Companies worldwide face a serious—and worsening—problem: a talent shortage at all levels. This has been made more acute by increased demand as the pandemic eases. The labor market also suffers from long-term structural issues, with fierce competition for specific skills, and employers fail to offer the flexible roles that workers want.
In this article, we will explore the issue of talent scarcity and the impact of the global talent shortage on companies and consider what can be done to ease it.
A 2021 survey from staffing firm ManpowerGroup found that global talent shortages were at a 15-year high. 69% of companies said they had trouble hiring people, up from just 14 percent in 2010.
These are alarming figures for the global economy, but the problem will likely worsen. Global consultant Korn Ferry predicts that 85 million jobs will be unfilled worldwide by 2030—equivalent to Germany's population—which could result in $8.5 trillion of annual revenues being left on the table.
According to the report, the tech sector in the US is set to be hit particularly hard, losing out on $162 billion in revenues unless it makes up the shortfall in tech know-how.
Furthermore, a Gartner survey found that IT executives saw the talent gap as the most severe adoption barrier to 64% of emerging technologies. In other words, skills scarcity hinders their ability to roll out the new technology people need. Only 4% of these technologies were threatened by this in 2020.
However, the problem is not limited to the US. Korn Ferry also found that Russia could be short of 6 million workers and China 12 million workers by 2030. Indonesia, Japan, and Brazil could each lack 18 million workers by that date.
In the UK, employers are reported to be offering £2,000 signing bonuses in an attempt to fill an estimated 26,000 seasonal job vacancies, almost twice the 14,000 unfilled in 2020 and more than a quarter higher than in 2019.
As in many other areas of life, the global pandemic has significantly impacted employment. As furlough schemes ended, businesses roared back to life, leading to a sudden spike in orders. Many companies around the world have struggled to meet that demand. This is most obviously seen in the global supply chain shortage, and US inflation reached a 31-year high. As wages rise, demand outstrips supply, and energy prices rise.
However, a more nuanced outcome of the pandemic is a mismatch between the type of work employers offer and what employees expect. With many professionals working from home over the last 18 months, 43% of people surveyed by Manpower think the 9-5 working week is over, while 80% want a better work-life balance. Despite this, 75% of employers surveyed said 50% of roles would be site-based.
Employee sentiments are encouraging companies to inject flexibility into roles. According to Manpower, 43% of companies are considering offering more flexible start and finish times. Meanwhile, 37% consider introducing flexible/condensed hours, and 27% may allow people to work at home sometimes. Only 31% of companies told recruiters they were not looking to increase flexibility for workers.
The lack of suitable permanent talent is why increasing hiring managers are looking to the contingent workforce to fill the gap. A recent McKinsey survey of 800 executives worldwide found that 70% planned to use more temporary workers and contractors than before the pandemic. Managers from the hospitality, food services, healthcare, and social assistance sectors were most likely to predict a rise in the use of contingent workers.
Companies that rely on contractors and other freelancers must manage their extended workforce as carefully as permanent employees – if not more so. Increasingly, employers need to find partners who can successfully fill roles. Companies are advised to build relationships with the best-managed service providers (MSPs) and designate preferred staffing suppliers based on performance and preferential rates. Meanwhile, rates for some freelancers have risen, so businesses may have to increase their rates to compete.
Companies planning to use contingent workers to help fill talent gaps should invest in a technology solution such as a vendor management system (VMS). This will allow employers to see how temporary workers perform on projects across the company, maximizing the benefits of a flexible workforce. It can also alert you when a worker is coming to the end of their contract so you can re-engage them in another assignment.
A good VMS can provide real-time visibility on competitive rates, comparing the pay for similar roles across the market so you know how much to offer to attract the talent you need more quickly.
At the heart of Beeline's technology is AI-driven data analytics, which can help you make better staffing decisions. In addition to helping your business understand your contingent workforce better, you will gain insights to manage budgets, cut costs, and assure quality work.
For more information, download our free guide.