Kingdom ‘must focus on work force productivity’

JEDDAH: The Saudi work force must double its productivity in order to maintain the current rate of economic growth over the next 50 years, given expected demographic trends, says eminent author Jonathan Woetzel.

“Saudi Arabia is one of the world’s fastest aging populations. That said today it has a relatively youthful work force,” said Woetzel, one of the three authors of the book titled No Ordinary Disruption: The Four Global Forces Breaking All the Trends.
“This makes it doubly important for the Kingdom to engage its work force in productivity enhancement, improving the skills and participation rates of the entire population, in order to preserve the growth and standards of living its people expect,” Woetzel added.
Speaking to Arab News during the book launch in Jeddah recently, he said:
“In Saudi Arabia, we hope our book is able to help understand the magnitude of the forces, and how they may affect consumers, society and all sectors of the economy.”
He said: “We believe Saudi Arabia’s future success — as with all economies — will depend on its ability to understand these challenges, operate with a high degree of agility, and engage with a sense of optimism to capitalize on the new opportunities this disrupted world will afford.”
Based in Shanghai for more than 15 years, Woetzel has been instrumental in establishing and scaling McKinsey’s presence in China.
He works with Chinese and global businesses to develop strategies, organizations, and operations for global growth, and with city, regional, and national authorities on energy, sustainability and economic development.
Richard Dobbs and James Manyika are the other two authors of the book.
Asked how relevant is the book’s release in Saudi Arabia, Woetzel said: “Today our world — with Saudi Arabia no exception — is undergoing a transformation as a result of four major disruptive forces. Any single one of these is greater than any disruption the world has seen before. But they are all impacting on the global economy at the same time and we estimate that — in terms of scale and speed — the force of this convergence is 3,000 times that of the British Industrial Revolution.”
These changes, he said, will have major implications for business leaders, policy leaders and citizens alike the world over.
“In No Ordinary Disruption, we argue that succeeding in this disrupted world will depend on resetting our collective intuition to understand not only the scale of the coming changes driven by these forces, but also the second and third order effects of them,” Woetzel said.
Asked how grave is the potential damage from rising food prices to the Middle East economy and stability, Woetzel said rising food prices challenge short-term prosperity but are unlikely to pose a threat on their own to economy and stability.
What is more important is how companies and policymakers respond to the reality of a more volatile resource environment.
This will require integrating volatility into daily purchasing decision-making, designing products and processes to minimize resource risk by maximizing efficiency and integrating the cost of resource volatility into product design.
Most food for example is wasted in transport to the end consumer but using technology to minimize food waste and maximize agricultural yields are opportunities for improvement.
The Middle East is relatively less well-connected than many other parts of the world which poses a handicap to its growth and development.
Increasing connectivity should be a priority of policy makers and executives as greater access to flows of goods, services, technology, people and capital lead to improved economic productivity and growth.
Discussing the book, Woetzel said: “In the Industrial Revolution, one new force changed everything. Today, our world is undergoing a much more dramatic transition with 3,000 times more impact due to four fundamental disruptive forces -any of which would rank among the greatest changes the global economy has ever seen.”
These forces are upending once reliable trends: the global capitals of consumer and business growth will be emerging market cities most Western executives have never heard of; the era of cheap capital is ending; training for new job skills can’t keep up with technology’s elimination of old jobs; after decades of oil shortages and even crises, the US recently surpassed Russia as the world’s largest supplier of oil and natural gas, and India has built the world’s most agile space program, spending less on orbiting a spacecraft around Mars than Hollywood spent on the movie Gravity.
“Whether we are business or policy leaders or ordinary citizens, the decisions we now make in the ‘era of trend breaks’ can no longer be based on our understanding of the world as we know it today.”
In No Ordinary Disruption: The Four Global Forces Breaking All the Trends, the directors of the McKinsey Global Institute (MGI), the flagship think tank of the McKinsey & Company global management consulting firm, interpret masses of illuminating data from the MGI’s 25 years of research to guide us through the next two decades of a dramatically different future.
With an urgent call to action to reset our intuition to an era of discontinuity, the authors dive deeply behind current headlines to analyze six emerging trends caused by four disruptive forces transforming the global economy:
The center of economic gravity is rapidly shifting toward emerging markets — and cities within them which few Western executives have heard of, such as Tianjin, in China or Porto Alegre, in Brazil. 440 emerging market cities will account for nearly 50 percent of the world’s additional GDP growth between now and 2025 and have already spurred the largest mass migration from the countryside to the city in world history.