Addressing the skills gap

EdTech Europe’s Charles McIntyre asks, can online digital talent platforms solve the skills gap crisis?

Economic development is a bumpy ride at the best of times, but with a little bit of foresight we can smooth some of the excess. None more so than in the supply of human capital and talent where we know there are significant skills gaps and without some radical attention some believe these imbalances could cause a potential global loss in GDP of over $10 trillion within the next 15 years[1]

Since the 1980s there have been big advances in the labour market with over 900 million non-farm jobs created in developing economies and over 50 million new high skilled jobs generated. These changes have been propelling global growth until now. However, sadly no longer. We now see that for a variety of reasons there is a growing mismatch between the skills required and the expected supply.

‘There are advanced economies such as Japan and German that have ageing populations that are highly educated but where labour shortages are expected to become increasingly pronounced in the years ahead’

The additional challenge is that the underlying causes and requirements vary significantly between economies. There are advanced economies such as Japan and German that have ageing populations that are highly educated but where labour shortages are expected to become increasingly pronounced in the years ahead.  We have other economies, like India, which has a much a younger population where the issue is different in that there may be a surplus of highly skilled workers being educated with respect to the jobs that the domestic economy can actually generate.

I have highlighted some of the characteristics of different economies below by reference to their size (bubble size), average age of the population (horizontal access) and education levels (vertical access).  The top right quadrant includes economies with educated but ageing populations while the bottom left quadrant includes countries with younger and less educated populations. It is worth noting the relative positions of China and India.

Source: World Bank and UNDP

To address the skills gap challenge there are a range of policy initiatives that can be implemented around job training, increasing labour force participation, reducing unemployment and increasing productivity. All sounds very easy, but in practice governments struggle to pull all the leavers required. These types of structural issues are costly to tackle and the pay back is slow, particularly in political terms. However, at the heart of the challenge is an issue of labour market efficiency: how to match supply with demand in a cost effective manner? 

Here I turn to some impressive work carried out by the McKinsey’s Global Institute which has looked into the role that online digital platforms can play in addressing human resource issues.  Online talent platforms are marketplaces and tools that connect individuals to the right work opportunities. Examples of these platforms range from websites that aggregate individual resumes such as and LinkedIn as well as the digital marketplaces of the likes of Uber and Upwork. The economic rationale for these digital platforms can be seen in the projections that McKinsey has produced which suggest that online talent platforms could raise global GDP by up to $2.7 trillion and increase employment by 72 million full-time equivalent positions by 2025.

‘Online talent platforms are marketplaces and tools that connect individuals to the right work opportunities’

In 2014, Manpower conducted a survey of 37,000 employers around the world. Amazingly, 36% of them said they could not find the talent they needed.  The skill gaps were right across the spectrum, not just computer programmers but also welders and electricians. The first key element for a marketplace is information, the more perfect the better it clears.  Online talent platforms accelerate the provision of information about job openings as well as the talent available. Reducing job search time is the largest single benefit that McKinsey identified.  The projected number of beneficiaries amounts to approximately 230 million people by 2025 or 5% of the working age population.

The benefits do not extend to just improving job searches but also to the quality of matches between job and employee. The screening and assessment process can be significantly improved using online platforms, leading to better staff retention rates and productivity. In addition, those outside of the ‘full-time workforce’ including the retired, part-time workers and women (often as full-time mothers) not in employment are more able to find jobs.  As the effectiveness of online platforms starts to play out, so in turn governments will be able to reduce spending on labour market programmes, an estimated $18 billion per annum.

As the world of work goes online so does the map of skills gaps across the globe. With this increasing visibility we can start to plan for the future, better. Governments can stimulate educational and training establishments with much greater accuracy, in the knowledge that policy can be both targeted and measured. The student going into vocational training can actually see where the skills gaps are. The good news is that online talent platforms will have dramatic positive impact for nations as well as empowering the individual.


[1] Boston Consulting Group: The Global Workforce Crisis June 2014


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