Going down the brain drain(2)

Both India and China are looking seriously at the issue.

For a couple of decades now, China has had programs to lure back more "returnees" — Chinese nationals who have gone abroad to study or work and have not come back. The country also has programs in place to attract more foreign talent.

The Associated Chambers of Commerce and Industry of India (Assocham) estimates that the flight of Indian students abroad costs the country around $13 billion a year. And in a report last month, the group noted that the number of available places for MBA students in India jumped from 96,000 in 2006 to 360,000 in 2012, but many of those graduates could not find jobs at home and often needed to go abroad to shore up the quality of education.

"We have a peculiar situation. On the one hand, there are no jobs available; on the other hand, corporates are searching for skill sets not available with the students," noted Assocham. The option is to study abroad, and a foreign degree often translates into a foreign job.

But while India and China may be large enough to absorb the problem with limited repercussions to their economic growth, smaller countries such as Malaysia — with a population of just 29 million — may have a more difficult time.

Malaysia has 46 universities that graduate 180,000 people every year. That's about half of the number of students that India generates just in business and a fraction of the 7 million university graduates that will hit China's job market this year.

Malaysia's brain drain problem is large enough that the World Bank has labeled it "intense". Part of the problem is structural and part is economic. Many of the people that are leaving are of Chinese descent. Some of them feel sidelined by policies that give native Malays greater privileges.

According to TalentCorp, a government organization tasked with bringing Malaysians back, as many as 300,000 university-educated Malaysians have left in the past decade, about 10 percent of the country's graduates. TalentCorp has managed to attract almost 2,000 back since 2011, thanks to a variety of government programs. But the number of people returning is but a fraction of the number that is leaving.

The Philippines is also facing a significant brain drain problem, exacerbated by the English fluency of most of its graduates.

And the problem is not confined to East Asia.

On the other side of the continent, Israel is increasingly concerned about the problem, which was highlighted earlier this year when three Israeli chemists won the Nobel Prize. That would be good news, except that two of them — Arieh Warshel and Michael Levitt — are living and working in the United States.

Israel is losing about a third of its top-tier talent, according to a recent study by the Taub Center for Social Policy Studies. The center found that 29 scholars left the country in 2008 for every 100 who stayed. Israel has put in place the Israel Brain Gain Program, a joint venture between government and universities to identify and, if possible, lure back Israeli academics living abroad.

An emerging trend is that talent may be moving within the region, rather than flowing into North America or Europe as it traditionally has, because of economic growth in the West slowing down. The fear is that when economies in North America and Europe return to growth over the next few years, emerging countries in Asia may see some reverses in the gains they have made in retaining or attracting talent.

In a recent study, Boris Groysberg and Deborah Bell of Harvard Business School found that Asian companies are hiring fewer people than those in North America or in Australia and New Zealand, but more than companies in Europe or Russia. About 69 percent of companies in Asia are hiring.

Interestingly, though, Asian companies are more likely than any others to hire locally. All of the Asian companies interviewed said they planned to hire people in Asia, compared with 89 percent of North American companies that planned to hire in their own markets.

For the time being, the brain drain is affecting developing countries that grow enough to generate a critical mass of talent with skills to participate in the global labor force, or enough students with the means to study abroad. But as these countries grow and begin to attract back more of their people, the fear of a flight of talent may surface in the more developed countries in the region.

Australia, for example, continues to attract talent but some are seeing a shifting tide of top talent gravitating toward faster-growing markets elsewhere in Asia.

"We're seeing more and more and we expect it to happen more in the future. There will be a talent drain," says Alex Malley, chief executive of CPA Australia, an accountancy body.

Part of the problem is regulatory. Australia is grappling with an overabundance of regulations including, currently, the possibility of legislation around salaries for CEOs.

"At one level, you could comfortably argue that that sounds sensible. But it presumes a sovereign state. If the very best people can earn much more in other markets, then by protecting yourself in salary levels in your own country can simply undermine itself," says Malley. "Those people will go and trade somewhere else."

"Talent follows opportunity and if Australia does not provide its own opportunities, then talent might die," he says. "And when you want to talk to Gen Y and Gen X … they are far more adept at being mobile, they are far more adapted to looking at opportunities outside their markets."