The mismatch between the skills of the workforce and those needed by employers is a serious obstacle to filling vacancies.
Worldwide job vacancies remain high or rising despite slowing global growth and tightening credit markets. States have taken measures to address the unusual shortage of workers, but partial solutions do not take into account the transformation of the labor market, the ways in which it has changed since the pandemic and the effects of the demographic transition, Fortune wrote in an analysis on the topic.
Since 2022, global growth has slowed as various shocks and conflicts have harmed and continue to threaten the global economy. In view of tight credit conditions and the fact that companies have not yet caught up with inflation, unemployment is expected to rise steadily in the coming years. And yet, the number of vacancies – unfilled roles that employers want to fill – remains surprisingly high and even near record highs in various parts of the world.
Even in markets that have seen job losses in recent months plummet, such as Australia, Canada, Denmark, Singapore, the UK and the US, they remain unusually high and above their pre-pandemic averages. Elsewhere, for example Belgium, Cyprus, Germany, Greece, Latvia, Lithuania and Spain, they remain persistently high or are increasing.
The actual number of job vacancies may be even higher if it is taken into account that companies may be prevented from advertising new positions after being unable to find qualified workers. In Germany, although the number of registered vacancies is around 700,000, the government believes that the real number is close to 2 million. The mismatch between the skills of the workforce and those needed by employers is a serious obstacle to filling vacancies. The reality is harsh: while the job market is full of opportunities, the skills mismatch leaves many positions unfilled, even in the face of high or rising unemployment.
Global labor crisis skill shortage
In Ontario, Canada, the manufacturing sector is struggling to fill positions with over 18,900 vacancies and an influx of over 7,000 jobs in the electric vehicle sector over the next two years.
At the end of 2022, Australia faced a similar scenario, with job vacancies outstripping the number of unemployed. In Singapore, the post-pandemic labor market is characterized by a mismatch between available jobs and skills, resulting in 1.6 job vacancies for every unemployed person.
Across Europe, the long-standing struggle to find enough skilled workers in the construction sector has been exacerbated by a surge in post-pandemic demand, signaling a global challenge.
by Wanderlust Magazine
The acute shortage of skilled labor is already seen as an obstacle to economic growth. In Germany, the outlook is now 0.7% – well below the long-term average of 2%, partly due to a shortage of workers. Companies wishing to grow and take advantage of new market opportunities find themselves hampered by difficulties in finding workers with the right skills.
This divergence not only highlights the ineffectiveness of current workforce development strategies but also the urgent need to change educational and vocational training programs. Industry representatives across countries argue that these programs must evolve quickly to meet the demands of a changing market, where the drive for low-carbon technologies and the pace of digitalization is accelerating the demand for new, specialized skills.
A puzzle of solutions
The increase in job vacancies and worker shortages reflects several underlying trends. After the recession in 2020, the global economy saw a strong recovery, growing by 6.3% in 2021 and by 3.4% in 2022, driving the increase in the number of job postings. The second piece of the puzzle may have to do with reduced immigration flows. The pandemic has forced many workers to leave their host countries, and immigration systems have faced delays in processing visas, causing labour shortages. Thirdly, wage stagnation is a persistent problem. For example, in Australia, although wages have seen some growth, they have not been able to keep up with the rising cost of living. Finally, specific national circumstances also play a role, such as the challenges of the UK labour market post-Brexit.
…In response, governments began to take measures to hire more immigrant workers or to formalize their status. Last year, Greece approved new legislation giving thousands of undocumented migrants the right to reside, provided they secure jobs.
Senior officials in Germany have even admitted that the country could not overcome the growing labor shortage without migrant labor. The authorities introduced legislative changes to make the country more attractive to migrants, including simplifying the path to citizenship, speeding up visa processing and recognizing foreign qualifications in the labor market.
It is possible that other countries will follow suit.
New working conditions, such as a four-day work week, are also being explored. In Germany, dozens of companies have been piloting this model since February. The idea is that a shorter work week could make workers more motivated and productive and help reduce shortages. Similar attempts are being conducted in other European countries.
Meanwhile, in German Towns, public companies are hiring students to ease labor shortages.
by Wanderlust Magazine
Notably, some US states are even considering relaxing child labor laws and allowing more teenagers to be employed, as immigration policy is seen as more contentious.
Global demographic transition
The economic downturn may temporarily mask the underlying upward trend in job vacancies. In the United Kingdom, for example, the ongoing economic contraction has raised the unemployment rate, but at the same time has led to a decrease in the number of job vacancies. Similarly, in Denmark, the recession towards the end of 2023 appears to have contributed to a reduction in vacancies. However, these economies are recovering, so we are likely to see a resurgence of labor shortages and vacancies. It is an indisputable fact that only partial measures will not solve the problem, as a longer-term demographic transition is unfolding globally.
In advanced economies, vacancies will increase due to aging populations. Official estimates indicate that by 2035 Germany’s aging society will have a shortage of 7 million skilled workers. Japan’s working-age population peaked in 1998 and has been steadily declining since then. The U.S. is on the verge of a sharp increase in jobs, with projections for 11.9 million new positions by 2030, yet the country’s labor force will shrink by 3 million people.
The world’s population is aging rapidly, a trend that has not escaped even traditional labor-sending and lower-income countries, and Africa is no exception. This reality shows that more open migration policies targeting traditional sending countries will not be enough. While facilitating African migrant workers’ access to high-income labor markets is important, investment in education and training is equally important, ensuring that African workers take full advantage of opportunities abroad.
A workforce in crisis
In addition to the ageing of the population, we should not leave behind the rise of the great departure. In the US, an unprecedented 50 million workers walked off the job in 2021 and 2022, reflecting growing discontent following the pandemic. Although initially perceived as a predominantly American trend, data suggests that discontent has spread to other parts of the world.
In France, a record 2.7 million voluntary resignations were recorded in 2022, with similar trends seen across Europe, although Asia reported a decline. There are growing signs of similar discontent in Australia, and even in the US, where exit rates have been falling recently, industries such as personal care services continue to report higher-than-average exit rates.
The global labor crisis can be partly explained by the devastating impact of the pandemic. Since then, there has been a clear shift in work preferences, with the demand for greater flexibility and a better work-life balance growing. In the US, a significant number of employees for whom resignation is not a realistic option express a preference for more flexible working arrangements, the possibility of a remote working model and a work-life balance – a lasting legacy of the impact of the pandemic on the norms of work place.
In Singapore, they are ready to replace pay with flexibility. As a result, this trend, especially among younger workers, higher earners, and women, has resulted in reduced working hours in the US, further exacerbating labor shortages. The rise in job vacancies is not just an anomaly – it signals a profound transformation sweeping global labor markets. This change affects not only the demographic transition, but also changes in work preferences after the pandemic.
Existing solutions may offer short-term relief, and economic downturns could temporarily hide these challenges, but ultimately solving them will require global coordination like we have never seen before. It is time for bold, creative approaches to mobilizing resources: harnessing Africa’s rapidly growing working-age population, harnessing the potential of older but still productive workers in lower-income countries, and re-engaging retirees and disaffected youth from richer countries. It is critical to recognize the interconnectedness of the challenges. We are part of a global labor market. The problems we face are common, and so are the solutions we must find together.
Read More: From Quantity to Quality: Adapting to Succeed
Read More: Time-Wasting Habits: A Personal Audit
Think your friends would be interested? Like, share and subscribe!
