For the first time in three years, the World Bank in January raised its forecast for global economic growth, mainly due to an improved outlook for advanced economies, particularly in the United States. According to the bank’s Global Economic Prospects report, we can look forward to an expansion of 3.2 percent for global gross domestic product, up from 2.4 percent in 2013. Shifting global growth patterns will influence business and HR strategies, especially among multinational organizations.
Despite more hopeful economic conditions in advanced economies, the World Bank has downgraded its forecast for developing countries from 5.6 percent to 5.3 percent for 2014. This comes after two years of the slowest growth recorded in emerging economies over the past decade.
Overall, most economists view this slowdown as a trend toward a more sustainable pattern of growth. Economists also are encouraged by the adoption of new economic policies in emerging markets, especially China’s recent attempts to shift its economic model away from fixed investment toward private consumption. Such changes are seen as beneficial to global trade.
These developments may already be affecting HR. Research from the Society for Human Resource Management (SHRM)—as part of its Ongoing Impact of the Recession series—found that HR professionals at U.S. organizations in 2013 were less concerned about global competition for workers than they were in 2012. HR professionals also reported that, from 2012 to 2013, the percentage of companies looking outside the U.S. for workers did not increase.
Shifting global growth patterns could affect both of these trends in 2014 and could lead to a rebalancing of global vs. domestic investments.
In SHRM’s Future Insights report, members of the Society’s Global HR Special Expertise Panel identified economic conditions as a key driver of international HR trends over the coming years. However, they expressed some caution over what economic growth might mean for employees and HR professionals: "The recession and continued global economic uncertainty has led organizations to rationalize their manpower by cautious hiring and moving jobs to low-cost destinations. The improvement in the economy may not result in a proportionate increase in the hiring of new workers."
A key risk to the global economy that the Global HR panel cited is the potential failure of educational institutions to keep pace with industry’s talent needs.
"Educational institutions, particularly in the developing countries, may not be able to deliver what industry wants either in terms of quality or quantity," according to the report. "This may put an additional burden on corporations to invest in training and developmental activities. The training would not just include technical competencies but also other important soft skills such as cross-cultural sensitivity, written communication skills, public speaking and leadership development."
Jennifer Schramm is manager of the Workforce Trends program at SHRM.