Talent scarcity: how have we got here and what can be done about it?

Companies around the globe are facing a serious – and worsening – problem: a shortage of talent at all levels. This has been made more acute by the increase in demand as the pandemic eases. The labour market also suffers from long-term structural issues, where there is fierce competition for specific skills and employers are failing 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.

Talent wanted: a Germany’s worth of workers

A 2021 survey from staffing firm ManpowerGroup found that global talent shortages were at a 15 year high. In fact, 69 per cent of companies said they were having trouble finding people to hire, up from just 14 per cent in 2010.

These are alarming figures for the global economy, but the problem looks likely to get worse. Global consultant Korn Ferry predicts that 85 million jobs will be unfilled around the world by 2030 – that is equivalent to the population of Germany and 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 serious ‘adoption barrier to 64 per cent of emerging technologies’. In other words, skills scarcity is hindering their ability to roll out the new technology people need. Only 4 per cent of these technologies were threatened by this in 2020.

But 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 be lacking 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.

How COVID is impacting the world of work

As in many other areas of life, the global pandemic has had a huge impact on employment. As furlough schemes end, 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 the fact that US inflation reached at 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 are offering and what employees expect. With many professionals working from home over the last 18 months, 43 per cent of people surveyed by Manpower think the 9-5 working week is over, while 80 per cent want a better work-life balance. Despite this, 75 per cent of employers surveyed said 50 per cent of roles would be site-based.

Employee sentiments are encouraging companies to inject flexibility into roles. According to Manpower, 43 per cent of companies are considering offering more flexible start and finish times. Meanwhile, 37 per cent are considering introducing flexible/condensed hours, and 27 per cent may allow people to work at home some of the time. Only 31 per cent of companies told recruiters they were not looking to increase flexibility for workers.

Finding talent in contingent workers

The lack of suitable permanent talent is why increasing numbers of hiring managers are looking to the contingent workforce to fill the gap. A recent McKinsey survey of 800 executives around the world found that 70 per cent 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 need to 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 rates to compete.

Let a VMS help you fill the skills gap

Companies that plan to use contingent workers to help fill any talent gaps should invest in a technology solution such as a vendor management system (VMS). This will help employers gain visibility of how temporary workers are performing on projects across the company, maximising 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 you need to offer right now to get the talent you need more quickly.

At the heart of Beeline’s technology is AI-driven data analytics that can help you make better staffing decision. As well as helping you 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.