Overcoming The Ongoing Labor Shortage
Ever since the global COVID-19 pandemic started, millions of people have lost their jobs and many of them remain unemployed. In fact, according to ILO Monitor, in 2020 at least 114 million jobs were lost which lead to $3.7 trillion lost labor income. Now, as we are trying to head back towards the dynamics of pre-pandemic life, you would expect job vacancies available to be filled up rather quickly, right? However, research shows that this is not quite the case. Let’s find out why is that so.
A global shortage of workers. What’s going on?
In the United States, studies show that in 2022 there are around about 11 million job vacancies but there are only 6.5 million unemployed people. Similarly, in Europe, there are over 1.2 million jobs available.
– Remote work culture:
During the pandemic, many jobs that had in-person interactions disappeared completely, while the number of people working remotely increased. This also means that many immigrants who would travel for work and be part of the labor market could no longer do so owing to the travel restrictions, reducing the number of employees.
– Psychological and social impact:
Another aspect is the psychological and social impact of the pandemic. Living in isolation, unemployment, and the likes have led many people to have poor mental health. This means that many people are no longer prioritizing work, they are instead focussing more on their mental well-being. According to a survey conducted in 2021, around 47 million people in the U.S. quit their jobs and about 50% quit their jobs due to poor mental health.
– Collective impact:
Fast forward to 2022, many people are looking for jobs that have greater flexibility and a healthy work-life balance, which unfortunately some of the available jobs in the labor market do not have. More people are used to working from home and they prefer working remotely and are inclined to leave the labor market if they do not get the flexibility they need.
– Wages aren’t keeping up with inflation:
Some people are also leaving the global labor market as they feel they are not getting paid enough. Although in 2022, wages in the U.S. increased 10.25 percent in June of 2022 over the same month in the previous year. However, the cost of living is also increasing at the same time due to inflation, so their wages are not meeting the employees’ everyday demands.
– Skills gap:
In the labor market, over the recent years, there has also been a loss of technology skills with around 87% of global employers having skills gap issues or expecting to have these issues in the coming years. This was also an issue pre-pandemic, but it has evidently risen due to the pandemic. Many companies are not able to navigate digital disruption because of the increasing digital skills gap.
Which sectors are being affected by the global labor shortage?
Even before the pandemic, the manufacturing industry was experiencing a decline in employees and ever since COVID, the decline seems to be getting worse. In the U.S. alone, there are 2 million unfilled jobs in the manufacturing sector. Some studies predict that there could be 8 million job vacancies by the end of 2030.
Healthcare is a huge sector that has been affected by the global pandemic, with essential workers risking their lives and their loved ones every day. In the U.S., at least 32% of nurses want to leave their roles, in which they directly communicate with their patients. While in the UK, the number of nurses and midwives leaving their jobs has been the highest in over for years, with 140,000 people leaving in 2021. This is mainly due to the stressful work environment and the staff being severely underpaid, despite their vital contribution to society.
The supply chain sector is also facing serious problems and is experiencing challenges all over the world. In the UK, after Brexit happened, there is a shortage of 100,000 truck drivers as most of the drivers came from the EU. As there are fewer workers from EU nations, there are fewer people that work in the supply chain. This has a knock-on effect on consumer goods and the shelves in the supermarket are frequently empty. Similarly, in the US, there are 80,000 vacancies for truck drivers. Globally, this ongoing problem is expected to bring an 18% shortage of truck drivers in Mexico and a 24% shortage in Turkey.
How can we overcome the global labor shortage?
Now that we have established that there is a global labor shortage, let’s explore some of the ways we can overcome it.
Business consultants across the world agree that now, more than ever, employers need to focus on their employees’ well-being and communicate with them regularly. The workplace needs to be adapted to the evolving needs of the workers and ensure their maximum engagement. Offering flexibility in work hours, and a hybrid work environment, among others, would mean that more workers would be inclined to work with your organization, which will slowly combat the shortage.
Another solution is to increase labor market flexibility. This is more on a state level than on an organizational level. This would mean that it is easy for workers to change jobs and choose different types of work. It can increase by making the minimum wage higher; improving information for workers and firms; better education and training; abolishing legislation such as unfair dismissal and improving childcare. All of this would mean that more people would be inclined to come forward and work in the labor market again.