Much has been said about the current global labour shortage experienced especially in the US, UK and the Eurozone. Asides from public health perhaps one of the biggest effects of the pandemic was the massive loss in labour during and even the post-pandemic period.
Labour shortages have hit virtually all sectors of these economies with the US experiencing the most acute shortage. As of August of this year, there were more than 10.4 million job openings in the US with another 4.3 million quitting their jobs in the same month.
The tech sector has also been severely impacted by this shortage. In fact, according to a CNBC report, today’s labour shortage is reported to be a bigger worry than cybersecurity and supply chain disruptions for 57% of top tech executives in the US.
“We’re definitely finding it challenging in this environment to find appropriate qualified and skilled talent, especially as the number of vacancies at the college has gone up as well,” said Jim Serr, chief information officer at Joliet Junior College.
More worryingly, this was a sharp uptick from the beginning of the year where only 36% of executives rated labour shortage as their most pressing worry. Now, nearly two-thirds of executives say the search for employees has gotten significantly harder.
Retaining talent is also becoming more challenging for even the biggest companies as there are more options for workers due to the rise in demand for their skills. Others are simply choosing to quit their jobs due to a variety of reasons. The report for instance says that more than 72% of 1200 US workers in the study were considering quitting their jobs.
Demystifying the strange nature of today’s labour market has become a challenge even for experts in the field. For once the problem is not lack of enough jobs, in fact, there are plenty of positions to be filled, especially in the tech sector. In the US for instance, millions of jobs are on offer as the economy is re-opening. Unemployment is also at an all-time low of 5%, the lowest in history.
Well as I said, determining the cause is difficult. But here are a few good guesses that could explain this strange phenomenon, at least in the tech sector.
Declining fertility rates and therefore populations in developed economies is a well-documented phenomenon. Basically, populations in most developed economies are declining, fast. Why? Well, people are just not giving birth enough. In most developed economies fertility rates are around 1.5 to 1.9, well below 2.1, the so-called replacement rate to keep the population stable.
The result is an inverted pyramid population where the majority of the population are older than working-age placing more stress on younger populations to support the elderly. This also means that there will be far fewer to participate in the labour market.
According to the U.S. Department of Labor, a record 4.3 million people quit their jobs in August. In September the figure rose to 4.4 million representing 3% of the population. So far, roughly 34.4 million people have quit their jobs this year, with more than 24 million doing so since April.
This is perhaps the most staggering statistic I’ve seen in a while. Coming from a country with a high unemployment rate I cannot fathom why so many people would choose to leave well-paying jobs.
But then again, I once worked in an office and I understand the frustration that comes with a traditional 9-5 job. When it comes to flexibility and freedom there is simply no comparison between the two, remote work is the best for employees.
And this is one tactic managers are using to cope with the labour shortage in the tech sector; hiring more remote workers. It’s a win-win for both manager and employee. The manager gets access to a wide pool of labour no matter the location while the worker gets to work from home with flexible working hours.
Other executives in a bid to retain the talent they already have are offering talent development programs so that employees can upskill and give more value to the company. The trick here is to recognise talent early in its most raw form. Talent is for instance tapped while in colleges while some have even eliminated the requirement for prospective candidates to have academic degrees
Managers then develop this talent within the company so that they can retain these employees’ service for a longer time. There is however the risk of the worker after upskilling choosing to work for another employer but studies indicate that workers that have been within the company tend to remain loyal for a long time.