Together, these factors are threatening growth by shrinking tax bases, lowering organizational resilience and increasing supply chain disruptions. Skills shortages and disparities in access to education are undermining efforts to future-proof workforces. And the nature of work and skills is changing fast, meaning that organizations that don’t invest in continuous learning could be left behind.
Governments can shape this increasingly fluid labor market by investing more in drivers of economic development and growth, such as education. They can also galvanize the private sector to invest in formalizing work and upskilling employees, and regularly review how they measure labor market health.
4. Deficient digital capacity and cybersecurity
Protecting sensitive data is a top priority for public sector organizations, but aging technology infrastructure, siloed systems and technical debt make them vulnerable to cyber attacks.
This threat is likely to accelerate in 2025 as artificial intelligence (AI) and quantum computing technologies mature. So, it’s urgent that governments and public sector institutions future-proof digital security by adopting cloud-based services. That’s as well as building a pipeline of cybersecurity professionals and increasing the digital and cyber resilience of public servants.
Challenges around skills shortages and data sharing are also preventing many organizations from using digital technologies to improve how they serve constituents. Upskilling employees to work with technology will unlock benefits, while improving interoperability and standardizing data governance, ethics and security controls will enable better use of data.
5. Failure to adapt to a new geopolitical landscape
After a decade of growing geopolitical complexity, the world is a more multipolar place. This means a greater number of actors are influencing international politics and the day-to-day agendas of government and public sector institutions.
The success of antiestablishment candidates during the global election supercycle also showed that people are seeking confident leadership in the face of growing uncertainty. This could in turn lead to a more transactional and opportunistic way of engaging internationally. It could also accelerate the trend for geopolitical divisions to spill over into global trade and conflict.
In this volatile environment, diplomacy becomes crucial. Where politics impede high-level dialogue, strong working-level relationships across agencies and borders will be key to de-escalating tension. At the organizational level, investing in data and predictive analytics will equip governments to better anticipate and prepare for disruption.