Why Is There A Global Labor Shortage? - Randstad

2. employers not meeting talent expectations on flexibility

Our 2024 Workmonitor findings indicate that talent now ranks work-life balance as more important than pay when making career decisions. Yet there is a potential mismatch between what they want and the flexible working arrangements on offer from employers. Almost two-fifths of respondents (39%) said that working from home was a non-negotiable for them, while over a third (37%) would consider quitting their job if asked to spend more time in the office. However, 41% said their employer had become stricter about attendance.

The flexibility talent is looking for is not limited to location though. Flexible hours were ranked as important by 41% of respondents, compared with 37% who wanted flexibility of location.

3. historically low unemployment rates

Unemployment rates are low worldwide, despite the recent slowdown in hiring. They are near historic lows in many OECD member countries – in some cases at their lowest for the past 20 years.

Germany, the US, the UK, Japan and Canada are still struggling to find enough talent for many positions. Spain and Italy, on the other hand, are dealing with a lot of people who are out of work.

In countries like Japan, Poland, Germany, the US, Australia and the Netherlands, the unemployment rates are particularly low, and are virtually at "full employment". It has been challenging to find people to fill job openings in these countries for the last few years.

4. rising job vacancy rates

Job vacancy rates in 2023 have slightly improved, but it's still hard to find either specialized or business-as-usual skills.

In the past decade, and especially after the pandemic, vacancy rates have increased across the board. Recruiting technical and emerging skills like AI is even more challenging due to high demand and low supply.

Vacancy rates in Belgium, the Netherlands, and Germany are currently over 4%. In the US, it's almost double at 7%, which is a big problem for American employers. These high vacancy rates are causing issues with operational performance, revenue generation and innovation in all of these markets.

In many countries, the vacancy challenge has become much worse in the last two years. It was already a problem before the pandemic, but in most countries, the vacancy rate is now twice as high as it was in the previous decade.

5. aging population

Another factor impacting today’s labor shortage is the world’s working-age population. For years, employers in many countries have had concerns about replacing record numbers of retiring talent. For instance, in the US alone, 10,000 people per day reach the 65-year-old threshold for retirement and this rate is expected to continue until at least 2029.

The average age of the global population is expected to increase in the upcoming decades. Studies estimate that by 2030, one in six people in the world will be aged 60 or over and, by 2050, this number will double.

There will be more people leaving the workforce than entering it in the next decade and, longer term, birth rates will continue to decline in developed countries.

In 75 countries, fertility rates already fall well below the desired replacement rate of 2.1, according to UN and World Bank statistics, an issue that will continue to plague employers for at least the next few decades.

Japan, Italy, and Germany have been experiencing this trend since the early 2000s, and it's contributing to their stagnating economic growth. In Germany, migration has helped a little with the aging workforce, but data shows the population will keep shrinking in the future. Even countries with big populations like Brazil and India will, in a few decades, face a shortage of skilled talent.

Belgium, France, the Netherlands, Spain, the UK, and Poland are all looking for ways to keep talent in their 50s and 60s in the labor market, but some countries are more successful than others. To see how your organization could benefit from an age-diverse workforce, read our article here.

6. technology skills gap

According to a recent study, skills shortages continue to prevent organizations from equipping their teams with the skills they need for the digital economy. While the loss of skills and experience through retirement is certainly a contributing factor, the leading cause of the skills shortage is the integration of advanced technology, AI 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.

Globally, 14% of current jobs are at high risk of automation, while 32% will see significant changes in their functions and required skills due to automation, our latest report on Understanding Talent Scarcity shows.

The most exposed jobs are those in scientific, technological, managerial, economic and legal fields.

These professions won't disappear, though. Studies indicate that where technology is heavily used, there's a positive correlation between AI exposure and employment growth. While some talent may face displacement during a transition period, those who successfully retrain and upskill can adapt to the changing job requirements of the future. However, employers will need to ensure they approach reskilling opportunities in an equitable way that aligns with the needs and interests of affected colleagues. You can read how to bridge the AI anxiety gap here.