Tackling the increasing global talent shortage

Tackling the increasing global talent shortage


By Sabine Vollmer

Employers in several European countries are facing increasing skills shortages in already tight labour markets, particularly in Luxembourg, Ireland, Denmark, and the Netherlands, according to research by Oxford Economics and international recruitment firm Hays.

Skills shortages in other markets eased a little in the past year, including in the US, Germany, and Japan, but overall the labour market tightened in the 33 countries in which Hays operates.

Staffing firm Manpower reported that 40% of employers worldwide are experiencing difficulties filling vacant positions, up from 38% in 2015. This increasing talent shortage is often a mismatch of existing and in-demand skills, the 2016 Hays Global Skills Index suggested.

“Businesses worldwide are struggling to manage their talent pipelines,” said Karen Young, director at Hays Senior Finance. “In areas such as qualified finance, what was previously a worrying skills gap is fast becoming a skills chasm. By prioritising training programmes and harnessing technology, business leaders can help to tackle the issue.”

These programmes should encompass both emerging digital skills and softer employability skills such as problem-solving and communication, and apply not just to new graduates but to the entire workforce, Young suggested. Use of smarter technologies will also help employers tackle the low productivity currently stifling the European labour market; greater access and use of smart devices while on the move could be part of the solution to the productivity puzzle. Organisations must also address employee engagement if they are to have a truly productive workforce.

With supplies of skilled labour and participation rates in labour markets remaining steady, the increasing talent shortage is driven by companies’ strengthening demand for skilled labour, Hays suggested.

For the fifth year in a row, employers have had the hardest time finding employees in skilled trades, such as electricians, carpenters, plumbers, and masons, according to Manpower. IT staff, from programmers to database managers, comes in second place, up from ninth place a year ago. Accounting and finance staff is in seventh place, followed by senior executives and board-level managers.

About one-quarter of employers said they have a hard time filling vacant positions because of a lack of available applicants, Manpower reported. Lack of technical competencies and lack of experience each accounted for 19% of employers’ hiring difficulties. Fourteen per cent of job applicants were looking for more pay than employers offered and 11% of job applicants lacked soft skills.

Europe. Economic recovery by some countries hit hard by the financial crisis is driving up demand for skilled labour, especially in Ireland, Portugal, and Spain. However, unemployment in Europe remains high, pay and productivity growth remain weak, and the workforces in some countries are projected to decline in size in the near future.

In the UK and Ireland, 27% of businesses need more than two months to fill junior positions, according to a Chartered Institute of Management Accountants poll of 1,205 UK finance professionals. The top area of weakness for new recruits is people and essential business skills. Eight in 10 school leavers lack basic math and literacy skills, up 7% since last year, according to CIMA.

Americas. Labour market participation is up in countries across the Americas, but talent mismatch is also on the rise. The US labour market is under particular strain. Talent mismatch and wage pressure in high-skills US industries is at the highest score the Hays Global Skills Index measures. Also, the US workforce is aging, and productivity growth remains sluggish and below pre-recession levels.

In South America, the severe recession in Brazil and slowing economic growth in Colombia are of particular concern. Unemployment in Brazil is expected to reach 12% at the end of 2016 and drive up the talent mismatch.

Asia Pacific. Economic growth rates remained fairly robust in Asia Pacific, and labour markets in the region’s three largest markets, China, India, and Japan, experienced a drop in wage pressure and talent mismatch.

However, skills shortages are projected to rise in Australia, New Zealand, Hong Kong, and Singapore. Wage pressure in these labour markets has particularly increased in high-skill occupations and industries.

To ease the talent shortage and skills mismatch, Hays suggested:

  • Governments need to identify skilled roles that aren’t being filled by candidates domestically and allow for more candidates from outside the market to fill vacant positions.
  • Businesses and governments need to work more closely together to design programmes to train and develop the skills of the future.
  • Businesses can tackle low productivity, which continues to retard economic growth, with the help of better technology, including more access to mobile devices and new software to analyse customer data.

Sabine Vollmer (svollmer@aicpa.org) is a CGMA Magazine senior editor.


The 10 tightest labour markets

The ten countries on the 2016 Hays Global Skills Index where skilled labour is hardest to get:

1. Sweden

2. US

3. Luxembourg

4. Spain

5. Germany

6. Ireland

7. UK

8. Colombia

9. Hungary

10. Japan

Source: Hays.