Companies are searching for new and innovative ways to address worst shortage in 16 years
With shortages of employees reaching 16-year highs, affecting as many as three in four businesses, the focus is becoming clear as organizations are increasingly searching for new and innovative measures to address this dire need.
As a new Manpower survey points out, the deficit for new talent reached a new high of 69% in 2021, which contrasted sharply to the figure of 31% in 2010.
“While it’s encouraging to see employers have the intention to hire workers, it’s been increasingly difficult for them to find the talent they need,” said Jonas Prising, ManpowerGroup chairman and CEO. “On top of the skills gap challenge, employers are dealing with wage inflation and competition for workers, as many are switching industries altogether to better suit their lifestyle. The need for organizations like ours to focus on reskilling and creating talent at scale has never been more important.”
The survey, which heard from 40,000 global employers, found that 47% of organizations have hiring plans for the third quarter and a mere 21% felt confident they had enough workers currently.
This worker shortage is also being felt by HR professionals, according to a new Randstad Sourceright survey of more than 900 human capital and C-suite leaders across 18 markets, conducted recently.
While about two-thirds of those asked plan to hire extensively over the next 12 months, 30% of HR leaders cited talent scarcity as a major focus of concern.
This led to about one-quarter of organizations reporting the dearth of employees led to lowered profit outcomes and another 25% reported having to cut back on customer service due to this.
The organizations plan to use such tools as offering more flexible work arrangement, higher compensation, which may include signing bonuses and looking outside their geographical areas for new blood.
According to a leading financial services provider, the shortage is becoming so severe, that it is returning to the global top 10 list of risk in the Allianz Risk Barometer 2022.
The barometer, which is based on the insight of 2,650 risk management experts from 89 countries and territories, also found that shortage of a skilled workforce was a top five risk in the engineering, construction, real estate, public service and health-care sectors, and it was the top risk for the transportation sector.
“The shortage of skilled labour is concerning for businesses worldwide,” said Thomas Varney, ARC Regional Manager, Allianz Global Corporate and Specialty (AGCS). “With the pandemic, this risk was bumped down the barometer [to 13th position] in 2021 because other things took precedence, but now it’s right back up there as a serious concern.”
This shortage reached a staggering 40 million workers in late 2020 and will rise to 85 million by 2030, said Korn Ferry.
While the scarcity has been in the top 10 before, it continues to vex hiring managers around the world in 2022, said Varney.
“The question on the minds of many business leaders is: how do we backfill positions when you have large amounts of workforce leaving? People are calling this the ‘great resignation’ because people are moving on and trying new things, perhaps after rethinking their priorities as they’ve been home during lockdowns.”
In New Zealand, the labour problem is one of the top concerns, especially in the wake of the Omicron variant.
“Our data confirmed the labour market was extremely stretched, with the unemployment rate held at the record low of 3.2%,” said Mark Smith, ASB Bank senior economist in releasing its first quarter labour market review.
With borders opening more and more, expect to see a flood of New Zealand residents flocking abroad for opportunities, he said. “Due to weak demand for workers, slowing wage growth reflects increasing difficulties in finding labour given weak labour force growth.”
Lack of skills ignored
In light of this global phenomenon, some employers are loosening their standards in order to boost hiring numbers, according to another survey by Express Employment Professionals.
Half of those surveyed said they disregarded candidates who didn’t possess the required soft skills and 45% overlooked the potential hires lack of experience.
Perhaps more concerning, 26% of employers reported they weren’t concerned about candidates passing a background check and one-fifth said educational degrees was not as important as it was in past years.
“We are seeing companies in a broad range of industry segments — including administrative, accounting, financial and even skilled trades — making adjustments to their requirements. The focus is shifting to candidates who have an aptitude to learn skills,” said Shane DeCoste, Express franchise owner in Halifax.
But one expert is warning employers not to relax their standards.
“Desperate for staff, some employers are softening their hiring criteria to make up the numbers they need to continue operating their businesses. But I don’t believe there are any market conditions under which employers should compromise their talent standards. You may think I’m naïve or out of touch. I get it. You need staff right now. But the decision to lower your standards will come back to bite you,” said Omer Molad, cofounder and CEO at Vervoe, an AI-powered skill-testing platform.