Section AWhen you talk about China and India’s seemingly unstoppable growth, nobody’s surp

Section A

When you talk about China and India’s seemingly unstoppable growth, nobody’s surprised. After all, the increasing economic strength of the two countries has dominated the news for the past few years. But both China and India face some substantial demographic hurdles to continued expansion. Despite the billion-plus citizens of each country, both may simply lack sufficient qualified workers.

(86) China is a rapidly aging society whose current challenges of unemployment and overpopulation will, within a decade, shift to different problems; labor shortages and an elderly population with too few children. In fact, China may be the first country to go gray before it reaches developed status. The World Bank estimates that by 2020 the mainland will face a lack of even unskilled labor due to aging.

China is already facing a shortage of skilled labor. Construction sites lack welders, skilled machine operators, and plumbers. And a recent report said the country is short some 750,000 managers. Despite a 95% literacy rate among all but the oldest citizens, there are not enough well-educated Chinese. (87) This is in part due to a lack of schools that combine basic theory with practical skills and a focus on passing the elite university exams. So despite rising salaries, many of those entering China’s workforce cannot learn the skills they need.

India seems to have an age advantage, with half its population under 25. In the long run, this gives them the upper hand. But at present, India shares China’s problem of an insufficiently educated workforce. Citigroup reports that India’s talent pool isn’t deep enough to meet demand in industries including textiles, aviation, telecom, retail, and engineering.

By some other measures, both countries look pretty good. China graduates about 1. 7 million students from 1,500 colleges and universities annually, of whom 350,000 are engineers. India produces about 3 million college and university graduates, including 440,000 engineers. Those numbers, though, don't tell the whole story. (88) Only 10% to 25% of these graduates are employable by multinationals, and this is only partially because of language challenges, which every human resources executive I’ve met who works in China or India agrees with.

The source of the problem is cultural. Young people in these countries are highly motivated to study and learn, but only in theory. There is no tradition of practical application. So engineers don’t go into operations, factories, or mines, and don’t really know the machines and conditions for which they are designing processes. (89) Chinese and Indian students who have just earned BAs want to pursue MBAs right away, and neither they nor their parents understand the value of practical experience. The degree is seen as a trophy, a traditional ticket to higher status.

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