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ON CREATING SUSTAINABLE AND INCLUSIVE GROWTH

This week’s headline findings

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From laundromats to dental practices, micro-, small, and medium-size enterprises (MSMEs) account for two-thirds of employment in advanced economies and nearly four-fifths in emerging markets. However, their productivity significantly lags behind that of larger companies, particularly in emerging countries. Closing this productivity gap could boost global GDP by 5–10 percent, say McKinsey Global Institute director Olivia White and coauthors. Drawing from their granular analysis of 16 economies across various sectors, the authors recommend that MSMEs collaborate with large firms to enhance R&D and technology capabilities, cooperate for knowledge and resource sharing, and use government policy support to access technology, new markets, and financing. They argue that improving MSME productivity benefits both MSMEs and large enterprises, as their productivity moves in tandem in most subsectors.

Gen Z could be the answer to the US manufacturing labor shortage, wherein barely six in ten vacancies have been filled since 2020. Although Gen Z has demonstrated a greater interest in manufacturing careers than previous generations have, and more comfort with its technologies, they also value meaningful work, career development, flexibility, and caring leadership, according to research by senior partner Fernando Perez and coauthors. To attract and retain these younger workers, manufacturers could offer flexible work arrangements, provide skills-based training that empowers them to solve operational issues, and connect their work to a broader sense of purpose. But leaders should act swiftly to engage their Gen Z workforce, the authors say, given that 48 percent of them intend to leave their positions within three to six months.

Cash may soon lose its luster in Latin America, where many people still receive wages and make purchases exclusively in cash. That’s because the region is rapidly undergoing “bancarization,” the expansion of financial services, including online banking, to the unbanked population. A 2023 survey by partner Jesús Moreno and coauthors reveals that 70 percent of Spanish-speaking Latin American consumers prefer noncash payments, such as debit cards, credit cards, and mobile payments, compared with just 41 percent in their 2021 survey. The authors suggest that this trend presents opportunities for banks and financial-services companies in the region to innovate and customize payment solutions that improve customer experiences. They can make their offerings more appealing to specific customer segments that favor one digital payment method over another; 17 percent of millennials in Latin America, for example, prefer mobile payments, while only 12 percent of Gen Z consumers do.

OTHER FINDINGS OF NOTE

WHAT WE’RE READING

A recent edition of Author Talks, exclusive to the McKinsey Insights app, features writer, facilitator, and speaker Elaine Lin Hering discussing her new book, Unlearning Silence: How to Speak Your Mind, Unleash Talent, and Live More Fully (Penguin Random House, March 2024). Hering highlights the pervasive culture of learned silence in the workplace, particularly how it suppresses minority voices, and suggests strategies that leaders can use to break it, such as normalizing dissent and sharing positive stories of colleagues speaking up and being rewarded for doing so.

The case study collection Rewired in Action illuminates companies that have launched digital transformations to build value. Supported by technical and industry expertise from McKinsey, these organizations have changed their trajectories through the integration of digital and AI.

— Edited by Jermey Matthews, editor, Boston

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