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Soft skills for business success

Weekly Economic Briefing

The Weekly Economic Briefing is written by two senior Deloitte Economists, David Rumbens from Deloitte Access Economics in Australia and Ian Stewart Deloitte’s Chief Economist in the UK. They provide a personal view on topical financial and economic issues. Subscribe to receive the Weekly Economic Briefing in your inbox!

Australian economic briefing by David Rumbens

This section of the briefing provides a snapshot of key economic data and issues of relevance to Australia.

Improving human capital – harnessing the collective skills and knowledge of people to create economic value – is increasingly seen as important for economic growth. But do we fully understand the workforce skills necessary for success?

Business success is not just achieved by having people with the right formal qualifications and technical skills. There are also a range of equally important ‘soft skills’ – think communication, teamwork, problem solving, emotional judgment, professional ethics and global citizenship – which are vital in the workplace, and which Deloitte Access Economics explores in the recently released report, Soft skills for business success.

Globalisation, digital disruption and demographic change mean that soft skills will become increasingly important in the future. And as technological advancements see some business functions increasingly automated, employees roles will take on a more human-centric, customer service focus. The right people for these roles will need to be able to combine technical knowledge with essential human skills such as communication and empathy. In fact, soft skill intensive occupations are expected to account for two-thirds of all jobs by 2030, and the number of jobs in these occupations is expected to grow at 2.5 times the rate of other jobs.

For now, a range of studies show that employees with high levels of soft skills can lift business performance. Emotional judgment can lead to lower levels of staff turnover, global citizenship can help businesses reach global markets, and digital literacy and communication keep more customers engaged.

Does our workforce have the skills necessary to foster business success and be job-ready for the future? International evidence shows that Australia performs reasonably well in attainment of soft skills relative to other nations – over 90% of graduates are recognised by their employers as having problem solving and team work skills. A range of data on attainment of soft skills in Australia is shown in the infographic below..

Australian performance for key soft skills

Source: Soft skills for business success, Deloitte Access Economics

However, despite Australia’s relatively high soft skill attainment, there is also significant under-reporting of this attainment, with just 1% of Australians reporting soft skills on their LinkedIn profiles. This under-reporting and under-recognition of soft skills is generating a gap, with 25% of employers having difficulty filling entry-level positions because applicants lack soft skills.

People are now more likely to change careers (and often more than once) over the length of their working life. In this context, its effective soft skills that can often be transferred across different career paths, and hence become a real job currency of the future.

For more information on the Australian brief, please contact the co-authors, David Rumbens and Christine Li

A personal view from Ian Stewart, Deloitte’s Chief Economist in the UK.Subscribe to and view previous Monday Briefings at:

  • Equity markets seem to be partying like there’s no tomorrow. After a surge in recent weeks equity markets in the US, Germany and the UK are close to all-time highs.
  • If you had bought UK equities a year ago, five weeks before the EU referendum, you would have made a 27% return.
  • Investors are increasingly venturing into riskier assets as confidence grows. This year emerging market and euro area equities have easily outperformed last year’s stars, US and UK equities. The value of previously unloved assets, such as Greek equities and euro area banks, has shot up by 20% since January.
  • Why are investors so cheery?
  • Part of the story is that the global economy, and profits, are accelerating, and at a rather faster pace than expected. Markets, like people, love positive surprises, and the global economy has delivered a few in recent months.
  • Growth in emerging economies, rather than crashing, as many feared, has accelerated. China has dodged a hard landing and the Indian economy has moved into top gear.
  • Activity is the rich world has also firmed, led by an improvement in US activity. Fears of a post-referendum recession in the UK have dissipated and the euro area is doing better than expected – and well enough for the European Central Bank to declare victory against deflation. Japan, an economy that gets little coverage in the West these days but is the world’s third largest, seems to be turning the corner. Japanese growth forecasts for this year have tripled to 1.4% in the last 12 months.
  • First-quarter company results show that the recovery is feeding through to profits. More than 70% of US and European companies which have so far reported have announced stronger-than-expected profits.
  • Despite widespread concern about political risks markets have so far shrugged off two huge political surprises, in the form of Britain’s Brexit vote and the election of President Trump.
  • More recently, victories for mainstream politicians in the Dutch and French general elections have cheered investors. So, too, has Angela Merkel’s surprise success, earlier this month, against the centre-left SPD, in Germany’s most populous state, Nord Rhine Westphalia. That outcome has bolstered expectations that Ms Merkel will win against her main challenger, the SPD’s Martin Schulz, in September’s Federal elections.
  • Equity markets have certainly bought into the idea of stronger global growth. And the hard data, by and large, confirm that global activity has picked up. But we need to keep this in perspective. Global growth is firming, but it is hardly booming. Plenty of risks and uncertainties persist. But that doesn’t seem to be the way financial markets see it.
  • Last week the US VIX index – a widely watched index of market anxiety known as the “fear gauge” – dropped to its lowest level in 23 years. I doubt that policymakers and corporates feel quite that cheery.

PS – Last week the Economist reported on how the e-commerce boom is disrupting the US retail sector. 4,000 US stores closed last year and the retail sector has shed 50,000 jobs since January. Despite strong US consumer confidence and growth in retail spending S&P Global Ratings expects more US retailers to default in 2017 than in the recession of 2009. Having read the article I checked the equity market performance of the overall US retail index. I was surprised to discover that, in the last 10 years, the sector as a whole has outperformed a strong rally in the wider US equity market. While some department stores have suffered, other retailers, including TJ Maxx, Foot Locker and Children’s Place, have done very well. It provides a good example of how, even in sectors seeing profound disruptive change, there are winners.

The FTSE 100 ended the week up 0.4% at 7,471.

Global stock markets recovered most of the losses they made earlier on over perceived risks to President Trump’s administration and his plans for tax cuts, infrastructure spending and deregulation.

Economics and business

  • The manifesto proposed raising the Immigration Skills Charge from £1,000 to £2,000 per worker pa, meaning higher charges for firms employing non-European skilled workers
  • Prime Minister May called for an end to ‘selfishindividualism'
  • The Labour Party’s manifesto proposed “excessive pay levy” for those earning above £330,000, higher tax rates for those earning more than £80,000, increases in corporation tax and the minimum wage and the nationalisation of the railways, water utilities and Royal Mail
  • The UK unemployment rate fell in March to 4.6%, the lowest level since 1975
  • UK retail sales bounced back strongly in April
  • The pound rose to $1.30 for the first time since September, making it the best-performing G10 currency this year
  • France’s unemployment rate fell to the lowest level since the depths of the euro crisis
  • Consumer confidence in the euro area rose in May to its highest level since July 2007
  • The euro area in March recorded its widest trade surplus with the rest of the world since the launch of the euro in 1999
  • The Japanese economy has just registered its longest run of sustained growth in more than a decade
  • The Fund for Peace’s index of global “fragility” reports that despite rising political populism in the West the world become more stable in 2016
  • Total absolute debt held by US households has now surpassed the peak reached during the recession in 2008
  • New research by the Guardian newspaper shows that private security workers outnumber public police officers for the majority of the world, partly as a result of growing income inequality and fears over terrorism
  • In Britain, 232,000 private guards were employed in 2015, compared with 151,000 police officers, according to the Guardian’s data
  • UK supermarkets are making more space for increasing amounts of less-than-perfect produce, including a campaign to encourage use of blemished bananas and new “wonky” ranges

Brexit and European politics

  • The European Court of Justice ruled that an EU/Singapore trade deal did not need ratification from all 38 national and regional parliaments in all areas, bolstering hopes of smoother EU/UK trade talks
  • The EU hopes to start Brexit negotiations as soon as the day after the UK’s June 8th election, according to the bloc’s chief negotiator
  • Countries seeking a trade deal with the EU should meet European standards on labour law and fair competition, according to EU competition commissioner Margrethe Vestager
  • Mrs Vestager cited Canada’s agreement with the EU as a model for the future as it enshrines recognition of labour standards, human rights and animal welfare
  • The New York Times is offering six-day “Brexit means Brexit” guided tours of London, giving American tourists the chance to “examine the historic implications of a historic vote” – taking in pub lunches in Westminster and visits to watch sessions in the Houses of Parliament
  • Spain is to push for a post-Brexit deal on citizens as close as possible to the current status quo, according to the country’s foreign minister
  • The UK’s Chartered Institute of Procurement and Supply (CIPS) says nearly a third of managers are looking to shift from EU to UK-based suppliers, in part to mitigate against increased foreign exchange volatility
  • Almost half of European businesses have started looking to replace British suppliers with those from the EU because of concerns about higher tariffs after Brexit, according to a CIPS survey


And finally…

Politico reports that leading Irish cheese manufacturers – who supply around a third of the UK’s cheddar – are now contemplating switching to mozzarella production because of fears about Britain crashing out of the EU – Chexit.