressing concern than investment capital in East Asia and the Pacific. 64% of companies surveyed in the region cite the challenge of attracting talent as a primary hurdle to business transformation, surpassing the global average of 53%. Specifically, in countries like Thailand and South Korea, three out of every four executives identify the unavailability of talent as the paramount barrier to transformation.

Yet, a mere 28% of executives within the region view the lack of investment capital as a key transformation barrier compared to the slightly higher global statistic of 37%. Highlighting this regional-global discrepancy, Viet Nam is where investment capital is a minimal concern, with only 13% of respondents acknowledging a potential capital shortage as a threat to their businesses.

Where does the vulnerability lie? For employers in East Asia and the Pacific, the ability to hire quality talent is the predominant concern. A slightly greater proportion of employers anticipate challenges in hiring availability over the next half-decade, compared to those foreseeing a positive outlook (39% versus 36% globally).

However, the biggest departure from global norms is in talent retention. In the region, 27% of organizations share concerns about retaining their existing workforce, a figure that eclipses the global average of 20%. This sentiment is particularly palpable in Malaysia and South Korea, where over a third of surveyed employers hold a bleak forecast for talent retention in the forthcoming five years.

From Shenzhen's tech ecosystems to Jakarta's software hives, Asia-Pacific is a hotbed for digital skills. Intriguingly, the skill matrix of Asia-Pacific is not just confined to lines of code or neural network architectures, but a mosaic of technical, analytical, and socio-emotional skills. Drawing from the World Economic Forum’s Global Skills Taxonomy, the “universal adapter” for existing taxonomies across various domains, the Future of Jobs Survey collect insights from employers worldwide to understand the current and future skills of importance.

In 2023, Analytical thinking reigns supreme in the Asia-Pacific skill landscape, a trend confirmed by the Asian Development Bank's forecasts. Two skills depart the most from global averages in terms of the skill importance today: Design and user experience and Reading, writing and mathematics. Commanding a respective 31% employer focus, compared to 24% and 25% globally, these skills suggest a workforce that values both digital interfacing and foundational knowledge in the region.

The region is witnessing an ascending importance attached to Creative thinking: 78% of respondents in the region acknowledge its values in the workplace. In Japan and Singapore, more than four in five executives surveyed see a growing trend in this skill. Such projection coincides with PwC’s latest survey in the region, where employees rank people skills such as critical thinking (66%), above technical or core business skills when asked to estimate the importance in the next five years.

Additionally, Global citizenship, integral for economies embedded in international supply chains, shows heightened importance. For instance, in Hong Kong SAR (56%) and Indonesia (56%), the demand for this skill overshadows the global average by a robust 20%. On the other hand, employers are less confident that Marketing and media, and Manual dexterity, endurance and precision will gain importance in the region.

In the next five years, while Analytical thinking, AI and big data echo global reskilling trends, Asia-Pacific hosts some unique pockets of focus in companies’ reskilling and upskilling initiatives. 21% of organizations identify Systems thinking as a priority for training programs, hinting at the region's growing appetite for integrated and holistic problem-solving approaches. In Australia, more than a quarter of the employers (26%) would like to invest in Systems thinking in their reskilling and upskilling programs.

In an increasingly interconnected world, the Asia-Pacific region exhibits notable trends in embracing Diversity, Equity, and Inclusion (DEI) and fostering regional talent mobility. These trends have a significant influence on the region's labour market dynamics. Countries such as Indonesia and Thailand are tapping into the potential of a young and diverse talent reservoir. In contrast, mature economies like Japan and Australia are seeking to augment their ageing workforce through skilled migrants.

The value of DEI policies in driving organizational success is well-acknowledged in the East Asia and Pacific region. The commitment to DEI initiatives to increase talent availability in the region is evident from the Future of Jobs Survey data, with 23% compared to the global benchmark of 18%. One example from the region is Shiseido, shortlisted as one of the cases at the Forum’s 2023 Diversity, Equity and Inclusion Lighthouses. The Japanese company promoted female upskilling and accelerated gender parity at the executive and board level. The region’s inclination towards diversity is further illustrated by the fact that 77% of organizations in East Asia and the Pacific have initiated DEI programmes at the company level, a figure that stands higher than the global average of 67%.

Typically, these initiatives include managerial and staff DEI training and enhancements in accessibility across physical and digital platforms. The enthusiasm for diverse talent pools is more pronounced in this region, registering at 17% against the global average of 10%. In this realm, Indonesia shines with 29% of its firms expressing a keen interest in fostering a diversified talent approach, followed closely by South Korea at 25%. It's worth noting that the International Labour Organization has highlighted that workers in Asia and the Pacific tend to experience higher levels of inclusion than other regions.

The region's evolving stance as a potential global talent hub underlines the importance of creating inclusive environments. Notably, the regional perspective on public policies, especially those relating to immigration laws on foreign talent, appears forward-looking. 41% of employers in the Asia-Pacific express support for immigration policy changes to enhance talent availability, surpassing the global average of 28%. In this context, nations such as Singapore and Viet Nam stand out, with 60% of respondents endorsing such policy adaptations.

Interestingly, the region maintains a cautious approach towards remote work as a talent strategy. Only 8% of employers identify cross-border remote work as a pivotal business practice, a sentiment that aligns with global views. In specific markets like Malaysia and Indonesia, the willingness to adopt these practices are relatively low, hovering around 3%.

Given these observations, it's evident that businesses should align their core strategies with evolving human capital priorities. As the employment landscape undergoes rapid transformations, the future workforce will need to be both adaptable and specialized. It's imperative for East Asia and the Pacific to sustain its momentum in talent mobility and the endorsement of diversity and inclusion amidst an intricate global talent ecosystem.

For more information on how the jobs and skills will evolve in the next five years, check out the Future of Jobs Report 2023 and its data explorer, where you can find more data and insights of the country and the region. Australian Industry Group (Ai Group) in Australia, Waseda University in Japan, Economic Development Board in Singapore, and Chulalongkorn Business School in Thailand are the Future of Jobs Survey partners who disseminated the survey and contributed to the insight of the region.