We’re hearing (what feels like) a consensus from a number of our clients, and across the market, that the talent shortage is starting to hurt business. So today I thought it was an issue worth addressing.
Australia’s unemployment rate is sitting at a steady 5.2% as the year comes to a close.
Last month, the economy added over 14,700 jobs, after a gain of 26,200 full-time jobs, and a loss of 11,400 part-time jobs (seasonally adjusted).
There are other positive indicators in the Australia labour market: the drop in the underemployment rate, by 0.2 percentage points to 8.3% is a great sign; namely that more people are working at capacity. Also, the participation rate declined to 66.1% (down from 66.2%) that is, the rate of people who’re out there looking for work.
And globally we’re seeing record-low unemployment rates:
New Zealand at 4.3%
The UK at 3.9%
The US at 3.6% (up from a 50 year historic low of 3.2).
The European Union at 3.6%
Germany, as a standout, at 3.1%
These unemployment numbers put pressure on finding the right people.
But the prediction (or perhaps I should say ‘hope’) of many employers, is that hiring pains will ease, in time. However, when we look at forecasts in most of the big western economies, this isn’t the case. This talent shortage is going to remain difficult.
Korn Ferry released a study recently that predicts a global talent shortage of over 85.2 million workers by the year 2030.
(I will note this: the one country that’s immune to the current talent shortage is India. Korn Ferry predicts a surplus of skilled workers (240 million by 2030) due to India’s demographics of the working-age population, coupled with government education initiatives teaching highly sought-after skills).
Why is this talent shortage happening?
There are a few reasons and I’ll cover these not by country or region, but overall.
Firstly, Boomers are retiring, in the US, at a rate of around 10,000 every day.
Interestingly, there’s an increasing availability of work for people aged 55+, and it’s growing at an annual rate of around 4.1% – four times the rate of job growth.
Is this the market adapting to the talent shortage?
Making more work opportunities available for the 55+ workers?
Our view is, yes.
Other factors impacting talent supply include:
- The digital landscape has raised the demand for skilled labour in certain job categories, whilst entry-level and low-skills jobs are increasingly automated
- Workers are retiring later (despite the boomer retiring numbers)
- There’s a lower uptake of Millennials entering the workforce than their generational predecessors
- Employers are finding applicants with adequate tech skills, but low-level people and life skills
- Conversely, employers are also finding candidates without adequate skills and training
- Millennials are now, officially, the largest generation in the labour force in the US (and 50% of our labour force here in Australia), and the percentage of employees aged 65+ is growing, too.
Clearly, none of these facts is ground-breaking: what is though, is the scale of the predicted talent shortage in some countries.
Like the US for example, where the talent shortage is expected to quadruple between now and 2030. The problem is, most business leaders aren’t seeing this for what it is – they see it as a cyclical not systemic issue.
And in Australia for example, the Australian Computer Society, the professional association for the tech sector, published the 2019 Australian Digital Pulse Report recently. The skills shortages highlighted for the sector are estimated to be an additional 100,000 workers by 2024. You can check out the report here.
These are scary numbers in any market definition.
What are the solutions?
We wrote about the best means for talent sourcing not long ago. Here we discussed the importance of taking a strategic approach to establishing and nurturing a talent pipeline as a means of addressing talent shortages. This is one of many great strategic solutions to mitigate what could become a talent crisis.
Here are a few others:
- Rethink the concept of a talent shortage. Is it people your business is lacking or is it skills? You’re likely to find the answer to that is a lack of skills. Now this is an easier problem to address
- Get strategic in your approach to talent supply and upskilling. HR needs to engage at a strategic level with the rest of the business leadership, especially the CEO, in order to have the people in place to achieve business goals
- Undertake a talent audit and upskilling program, with the view to growing current staff. This is a great reward strategy as well for upcoming workers seeking to rise to the next level of their career (often a more satisfying reward than money)
- Make sure your EVP is on point. Don’t promote an EVP to the open talent market that isn’t real or isn’t being experienced by existing staff
- Include succession planning in your workforce strategy. Aligned closely with talent upskilling, consistent, technology-enabled succession planning will provide both your business leadership and your people with a future vision. It will also support talent loyalty and retention
- Destigmatise technology. If you’re attracting or employing older workers, make technology – including tech training – a staple of your onboarding and ongoing learning and development program. Importantly, don’t think technology as your saviour to talent shortage woes. Yes, technology continues to have a radical impact on how we work, but its application must include competency-based training for people to leverage its full potential
- Treat candidates like customers. It’s a candidate’s market, so having a strategic play with how you engage potential future hires is more critical now than ever
- Shift your culture to one that encourages critical thinking and innovation. The level of engagement and happiness experienced by your people is directly related to output, productivity and profitability. If you include your people in the bigger picture – especially through the contribution of ideas – you’re establishing a cohesive, inclusive environment, one that will experience a better rate of talent retention
- Offering flexible working solutions: offsite workers, flexible hours and job sharing, are just some ideas that have proven valuable
- Engage contingent workers as part of your workforce strategy: project-based workers can offer a valuable solution for reaching specific business goals
What about Australia? Here are some final thoughts
There are a number of initiatives we’ve seen coming out of Australia. And there are many viewpoints – both political and otherwise – that are worth considering.
Here are some of what we’ve learned lately, as food for thought:
- There’s a heavy push in Australia for the federal government to revamp the TAFE system. Work-based learning can help grass-roots workers better navigate the digital economy and the modern workforce, as well as better preparedness for the future of work
- The aforementioned ‘2019 Australia Digital Pulse’ report, outlined a number of policy priorities that will drive growth in Australia’s digital economy and meet the demands of a successful workforce. These include investment in digital technologies and importantly, investment in the skills to build a deploy them
- Telstra has partnered with six educational institutions (five in Australia, one in India) to facilitate skills development in an effort to drive capabilities for their own, and Australia’s future workforce. The initiative will focus on skills shortages – such as data analytics, cybersecurity and software engineering, and includes a strategy to offshore a large portion of new hires for the telco
And finally, there’s no silver bullet as a solution to the talent shortage in key skills.
Strategic planning, a commitment to sustaining the initiatives that will drive a consistent talent and skills supply, is mandatory for the future viability of your organisation.
What’s your view?
Is your company experiencing talent shortages?
Across what skills?
As one of the world’s top suppliers of contingent worker management solutions, CXC is perfectly positioned to create, manage and optimise your contingent workforce strategy. With operations in more than 50 countries across 5 continents decades of experience, we can assist with every aspect of your program.
We look forward to hearing from you.