The missing workforce
How can we fill the talent gap?
Jump to section
The workplace is being transformed by new technologies. But economies around the world also face intense demographic pressures and changing expectations about work, which are resulting in talent shortages. How can we fill the gap of the missing workforce?
The world of work is passing through an era of dramatic change. Technology – in particular AI – is disrupting the ways in which organisations operate.
But technology is not the only driver of change regarding the employee-employer relationship. Endemic unpredictability and weak economic growth across the globe are destabilising for business, creating negative conditions for hiring new recruits and even for keeping existing talent. As well as significant changes to the conditions of work, the profile of the workforce is undergoing a seismic shift. This is because many regions face a very human challenge: a shortage of available talent.
These shortages are affecting major economies around the world:
Analysis by the US Chamber of Commerce finds that, if every unemployed person in the US found a job today, there would still be 2.4 million open vacancies
Japan is expected to be short of 11 million workers by 2040, according to research by the Recruit Works Institute
China faces an annual labour force gap of about 11.8 million, according to analysis by the World Economic Forum
The EU’s working-age population dropped from 269 million in 2012 to 264 million in 2021, according to Business Europe. It is expected to shrink further over the next years and decades, with the loss of an additional 35 million people by 2050.
Consultancy Korn Ferry has warned of a global talent shortage of 85.2 million people by 2030. Of 20 leading economies analysed, India is the only one that can expect a talent surplus by 2030.
The financial impact could amount to $8.452 trillion in unrealised revenue, equivalent to the combined GDP of Germany and Japan. In business and financial services alone, in the US the lost opportunity could be equivalent to 1.5% of the projected 2030 economy.
Analysis by the US Chamber of Commerce finds that, if every unemployed person in the US found a job today, there would still be 2.4 million open vacancies
Japan is expected to be short of 11 million workers by 2040, according to research by the Recruit Works Institute
China faces an annual labour force gap of about 11.8 million, according to analysis by the World Economic Forum
The EU’s working-age population dropped from 269 million in 2012 to 264 million in 2021, according to Business Europe. It is expected to shrink further over the next years and decades, with the loss of an additional 35 million people by 2050.
Consultancy Korn Ferry has warned of a global talent shortage of 85.2 million people by 2030. Of 20 leading economies analysed, India is the only one that can expect a talent surplus by 2030.
The financial impact could amount to $8.452 trillion in unrealised revenue, equivalent to the combined GDP of Germany and Japan. In business and financial services alone, in the US the lost opportunity could be equivalent to 1.5% of the projected 2030 economy.
Some of the reasons for this issue are demographic – the result of a retirement wave sweeping through ageing societies, for example. Increased labour mobility creates opportunities for some regions and industries, and complications for others.
The effects of these trends have been compounded by major shifts relating to people’s attitudes towards work. Since 2020 and the Covid crisis, many people have re-evaluated the role of work in their lives. They have sought increased autonomy and control in their professional activities, and the Great Resignation or Great Attrition have illustrated workers’ willingness to work differently, rejecting traditional deals from their employers.
“The pandemic highlighted workers’ desire for non-traditional forms of work, whether it’s flexible work, working from home, working remotely while you're travelling the globe – all those things that became normal,” says Barry Asin, chief analyst at global staffing and workforce solutions research and advisory firm Staffing Industry Analysts (SIA). “Meanwhile, companies continue to struggle to get the labour they need. Typically, CEOs are now reporting that getting the right talent is one of their top three challenges.”
“
The pandemic highlighted workers’ desire for non-traditional forms of work, whether it’s flexible work, working from home, working remotely while you're travelling the globe – all those things that became normal.
Barry Asin
Chief analyst Staffing Industry Analysts (SIA)
INTERVIEW:
How to attract and retain diverse talent pools
Dr Anna Gurun Director of future of work at HSM Advisory
The world of work may be recovering from the Covid pandemic, but the global talent shortage shows no sign of reducing. Unfilled jobs, a lack of skilled talent and high attrition rates continue to plague businesses in many sectors. So what exactly is going on? And how can businesses address this before it’s too late?
In this episode of The Work We Want, we explore the social and cultural shifts driving the global talent shortage. We consider how demographic changes are reshaping the structure of the workforce, what employees really want in the way of flexible working, and why organisations must create a dialogue with their employees.
To discuss this topic, FT Longitude’s managing editor Hannah Freegard is joined by Dr Anna Gurun, director of future of work at UK consultancy HSM Advisory.
Expanding the talent pool
One way that employers can help redress the imbalance between labour market demand and supply is to invest effort in actively expanding the available pools of talent.
Our global survey of 715 senior executives reveals that the most common strategy for doing this is targeting and supporting talent from underemployed sectors of the workforce, such as people who are long-term unemployed, disabled people, people with criminal records, and people from ethnic minorities.
REAL-WORLD VOICES
Integrating people with disabilities and health issues (Switzerland)
After a long period of unemployment, Beat D. (aged 61) was hopeful of getting a position he’d applied for as a salesperson at an industrial company.
"The HR manager wanted to hire me, but the company deemed the risk too uncertain due to my Parkinson's disease,” he explains. However, the HR manager then reached out to the Stiftung Profil, an organisation that supports people with disabilities or health issues to integrate into the general job market and advises companies on inclusion.
Thanks to the Stiftung Profil, he could benefit from a job coach helping him and the company to settle into his role. He has increased his working hours from an initial 50% to 80%, and is now aiming for 100% – and wants to continue working for several more years, even beyond retirement age.
His advisor at the Stiftung Profil continues to be a crucial point of contact. "I hope that such institutions become better known in companies' HR departments,” he says. “This would give more people with disabilities the opportunity to be employed."
Organisations like the Stiftung Profil don't just serve the recruitment needs of companies, giving them access to untapped talent pools. They also help to manage some of the risks, such as increased sickness benefits premiums, which can deter companies from hiring people with disabilities. When employment goes through a staffing company, the employees are insured for sickness benefits through the collective labour agreement for the agency work sector.
REAL-WORLD VOICES
Supporting people to work after involvement in the justice system (USA)
Staffing gave Lisa Goodrich the second chance she needed in her career. After being involved in the justice system in the past, Goodrich was concerned she would never get a chance to move past a dead-end job that didn’t support her financially and kept her away from her husband for long periods.
Then she found Working Fields. The staffing agency not only placed her with a local cable manufacturing company but also provided her with a peer coach, who met with her weekly to develop her budgeting skills and support her recovery from substance use.
Soon, Goodrich had the resources to purchase a vehicle and get the necessary medical treatment she’d been postponing. Based on her hard work and dedication, Goodrich later earned a full-time position with the manufacturing company.
REAL-WORLD VOICES
Finding real-world talent in the virtual world (The Netherlands)
Many institutions predict that labour market shortages and mismatches of available workers will only increase in the coming years. One recommended solution is to promote learning behaviours within the workforce, but these programmes can face low engagement rates from employees. Employers may be able to overcome these challenges by making the invisible visible.
Globally, approximately 2.8 billion people engage in daily gaming. Interestingly, research from Randstad indicates that gaming contributes to the development of essential skills for real-world occupations. Recognising the gamer audience as a talent source enables employers to fulfil staffing needs based on individuals’ hobbies, while also enhancing their employer branding. The Randstad "career mode" video on this can be found here.
Another strategy is to make recruitment practices more efficient, whether by making the application process more accessible (identified by 47% of the companies in our research), using new recruitment platforms to access untapped talent (33%) or reducing formal education requirements when hiring.
Half of organisations want to source workers from under-employed groups to expand their pool of talent within the next two years
Strategies to expand talent pool
Sourcing talent from under-employed sectors of the workforce and providing them with the support they need to be successful at work
Making the application process more accessible
Offering specialist support to refugees or asylum seekers to help them work for your organisation
Using new recruitment platforms to access overlooked talent
Shortening the work week
Reducing specific experience or formal education requirements when recruiting
Increasing our employment of agency workers
Creating a global talent acquisition strategy
The third-ranked strategy is to offer specialist support to refugees and asylum seekers, many of who are blocked by legal barriers from entering the labour market when they arrive in a new country. Even when settled status is achieved - which can take years - these workers often find it hard to re-enter work, disadvantaged by employments gaps in their CVs, language barriers or a lack of experience in the new market.
“Worldwide, countries can do more to give asylum and refugee workers a formal role in the economy,” says Luc Triangle, general secretary at the International Trade Union Confederation (ITUC). “They could be integrated much better into society through formal employment in the labour market.”
Our survey respondents agree: 80% say that governments must reduce legal barriers to hiring refugees or asylum seekers. As organisations are recognising, these groups can be a valuable source of talent.
While the integration of asylum seekers and refugees is essential in the current geopolitical context, facilitating well-managed work mobility is equally important to meet economic and workers’ needs. Survey respondents clearly recognise the importance of labour mobility. In the context of the labour market gaps they face, migration can play an important role in increasing the talent pools available to employers. Eighty-one percent of respondents say that increased labour migration has allowed their organisation to access talent with different and/or higher levels of skills, while 78% say that if they didn't hire workers from abroad, they wouldn't be able to fill vital skills gaps at their organisations.
of senior executives
say that increased labour migration has allowed their organisation to access skilled talent
“
Worldwide, countries can do more to give asylum and refugee workers a formal role in the economy. They could be integrated much better into society through formal employment in the labour market.
Luc Triangle
General secretary
The International Trade Union Confederation (ITUC)
Building more inclusive workplaces
To attract and retain under-employed worker groups and workers from other countries, businesses will need to offer more flexible working arrangements and varied opportunities. For example, flexible or reduced working hours are often sought by senior specialists who no longer wish to work full time. But beyond increasing availability of those arrangements, businesses also need to build more inclusive cultures that allow everyone to feel comfortable and thrive as a result.
We find that most executives see their organisation as being committed to inclusion.
Most organisations are committed to challenging discrimination, wherever it occurs
It is positive to see that the vast majority are committed to challenging discrimination and have put in place clear processes to report problems, although there is further progress to be made. Six percent disagree that their organisation is committed to challenging discrimination, and 5% disagree that their organisation has a strategy that specifically supports diversity, equity and inclusion in its workforce.
The skills to succeed
As well as building a supportive environment, equipping every worker with the skills they need to succeed is crucial to attracting and retaining talent.
That includes reskilling people who may have become disillusioned with their first career to help them re-enter the workforce, as well as helping older workers to become more comfortable with new technologies. Senior executives are aware of the pressure that constant tech evolution adds to their training programs: 78% worry they will not be able to train employees sufficiently to keep up with technology developments in the next three years.
Nevertheless, the companies that face this challenge head on and invest in their upskilling strategies now will reap the benefits in building a reliable and dynamic talent pool.
Most organisations are committed to challenging discrimination, wherever it occurs
The need for a more flexible workplace
of senior executives
say increasing employment of agency workers will be important for building workforce flexibility in the next two years
Johnny C. Taylor, Jr., president and CEO at SHRM, has noted leaders’ perspectives changing: “Historically, employers wanted dedicated employees on their payroll for a significant period of time. Now, CEOs are increasingly comfortable with a bigger percentage of their workforce being on flexible contracts. It’s good for the employees, who want that flexibility and who don't need the stability of a permanent role, and good for the companies, because it allows them to ramp up and down quickly.”
Flexible employment can also open the door to permanent employment, if that suits both parties, adds Taylor: “Companies are saying, ‘I'll put you on a contract at the end of it, or I can let you go, or I can extend it – and you can decide if you're going to remain with me.’”
Not all roads lead to permanent roles, and nor should they – but a truly flexible approach represents a win-win for both sides of the employment relationship.
“
Companies are saying, ‘I'll put you on a contract at the end of it, or I can let you go, or I can extend it – and you can decide if you're going to remain with me.
Johnny C. Taylor, Jr.
President and CEO
SHRM
Offering opportunity through agency contracts
Extending the use of agency work contracts is also providing better options for under-employed groups.
“There’s an opportunity to use contingent talent or independent workers to make your workforce more diverse,” confirms Dr Anna Gurun, director of future of work at UK consultancy HSM Advisory. “It’s often about women who've had children who don't want to return to full-time work in the same way, but have the experience that organisations need,” she explains. “They could be brought in on a contract to do a certain number of hours across the year, but they have flexibility in deciding how to do that – maybe more during term time and not as much during the holidays.”
Encouragingly, a majority of the executives we surveyed are already working to diversify their agency worker talent pools. A significant proportion of those working on these initiatives have implemented them by partnering with an HR services provider.
HR services providers are a key part of organisations’ strategies to diversify their agency worker talent pools
Demand for flexible work is also growing among older age groups. “I see a lot of older people who have specific skills and want to work as a freelancer or contractor,” says Gurun. They may have been full-time employees in the past, but want a new approach that doesn't require the commitment of a full-time role, while still allowing them to continue contributing and earning as they approach retirement. “That works for business because it gives them ongoing access to the experience and knowledge of those individuals,” says Gurun.
Engaging older individuals as agency workers also helps businesses provide advancement options for younger workers. “It allows businesses to improve their age diversity without blocking the pipeline,” explains Gurun. “It frees up some space for workers coming up the organisation, while maintaining access to those more experienced workers.”
HR services providers are a key part of organisations’ strategies to diversify their agency worker talent pools
A multi-layered solution
As employers around the world wrestle with major labour and skills shortages, it's becoming critical that they pull every lever available to them in an effort to close the gaps. That means a multi-pronged approach: from the smart deployment of AI to enhance workers’ productivity, to redoubling investment in skills, to creating more inclusive work cultures, and building flexibility in working hours, location and contract type. Policymakers must also wake up to these shifts in worker preferences and ensure that the full opportunities of the modern labour market can be accessed by every part of society.
Next, we explore how that multi-pronged approach can help design and provide the work life we want.
The World Employment Confederation is the voice of the private employment services industry at the global level, representing national federations as well as workforce solutions companies from across the world. Members of the World Employment Confederation represent a wide range of HR services, including agency work, direct recruitment, career management, Recruitment Process Outsourcing (RPO) and Managed Service Provider (MSP).
Stay in touch
World Employment Confederation – Avenue du Port 86c/302 – B-1000 Brussels – T. + 32 2 203 38 03