Many companies worldwide are struggling with labor shortages. According to Randstad, two-thirds of global leaders have faced a labor shortage within the past 12 months.
The rise of emerging technologies also worsens the workforce gap, creating a demand for these new skills. A recent European Commission report shows that labor shortages exist in various sectors and occupations. Still, the gap could further widen, driven by the creation of new jobs and the need to replace workers who will retire.
A labor shortage occurs when no available workers or skills fill the talent demand. For example, in the US, the number of vacancies has surpassed the number of hires since 2018, and as of July 2023, there are 1.5 jobs per unemployed person in the country. The problem exists in European employers, Australia, Singapore, and other countries.
What is causing the global labor skills shortage?
The Randstad article identified six reasons for the current skills shortage.
- First, the number of working-age people is not enough, and in some countries, people of working age are not willing to work. In Japan and Germany, a counter-trend is happening. People who are 65 and above are still choosing to keep working, which could help fill the skills gap.
- Second, the population is aging, and employers are concerned that there are not enough people to replace these retiring talents. In the US alone, 10,000 people reach the retirement age of 65 every day, and this trend will continue until 2029.
- Third, employers are not meeting talents’ expectations of flexibility. The Randstad 2024 work monitor’s findings show that talents increasingly prioritize work-life balance over pay. They want flexible working arrangements from employers, like flexible hours or working from home, which some employers are not yet prepared to offer.
- Fourth, unemployment rates are low globally, particularly in OECD countries. In some of these countries, it is their lower unemployment levels in the last two decades. Countries like Germany, the US, Japan, the UK, and Canada still struggle to find enough talent to fill many positions, while Spain and Italy have many people out of work.
- Fifth, although some countries have had rising job vacancy rates, they still need help to fill some specialized skills, particularly technical and emerging skills in Artificial Intelligence, integration of advanced technology, and automation in the workplace. While this emerging technology helps to streamline business processes and improve workplace efficiencies, it also requires talent with the skills to operate it.
According to the article, the labor shortage has impacted manufacturing, supply chain, and healthcare most.
Construction Pros suggests creative ways employers can deal with the skills shortage. According to the article, emerging trends and changes to the labor market and talent expectations mean employers must adapt to attract and keep more workers, starting with their training programs.
First, the increasing digital transformation of the workplace means employers must apply for more technology-based training programs, particularly for the younger and incoming workforce, who are accustomed to technology and are more comfortable learning through videos and interactive programs.
Second, the gap between what the executive thinks and what is happening on the ground must be narrowed. Technical trainers working on the ground are the best resource for this information and could give the best recommendations on the style and pace of training for new or incoming workers.
Third, the younger workforce—Gen Z and Millenials—is more prone to job hopping. Employers can retain them by appreciating their achievements and milestones at work. The new generation also appreciates purpose-driven work and milestones, so adapting the workplace to retain these younger workers could benefit the employer rather than expecting them to change. Lastly, the shorter tenure of the younger workforce and their preference for technology would mean designing shorter training that preferably uses a digital platform.
Millennials and Gen Z have officially entered the workforce. Gen Z accounts for over 30% of the US population and outnumbers millennials. They have grown up with digital devices, social media, and instant connectivity thanks to the internet.
Businesses can take advantage of the appeal of technologies with these younger generations, helping the company stay ahead of the curve with change consistently accelerating in technology and changing client and market expectations.
Source:
Why is there a global labor shortage? (2024, February 20). Randstad. Retrieved from https://www.randstad.com/workforce-insights/talent-acquisition/why-there-a-global-labor-shortage/
Allianz Risk Barometer 2024 -Rank 10: Shortage of skilled workforce. (2024, January). Allianz. Retrieved from https://commercial.allianz.com/news-and-insights/expert-risk-articles/allianz-risk-barometer-2024-shortage-skilled-workforce.html
Shriver, M. (2024, April 29). Skilled Trade Labor Shortage: Time for Change. For Construction. Retrieved from https://www.forconstructionpros.com/business/labor-workforce-development/article/22894254/skilled-trade-labor-shortage-time-for-change
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