At the St. Petersburg International Economic Forum, David Gray of PwC Russia discussed Russia’s ability to drive future economic growth with its existing talent pool, especially the younger members of Generation Y.

Economic Development Minister Alexei Ulyukayev (left) and German Gref, the head of state-owned Sberbank at the St. Petersburg International Economic Forum. Photo: RIA Novosti

As global CEOs gathered on May 22 at the St. Petersburg International Economic Forum (SPIEF) to discuss the most important global development issues, one theme attracted special attention: How can Russia’s talent pool help the country improve its global competitiveness?

At an SPIEF panel discussion (“Unleashing Russia’s talent pool to develop its competitive standing”), participants agreed that one important factor is Russia’s educational system, which needs to adjust to the needs of business.

“We have a very good educational system [in Russia] that was built during the Soviet period, and we are very grateful for that,” said Anatoly Karachinsky, President of IBS Group, on Thursday, May 22. “We have a big problem though. The Soviet Union built its education system according to the economic geography that the Soviet Union had, and after the USSR turned into Russia, we’ve changed a lot of things. The only thing we didn’t change was our education system.”

He added that “businesses need personnel with certain competencies and these kinds of people are not being produced by our education system.”

This is not just a uniquely Russian problem, though. A new study by PwC, which was based on 1,344 interviews with CEOs in 68 countries during the last four months of 2013, showed that business leaders are more concerned than ever about finding the right people to ensure further growth of their companies. 63 percent of CEOs claim that the availability of key skills is the biggest threat to their organization’s growth. 93 percent of CEOs say they need to change their strategy for attracting and retaining talent. Russia is no exception here.

Others agreed that this is a universal problem and that certain reforms are long awaited.

Some believe that the problem might be of a different nature. As Dmitry Peskov, Young Professionals Project Director from the Agency for Strategic Initiatives (ASI), pointed out, we cannot expect any breakthroughs now that the "millenials" of Generation Y – those born between the early 1980s to the early 2000s - are to dominate labor markets.

“This is a completely different generation... They have good communication skills but that’s about it.”

He argued that members of Generation Y “are not rebels.” “This is a service generation, servile generation, service-oriented generation. They are not leaders. They are happy to follow… First, we need to digest this generation.”

About this and other issues related to the global war for talent, Russia Direct talked to David Gray, Managing Partner, PwC Russia, on the sidelines of the St. Petersburg International Economic Forum.


Participants of the St. Petersburg International Economic Forum. Photo: RIA Novosti

Russia Direct: Why was the discussion on unleashing Russia’s talent pool to develop its competitive standing held during the most important economic forum in Russia?

David Gray:  I think the importance of talent cannot be exaggerated. I do believe that the future is all going to be about the knowledge-based economy. If Russia is going to be competitive and successful, it’s going to have to win this war for talent. I do think that Generation Y is also going to be more mobile globally. So it’s very important, as we will be figuring out what we want to specialize in. And we focus on developing and retaining that talent in the country.

RD: Do you agree with the remarks made by Mr. Peskov about Generation Y?

D.G.: I think it is absolutely right that Generation Y is a different generation and it has different ambitions. Where I would disagree with him is I don’t think Generation Y is unambitious. He is correct that they look for a high level of benefits, as he highlighted. But I do think Generation Y looks for challenges. We see that Generation Y wants to learn quickly and wants to do things differently. They do challenge how we do things. So I do think it’s a very creative generation.

RD: Do you see any differences between Generation Y in Russia and elsewhere in the world?

D.G.: PwC is a global network of firms. We’ve been operating in 157 countries. So, I do have the opportunity to talk to people from many of those countries. There are common things, like their use of technology. The way they use technology is completely different from how I use it. They are brought up with this access to technology and they take it for granted. They are much more open to it. So I do think there is a lot of commonality. There are some specifics about Generation Y in Russia.

RD: Like what?

D.G.: Well, Generation Y is coinciding with this drop in the birth rate that we had in the 1990s, which means that actually they are more scarce; since there are fewer of them, they are somewhat spoiled with the labor market. We are all pursuing this generation to try and bring them into the business. There is a danger that they don’t have the same work ethic perhaps as some of their counterparts in other places because there is less competition.

You see youth unemployment in Europe is at 20-30 percent. We don’t have this issue in Russia. So there is a danger that they are a little bit spoiled by that and they don’t have that drive as a consequence to do something creative, to innovate, to use their talents to produce new products, new ways of doing things, and new services as you see in some of the other economies.

In Russia we have a significant drop in the number of people coming into the workforce, which does mean that they are fought over as everyone is trying to attract them. And there is a danger that this makes them a little bit too complacent in terms of their need to apply themselves. I remember when I entered the business world I very clearly understood that it was going to be extremely hard work for the first three to five years; you have to learn very quickly, learn a lot, and apply it.

But all of that experience is the foundation for the rest of your career. I think that Generation Y has this mentality where they think, "Well, I can leave for another job because there is high demand in the market and therefore my career is less important to me because I can earn a good living without needing to perhaps work quite so hard."

I think it’s a shame because I do think those are the key years in which a lot of this creativity happens. We know from academic studies that many of the great scientific discoveries, particularly in math, the best work is done by very young people. So, it will be a shame if in Russia we have a generation that is less engaged with work, and therefore we miss out on the potential they have to generate new ideas and innovations for Russia.

RD:  Should we just wait when this period passes and Generation Y will be replaced with another one?

D.G.: No. In PwC we work very closely with this generation to try and motivate them, and capture them, and communicate to them the importance of their careers. We try to instill in them how important it is not to think about three months, six months, or a year but rather to think about their career in terms of five years or 15 years. 

We engage with them around designing programs that challenge them around this idea of creativity to help us to transform our business in terms of how we deliver our services and which services we deliver to our clients.

RD: Many today talk about the importance of closer ties between business and education. What do you think about it?

D.G.: I think this a key issue not just for Russia but globally. There is a joke in the UK about what do you say to an English graduate, and the answer is: “I’d like a cappuccino and some sprinkles on the top of it.” There is an imbalance between the skills that are coming out of the education system and the needs of business.

So I do think that this is an area where business and government need to focus on cooperation to make sure that the types of skills that businesses need in order to develop (we hear some about that in terms of regions as well)… And it’s not just technical skills. It can be skills like management skills when we hear about restaurants.

We need more people who are skilled at running restaurants. That’s a tangible benefit for society. So we need to match those up, the supply and the demand to make sure that we are not wasting resources on producing – like we do in the UK sometimes – tens of thousands media graduates when there are only two thousand media graduates that we need a year.

RD: One of the panelists said that, no matter how talented you are, you need to go and get some education. Do you agree with that?

D.G.: I think history is full of examples of people who had very little formal education but still achieved a great deal. But I do think that’s an exception rather than rule. I do think that education is extremely important.

I think that’s extremely important that we focus on education as a core thing that we need in order to produce the workforce of the future. I do think that there will always be anecdotal stories about guys doing things in garages, or a guy who has no formal education but turns out to be a great artist, but I think the reality is that a core education is essential. And having a high quality – which Russia traditionally had – of core education puts a country in an extremely favorable position.

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