Second of two parts (Read part one)
We continue this week the other key findings of PwC’s 21st survey of almost 1,300 CEOs around the world, launched at the recent World Economic Forum Annual Meeting in Davos.
Jobs and digital skills: headcounts to increase; leaders concerned about availability of digital talent
Confidence in short-term revenue growth is feeding into jobs growth, with 54 percent of CEOs planning to increase their headcount in 2018 (2017: 52 percent). Only 18 percent of CEOs expect to reduce their headcount.
Healthcare (71 percent), technology (70 percent), business services (67 percent) communications (60 percent), and hospitality and leisure (59 percent) are among the sectors with the highest demand for new recruits.
On digital skills specifically, over a quarter (28 percent) of CEOs are extremely concerned about availability within the country they are based in, rising to 49 percent who are extremely concerned in South Africa, 51 percent in China and 59 percent in Brazil.
Overall, 22 percent of CEOs are extremely concerned about the availability of key digital skills in the workforce, 27 percent in their industry and 23 percent at the leadership level.
Investments in modern working environments, learning and development programs, and partnering with other providers are the top strategies to help them attract and develop the digital talent they need.
While recent research by PwC showed that workers were optimistic about technology improving their job prospects, CEOs admit that helping employees retrain and increasing transparency on how automation and AI could impact jobs is becoming a more important issue for them.
Two-thirds of CEOs believe they have a responsibility to retrain employees whose roles are replaced by technology, chiefly amongst engineering and construction (73 percent), technology (71 percent) and communications (77 percent) sectors. Sixty-one percent of CEOs build trust with their workforce by creating transparency, at least to some extent, on how automation and AI impact their employees.
Bob Moritz, PwC global chairman, commented: “Our education systems need to arm a global workforce with the right skills to succeed. Governments, communities and businesses need to truly partner to match talent with opportunity and that means pioneering new approaches to educating students and training workers in the fields that will matter in a technology-enabled job market. It also means encouraging and creating opportunities for the workforce to retrain and learn new skills throughout their careers. As the interest in apprenticeships and internships shows, lifelong training relevant to a business or industry is critical.”
The digital and automation transition is particularly acute in the financial services sector. Almost a quarter (24 percent) of banking, capital markets and insurance CEOs plan workforce reductions, with 28 percent of banking and capital markets jobs likely to be lost to a large extent due to technology and automation.
Despite the optimism in the global economy, anxiety is rising on a much broader range of business, social and economic threats. CEOs are ‘extremely concerned’ about geopolitical uncertainty (40 percent), cyber threats (40 percent), terrorism (41 percent), availability of key skills (38 percent) and populism (35 percent). These threats outpace familiar concerns about business growth prospects such as exchange rate volatility (29 percent) and changing consumer behavior (26 percent).
Underlining the shift, extreme concern about terrorism doubled (41 percent for 2018 versus 2017’s 20 percent) and terrorism enters the top 10 threats to growth. The threat of over-regulation remains the top concern for CEOs (42 percent extremely concerned), and over a third (36 percent) remain concerned about an increasing tax burden.
Key skills availability is the top concern for CEOs in China (2018: 64 percent extremely concerned vs. 2017: 52 percent). In the US (63 percent) and the UK (39 percent), cyber has become the top threat for CEOs, displacing over-regulation. In Germany, cyber jumped from being the fifth threat in 2017 to third place (28 percent) this year.
A year after the Paris Agreement was signed by over 190 nations, which saw countries commit to voluntary action on climate change and low carbon investment, CEOs’ concern about the threat of climate change and environmental damage to growth prospects has now doubled to 31 percent of CEOs (2017: 15 percent).
High-profile extreme weather events and the US withdrawal from the Paris Agreement have significantly raised the profile of business action on climate risk, regulation and resilience. In China, over half (54 percent) of business leaders are extremely concerned about climate change and environmental damage as a threat to business growth, equal with their levels of concern about geopolitical uncertainty and protectionism.
“The higher level of concern is being driven by larger societal and geopolitical shifts rather than the dynamics of business leaders’ own markets,” Moritz said. “It’s clear their mid to long-term confidence in revenue growth is tempered by threats the business world is not used to tackling directly itself.”
Echoing the theme of the World Economic Forum this year, CEOs acknowledge that we live in a fractured world. They are divided over whether future economic growth will benefit the many or the few. They see the world moving towards new, multifaceted metrics to measure future prosperity.
Moritz commented: “The higher levels of CEO concern about broader societal threats underlines how companies are navigating an increasingly fractured world. CEOs across every region and country that we spoke to recognize that the old ways of measuring growth and profit won’t work alone for the future. Particularly in the context of the Sustainable Development Goals, we’re likely to see more work developing and defining metrics that capture and communicate an organization’s purpose in a way that is relevant to businesses’ stakeholders in the coming years.”
Examining the key challenges to trust for businesses, CEOs admit that delivering results in shorter periods of time (60 percent) is the main challenge. However, following this, there is a significant shift with the majority reporting higher levels of pressure to hold individual leaders to account (59 percent), including for misconduct.
Over a third report more pressure from employees and customers to take political and social stances (38 percent) in public.
In the banking and capital market (65 percent), healthcare (65 percent) and technology sectors (59 percent), the profile of leadership accountability was higher than average. So too were expectations in the US (70 percent), Brazil (67 percent), and the UK (63 percent). High-profile debates on diversity, immigration, social inclusion and pay equity have raised employees’ expectations of leadership to engage in political and social issues, particularly in the US (51 percent), China (41 percent) and the UK (38 percent).
This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.