The South Asian region primarily comprises India (IN), Pakistan (PK), Bangladesh (BD) and Sri Lanka (LK), as well as smaller nations, like Nepal, Bhutan and Maldives. According to the World Bank, South Asia has regained its lead as the fastest growing region in the world, supported by recovery in India.
With the right mix of policies and reforms, growth is expected to accelerate to 6.9 percent in 2018 and 7.1 percent next year. The growth rate of developed economies has remained stagnant at lower rates in the range of 1% to 3%, and those of other developing nations (like BRICs, except for India) remains flat or has even turned negative. Amid sluggish global growth, the South Asian region has emerged with consistent and strong performance. According to the World Bank, India, the bellwether of the group, is expected to accelerate growth from 6.7 in 2017 to 7.3 percent in 2018 and keep inflation below 5 percent.
Economic growth in Bangladesh remains strong with growing industrial production, remittances and investment. Growth is expected to moderate from 7.3 percent in 2017 to 6.5 percent in 2018. Inflation and budgetary pressures continue to be high. In Pakistan, economic growth increased from 5.4 percent in 2017 to 5.8 percent in 2018 supported by major infrastructure projects and low interest rates. However, high inflation remains a concern. Sri Lanka’s economic performance has been hurt by prolonged drought but is expected to accelerate from 3.1 percent in 2017 to 4.8 percent in 2018, with arrested inflation. While economic growth is well supported, there is dismal performance as per the Ease of Doing Business rankings by the World Bank. All four of these countries rank between 100 to 180, in a ranking of 190 countries globally. So, there is much scope for improvement, consistently.
The demographic advantage
South Asia, especially India, Bangladesh and Pakistan, is home to a young population, and nearly 40% of the population is in the age bracket of 25-54 years. Amongst them, Pakistan is one of the younger countries, with an average age of 23.8 years, followed by Bangladesh at 26.7 years, India at 27.9 years and Lanka at 32.8 years. All these countries are looking at a talent landscape, that will be dominated by the millennials and generation Z, with a large percent of working individuals belonging to these generation segments. As corporates in South Asia welcome four to five generations in the workplace, it will be critical to see how HR professionals manage to attract and retain its talent.
"More than 1.8 million young people will reach working age every month in South Asia through 2025 and the good news is that economic growth is creating jobs in the region," said Martin Rama, World Bank South Asia Region Chief Economist. But providing opportunities to these young entrants while attracting more women into the labor market, will require generating even more jobs for every point of economic growth."
While it is popularly called out as a “demographic dividend,” it also infers that economic growth and resulting job creation need to serve the needs of the millions of new graduates entering the workforce each year, in all these countries. There is clearly a mismatch between skills employees possess, and skills demanded by the employers. The current educational and technical infrastructure is not producing enough “ready for work” employees, in the South Asia region, uniformly. This puts further pressure on the talent equations, accentuating the ‘skills shortage’.
Shifting workplace trends
With a younger workforce, employee expectations in these countries are changing. While the baby boomers and traditionalists sought the comfort of long-term careers, the younger workforce in South Asia would like to have the liberty to navigate their own careers. The corporate world in all of the 4 countries, in South Asia, is looking for and working hard to ensure that they are able to attract as well as retain this younger workforce, in a multi-generational set-up. Not surprising that the attrition in all of these four countries in South Asia is well in its double digits. There is a ‘war for talent’, as the right talent is both limited and comes at a price. Organizations will have to pay attention to map organization’s growth with employee aspirations and needs, while balancing the same with ‘affordability’.
Another aspect that binds these four South Asian economies, is the way organizations are forecasting salary increases. All of these four countries have been forecasting and doling out 9-10% of salary increases, year-on-year. One major factor contributing to the same, of course, is the limited talent that is moving around and is fungible. There is a clear indication of skills shortage, resulting in the current experienced talent having a greater demand and thus, a greater war-for-talent. Managing employee expectations, co-existing with burgeoning opportunities in the market, is fueling compensation, in all of these four economies. Companies in this region, continue to struggle to defend their compensation budgets, especially when companies across Asia show a median increase of 5.2%.
There are multiple more parallels that can be drawn. In view of the multiple challenges, HR teams across South Asia region face common challenges, especially in the large four economies. It is important that there is greater knowledge sharing within the region, as companies gear to tackle similar issues and hitches of talent management. With higher attrition and skills shortage, companies need to walk a tight rope of attracting and retaining its key talent, with a much stronger employee value proposition, targeted to the demography that demands it. Its interesting times for the HR in South Asia, in this dynamic environment.