In 2022, global talent shortages reached a 16-year high. In fact, 75% of employers reported challenges finding skilled and qualified employees to fill vacancies at their companies. While the reasons for these shortages vary by region and industry, one thing remains clear: the talent shortage crisis is here to stay.
In this article, we're taking a closer look at the global talent shortage, including what's causing it and what you can do to combat skill shortages at your company.
The current global talent shortage at a glance
If the talent shortage continues at the rate it's going, experts predict it could cost companies $8.5 trillion by 2030. Of course, it's not a surprise since only 25% of companies can find the right talent for their positions without challenges right now.
While skill shortages exist in many sectors, IT, tech and finance remain the top industries facing significant skill gaps. There's a high demand for skilled employees in these areas, but there just isn't enough talent to fill them.
What's Causing the Talent Shortage?
Despite differences in labor force participation, the United States, Australia and many other countries are struggling with the current talent shortage. Why is this the case, though? What issues have contributed to this problem?
The following are five of the most well-known causes:
1. Older generations retiring
One of the first issues influencing the global talent shortage is an increase in older employees retiring. The Pew Research Center explains that Baby Boomers (those born between 1946 and 1964) comprise approximately one-third of the workforce.
Many of these employees plan to retire in the next decade, and nearly 30 million were forced into retirement in 2020 during the height COVID-19 pandemic. When one-third of the workforce leaves their job, there will inevitably be a significant gap left behind.
Yes, more young workers are joining the workforce. However, they're not joining at fast enough rates to keep up with retiring Baby Boomers.
2. Skills gaps
According to a McKinsey & Company report, an astounding 87% of companies say that they are either currently experiencing skills gaps among their staff or expect to experience them in the coming years.
These skills gaps have led to smaller talent pools, making it harder for employers to find qualified candidates to fill vacancies at their companies. In short, the demand is greater than the supply, meaning it takes employers much longer to find qualified candidates.
Why are there so many skills gaps? A few issues have contributed to this, including more degrees earned in low-demand fields and a smaller work pool altogether (remember, the number of people participating in the US labor force, in particular, has decreased).
3. Burnout and other mental health challenges
Burnout leads to physical and emotional exhaustion, which can contribute to decreased productivity, job satisfaction and employee performance. Some employees also struggle so severely with burnout that they no longer feel they can do their jobs and decide to leave altogether. As a result, qualified employees are dropping out of the candidate pool to tend to their mental health needs.
4. Family care needs
Some employees have also chosen to leave their jobs in the last few years because of increasing family care demands. In the US, over 17 million individuals are the caregivers of a family member aged 65 or older. Roughly 1 in 10 Australians is in the same position.
With so many Baby Boomers getting older and retiring, more responsibility is being placed on younger relatives to care for them. Sometimes, the burden is so significant that the younger family member has to leave their job.
On the opposite end of the spectrum, childcare demands also impact people's participation in the labor force. Women are more likely than men to quit their jobs because they can't find adequate childcare (or afford it even with two working parents).
5. Increases in job hopping
A few decades ago, people generally stuck with the same job from when they were hired in their 20s or 30s to when they retired. These days, that's no longer the case.
Millennials and Gen Zs are known in many circles as the job-hopping generations and for a good reason. A Gallup report showed that 21% of Millennials reported changing jobs within the past year (over three times the number of non-Millennials who did the same). Millennial job turnover costs are expensive. In fact, Gallup estimates they cost the US economy over $30 billion.
There are many reasons why Millennials job-hop. Many do so because they want to find a higher-paying job. Others leave because they don't like the company culture or want to explore a different career path. In other words, if Millennials feel they're not getting enough out of their current job, they have few qualms about quitting and finding something different.
5 ways to combat the talent shortage in your company
As you can see, numerous issues factor into the current global talent shortage. The good news is that there are many steps you can take at your company to cope with this challenge, including the following:
1. Retrain and upskill your current staff
If younger employees don't have the skills needed to take on the jobs retirees have left, don't give up on them. Instead, train them and help them develop those skills. Seventy-six percent of employees say they're more likely to stick with an employer that offers continuous training. Fifty-five percent also say they need more training to perform better in their roles.
If you want to improve your employee retention rate and prevent even larger talent shortages, invest in your existing workers.
2. Embrace automation
Investing in artificial intelligence (AI) and automation can help you cope with reduced staff and talent shortages. By automating time-consuming and repetitive tasks, your existing employees will have more time to handle other, more critical tasks. Not only will this help them increase their productivity, but it can also help to reduce stress and combat burnout.
Resist the urge to shun automation and artificial intelligence. Instead, strive to embrace these technologies and find ways for them to support your existing staff and help them perform their jobs better.
3. Level up your onboarding process
The onboarding process is meant to help new hires adjust to their jobs — specifically the social and performance aspects — as quickly and smoothly as possible. A study by the Brandon Hall Group revealed that organizations with solid onboarding processes improve their new hire retention rates by 82%. In addition, their productivity also increases by over 70%.
A solid onboarding strategy contributes to improved employee retention for several reasons, including the following:
- Effective onboarding helps employees feel motivated and engaged from day one.
- Teaching new employees about the company policies and culture increases the likelihood that they'll build strong relationships with colleagues and senior staff members.
- Good onboarding ensures new employees fully understand their roles and responsibilities.
- Taking the time to educate and engage with new hires helps them feel more respected and appreciated.
(If you want to wow your remote employees, let us help. At Outstaffer.com, we're known for our exceptional onboarding experience. With dedicated onboarding specialists, welcome kits and employee inductions, we help your global talent get started on the right foot. Learn more about our Employer of Record and Employee Onboarding services here).
4. Focus on employee well-being
A recent Gallup poll showed that just 33% of employees were thriving in their workplace. In fact, workplace stress has reached an all-time high, with 45% saying they experience a lot of stress on the job.
By placing a greater emphasis on employee well-being and giving people the tools they need to manage their physical and mental health, employers can improve retention and reduce the likelihood that people will quit their jobs.
Employees say that the following are ways their employers can support their well-being:
- Additional time off (35%)
- Mental health support (29%)
- Adequate staffing (28%)
- Better health insurance (28%)
Those who work in remote leadership positions can also improve employees' mental health and well-being by creating more opportunities to connect and build rapport. It's easy for remote employees to feel lonely or struggle to collaborate with team members, so these efforts are especially beneficial.
5. Leverage the global talent pool
Another way to overcome the challenges presented by the talent shortage is to expand your hiring parameters. By embracing global recruitment and opening your company to job seekers in other countries, you automatically increase your chances of finding qualified candidates and filling vacancies.
In addition to helping you find skilled job seekers, leveraging the global talent pool also enables you to expand your company's diversity (which has been linked to improvements in productivity and performance).
Ultimately, remote work allows you to extend your reach beyond borders which can help you overcome local skill gaps and save money in the process.
Overcome the talent shortage in 2023 with Outstaffer.com
If you're struggling to find and retain talent, remember the strategies discussed above. From retraining and upskilling existing staff to embracing globalization and casting a wider hiring net, there are many ways to combat the skill shortage and keep your company afloat.
Are you interested in utilizing the global talent pool to fill skill gaps in your company? If so, we can help. At Outstaffer.com, we make it easy to hire,
Outstaffer.com makes it easier to hire, pay and equip the best employees from around the world. Plus, our #WorkFromAnywhere platform makes it easy for your global team to work. From Managed Devices and Workforce Monitoring to an exceptional onboarding process, we give your global team everything they need to thrive. Get ahead of the talent shortage crisis, and book your free demo today.