Avoiding long-term problems around labor market shortages
Countries around the world have been rocked by labor market shortages this year. Across a broad swathe of industries, a perfect storm of pandemic-related lockdowns, aging populations, and more restrictive immigration policies have led to numerous businesses struggling to fill positions. Worldwide, unemployment remains high, but so too does the number of job vacancies.
While the labor shortage has delivered some short-term gains for workers – average hourly wages in the US private sector hit $30.85 in September – more worrying signs are on the horizon. For example, a recent Boston Consulting Group report estimates that the labor force imbalance could lead to a loss of $10 trillion across the collective GDPs for 25 of the world’s leading economies. Evidently, restoring some sense of balance is in the long-term interests of employers and workers alike.
What is causing the labor shortage?
Of course, each market is unique, with specific labor market nuances. However, some common issues have emerged, including the COVID-19 pandemic, which has led to the shuttering of many industries. And although furlough and other job retention schemes attempted to lessen the economic damage, many individuals remain out of work. In addition, some individuals have voluntarily left employment, and jobs in certain sectors are now much less attractive.
Some industries are certainly finding it difficult to attract employees. In the US, for instance, employment in manufacturing fell by 270,000 between February 2020 and November 2021, even as the country’s post-pandemic recovery continued. This decline suggests that some sectors more than others are struggling to carry out skills matching to reach the right sort of workers and publicize the advantages of a career in their particular industry.
In several countries around the world, critical labor shortages have had especially noticeable effects:
In the UK, empty grocery store shelves and crowded gas station forecourts have revealed the impact of the country’s labor shortage. A lack of qualified HGV drivers has primarily been blamed, with migration issues related to Brexit not helping matters. However, even accounting for the unpredictable nature of the pandemic, the labor market in the UK could have been better managed. By introducing more apprenticeship schemes, training programs, and educational opportunities, the UK could have avoided many of the damaging consequences of Brexit and COVID-19.
Germany expects to experience a shortage of up to 10 million workers by 2030. Already, some businesses are finding it difficult to fill positions in the engineering, IT, and hospitality sectors – perhaps due to the country’s aging population shedding skilled candidates from the workforce. This skills gap has not escaped the government’s attention, as the German Labor Chief recently announced a need for 400,000 skilled immigrants annually. If productivity does not increase or immigration policies are not relaxed, the country’s labor shortage will damage GDP growth.
In Brazil, long-term unemployment due to failures within the education system and a high proportion of under-skilled workers mean that the country could have a shortage of 40.9 million employees by 2030. However, greater formalization of work opportunities and better access to jobs (particularly among the rural poor) could help fill employment gaps.
How to navigate labor market challenges
There are many predictions that the current labor market shortage is chronic, long-term, perhaps even permanent, causing disruption across the globe. If this does turn out to be the case, businesses are likely to suffer productivity losses as critical positions remain unfilled. As a result, economies may experience inflationary risks and suffer declines in GDP. Fortunately, however, innovative labor market solutions could prevent these predictions from coming true.
Digital solutions like WCC’s Employment Platform can give Public Employment Services and staffing agencies access to the insights they need to match prospective employees to their dream roles in even the tightest labor markets. In addition, our Employment Platform Analytics module offers targeted graphs and analysis to help craft a successful labor market strategy.
High-quality data can help restore balance to a global labor market that has created challenges for jobseekers, private enterprises, and public employment services. See how WCC’s employment solutions can support a labor market that works for all its stakeholders.
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