The global labor shortage is a serious issue, and it’s not going away soon but only getting worse. As technology continues to take away jobs from humans and globalization makes it more difficult for companies to find and retain employees, the need for workers will only increase over time.
What is Labor Shortage?
A labor shortage often happens when there need to be more active workers to fill all open positions in the market. In the US, for instance, there are around 11 million open positions, but only 6.5 million employees are projected to be unemployed in 2022.
This high number of job opportunities is also impacting employers around the world. For instance, European employers were having trouble filling more than 1.2 million open posts as of the beginning of 2022, and those in Australia are attempting to fill close to 400,00 vacancies. Furthermore, there were 163 open positions in Singapore in 2021 compared to 100 qualified applicants.
All these numbers are based on research depicting what exactly labor shortage means and how it impacts many countries.
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What are the Factors causing Global Shortage?
It is undeniably one of the biggest difficulties in contemporary history, even though the effects of the current labor shortage vary by region and industry. In a post-pandemic economy, a persistent labor shortage could seriously hamper the globe’s ability to recover fully. It is crucial to pinpoint what is causing a severe shortage to solve this enormous difficulty. Here, we have listed a few causes of labor shortage. If you want to know more, keep reading.
COVID-19 Pandemic
Discussing the global labor shortage without mentioning the pandemic would not be fair. In March 2022, WHO reported a 6 million decrease due to pandemic-related issues. Apart from this specific number, many are still suffering from the long-term effects of the virus, and things still need to be more stable globally. Workplaces all across the world have been severely disrupted by one aspect alone. Not only this, but a few more things have affected the workforce globally. Let us get into it.
Mental Health Issues
Early in the pandemic, mental health experts voiced concerns about how the epidemic would affect workers’ mental health. These cautions seem to be coming to pass in our current day. According to the National Statistics of the UK, more than 400,000 people quit their jobs between February 2020 and November 2021. Half of those departures were attributed to long-term mental health concerns. According to a new survey, two-thirds of millennials in the United States who leave their jobs in 2021 claim mental health as their main cause.
Changed Expectations of Workers
During the epidemic, many employees dealt with additional work-related stressors like lockdowns, unexpected layoffs, and incredibly difficult personal challenges like educating their kids and caring for elderly parents.
These circumstances have prompted a change in expectations among employees. The desire to keep a healthy work-life balance is at the forefront of these expectations. With the availability of remote employment, flexible work hours, more paid vacation days, and increased control over their schedules, today’s workers are seeking greater flexibility.
Furthermore, some individuals are prepared to move occupations to get the flexibility they require or to quit their positions altogether if they can’t. A recent Monster study reveals that 95% of workers are open to changing professions, and 92% are willing to shift industries if necessary.
Read this to know how The Number Of Applicants For Construction Job Openings Plummets.
Low Salaries
Many people change employment as a result of better job possibilities. However, some individuals leave the labor entirely. For better pay, some are moving on. In fact, according to the research, 62% of employees worldwide rate pay as the top reason for shifting employers.
A candidate-driven market is now prevalent throughout most of the world due to the persistent labor shortage. There are many requests for increased pay and better perks from employees and job seekers. But these pay raises differ regionally and globally. In contrast, only 92% of nations in Latin America, 78% of countries in Asia-Pacific, and 50% of countries in the Middle East and Africa anticipate salary increases in 2022. For instance, 100% of countries in North America will experience wage growth in 2022.
The cost of growing inflation may exceed the salary increases for employees in several regions of the world. For instance, in the US, inflation increased by 7% in the same month that hourly wages increased by 4.7%. Raised wages are even more crucial for those employed in these fields.
Expanded benefits should also be prioritized as a component of the employee remuneration package. Workers demand more than just competitive pay, too. Our research indicates that they also desire a positive work environment (55%), secure employment (56%), and a healthy work-life balance (58%).
Immigration Disruptions
During the epidemic, many employees dealt with additional work-related stressors like lockdowns, unexpected layoffs, and incredibly difficult personal challenges like educating their kids and caring for elderly parents. These circumstances have prompted a change in expectations among employees.
The desire to keep a healthy work-life balance is at the forefront of these expectations. With the availability of remote employment, flexible work hours, more paid vacation days, and increased control over their schedules, today’s workers are seeking greater flexibility.
Population Aging
The aging of the global population is another factor contributing to the current labor shortage. Employers in several nations have been worried for years about replacing record numbers of retiring workers. For instance, 10,000 people in the United States alone reach the retirement age of 65 every day, and this rate is anticipated to last until at least 2029.
In the following decades, it is anticipated that the elderly population will grow, according to studies. One in six individuals worldwide will be 65 or older by 2030, and by 2050, that figure will be doubled. In addition to this dilemma, birth rates are declining in several nations. Fewer people will be available to work due to the aging population and declining birth rate.
According to studies, the working population in Japan and China will decline by 40% and 20% by 2050. Not just China and Japan are dealing with this problem. As per the UN and World Bank data, 75 nations have fertility rates substantially lower than the desired replacement rate of 2.1. This problem will continue to plague employers for the next few decades.
The Gap in Technology Skills
87% of worldwide employers, according to a recent poll, acknowledge that they are either now experiencing problems with the skills gap or anticipate doing so soon. The main source of the skills shortage is the incorporation of cutting-edge technology, AI, and automation in the workplace. At the same time, the loss of knowledge and expertise due to retirement is undoubtedly a contributing issue. While this cutting-edge technology undoubtedly contributes to simplifying company procedures and increasing productivity at the workplace, its use also necessitates workers with the necessary technical abilities. Employers have always faced challenges like this, but they have grown more serious since the pandemic.
Automation has also played a role in driving unemployment and reducing worker demand. Automation is “the application of technology to replace or add functionality to human workers.” The most notable examples of automation include self-driving cars. Still, other forms of automation include robotics and computerized manufacturing processes that allow companies to cut costs by outsourcing their work overseas.
There is a greater demand for automation in the workplace because so many businesses deal with production and supply chain issues during the pandemic. Employers now have a greater demand for appropriate tech-related abilities due to the rising usage of technology in the workplace.
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What Effects Does Labor Shortage have?
The prolonged labor scarcity affects society as a whole and impedes business growth. For instance, product shortages have previously happened due to supply chain disruption. The lack of workers in some regions may have also led to the closing or curtailing the hours of businesses like restaurants and retail shops.
Rising inflation is another issue being actively monitored by many analysts. Many feel that the current labor scarcity will lead to higher wages, higher prices, and slower post-pandemic recovery. It is still debatable, however, whether the labor shortage leads to inflation. A significant catastrophe that would take years or decades to overcome could be inflation if it is not controlled.
Businesses may need help to adopt emerging technology because of the labor crisis and, more precisely, the skills gap. According to a recent report, the labor shortage is now cited as the top barrier by 64% of firms, up from 4% in 2020, to adopt new technology. The issue is that these organizations can only apply new technology once they have acquired the required tech-related expertise. Although the labor shortage is a significant obstacle, knowing what causes it might help your business overcome it.
Wrapping Up
The global labor shortage results from many factors, but the most important is our inability to keep up with technological advances. Over the past few decades, we’ve increasingly relied on computers and automation to save business time and money. It has led companies across all industries to invest more in technology than ever before, even those that rely heavily on human labor.
Thankfully, there are ways for them to remedy this situation without resorting back to outdated practices like child labor or sweatshop factories overseas: simply by adjusting their hiring procedures accordingly by approaching recruitment agencies.
Suppose you are looking for one in that case; we at Dynamic Staffing Services have a team of passionate, committed professionals who will work closely with you to comprehend your needs, preferences, and requirements for hiring globally. DSS can help you with the following:
- Recruit from all over the world and get the best talent for your project
- Make sure you’re receiving the highest quality candidates for your project
- We make sure all of the processes are quick and effective so you can return to concentrating on your company
We’ve been helping clients like you with their recruitment needs since 1977. From start-ups to Fortune 500 firms, we have assisted companies of all sizes to discover the best employees for their business. We believe in building the life of people by providing them with top-notch services.
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