Structural Issues Plaguing the Global Labor Market. How Will the ‘Future of Work’ Fix Them?
Unemployment is high in many countries. The young cannot join the workforce, while there are worldwide reports of not finding qualified workers. Though many retirees would like to work, companies cannot accommodate them. Additionally, information technology has displaced workers while also creating new jobs.
These conflicting signals and trends are a symptom of a series of fundamental mismatches between what employers need and what they would like to hire. But there has never been a shortage of educated people in history.
The crisis in Europe, the slow economic recovery in the United States, and the rise of emerging economies reveal previously hidden flaws in the labor market. Addressing them will require a broad range of policy interventions.
Let us look at factors that suppress the search and acquisition of talented professionals for companies in virtually every product and service niches.
1. Low Unemployment Has Inspired Companies to Offer Incentives
During economic recessions, there are more qualified applicants and fewer full-time jobs for skilled professionals. Then, employers got to choose from a large volume of high caliber and experienced candidates.
The slow and steady global economic recovery has produced the lowest unemployment rates, challenging workforce planning. Today, fewer applicants are looking for work or willing to leave their current employers for new opportunities. The retention level is much higher in many niche industries, and career specialists are higher today than before.
It takes more time for the workforce planning team to find the right fit, particularly in high-demand technology and executive leadership roles. So, organizations are offering lifestyle and corporate culture incentives to attract quality candidates.
2. Experienced Candidates are Hard to Find Locally
Major metropolitan areas are known for having plentiful job opportunities with higher salary levels. The higher salary is partly due to the higher cost of living in these metros, so obscure cities are marketing themselves as the next technology hub.
Today, many cities have acknowledged that failure to attract IT or technology talent can substantially stifle growth and new business investment. Balancing the labor pool means creating incentives for both businesses to ‘set up shop’ within the city, attracting large global companies like Microsoft, Google, or Apple.
The lack of experienced candidates in the local region can hinder companies whose workforce planning teams wish for talent onsite, not remote contract workers.
3. There is Competition from Larger Organizations
While startups offer benefits, technical and marketing experiences, brand-building opportunities, most candidates prefer to work for large corporations. The longer the company has been around, the more job security it can offer, a common sentiment among job seekers. Hence, workforce planning has it tough for small companies.
However, large organizations with large overheads risk downsizing and layoffs than small or medium-sized businesses.
On the other hand, small and medium-sized companies constantly compete with large and internationally recognized businesses, needing AI-based workforce planning that can use data and track trends to help talent management perform their workforce planning activities.
4. The Demand for Flexibility is Higher Than Ever
As socioeconomic pressures impact professionals aged 35 to 50, the global workforce is evolving. There is a demand for flexible work hours. Workforce planning can utilize a combination of shared in-office space and hot-desking and allow certain employees to work from home for part of the week.
Working from home at least part-time presents several lifestyle benefits and accommodations and financial savings for employees. It enables employees to mitigate the needs of family members, children, and elderly parents without taking time from work.
There are three main types workforce planning team can consider:
a. Shorter work week –Studies showed higher productivity, lower absenteeism, and increased job satisfaction with the same salary rate.
b. Flexible day schedule – It allows employees to start or end within a specified time window with an agreement of completing the full 8-hour schedule.
c. Self-determined schedule – Executive level professionals have this model that sets KPIs they are accountable for. Employees with long tenure could be permitted to self-govern, combined with telecommuting, typical for sales and marketing execs. The workforce planning team can provide this to workers in the metropolitan areas where daily commute can be taxing, attending mandatory meetings and events.
5. There is Unavailability of Autonomy with Organizations
The freelance economy grew due to the low demand during the global economic recession. As finding employment opportunities became more arduous due to the low availability of full-time jobs, candidates got innovative who marketed their skills to prospective employers on a contract basis. If flexibility is attractive to talented and experienced professionals, autonomy and self-employment are even more appealing.
While unemployment rates are low today, self-employed individuals, consultants, and service providers remain high, primarily in marketing, sales, and web development. Workforce planning is warming up to accommodating freelancers as an economical option.
In this time of uncertainty, it is not enough to have a recruitment strategy. If companies want to be competitive and attract quality talent, the talent management team must have a streamlined workforce planning program while governments address challenging issues involving education, opportunities for the young and old, the virtues and challenges of immigration, and the aspirations of women.
Though controversial, well-functioning labor markets require both firm leadership and open minds that implement workforce planning optimally.
New technologies have provided workforce planning teams with access to data, allowing talent management leaders to analyze the impact of workforce decisions based on existing and hypothetical scenarios.
As a comprehensive and in-depth talent intelligence platform, Draup provides analytics across the entire spectrum of operations, finance, and HR, allowing the forecast of your workforce planning cost-effectively.