4 Factors Contributing to the Global Skilled Labor Shortage and How You Can Overcome Them
If your organization is struggling with hiring and retention, you are only one of the many suffering from the global skilled labor shortage. The resumption of delayed projects, a rebounding economy, the rolling waves of COVID variants, and additional factors have ratcheted up the difficulty level for finding and keeping STEM and other skilled professionals.
For this reason, some experts are labeling our current condition an acute talent shortage, one that will require adaptation to enduring conditions rather than perseverance against an interim situation. As we enter this new chapter, it’s important to survey the lay of the land if you are going to respond to the reshaped talent acquisition market.
From our own experience, those of our partners, and insights from thought leaders, we’ve created a list of factors that every business leaders needs to keep in mind to improve hiring and retention strategies going forward.
Concern returning to the office
Working from home has resonated with professionals since the start of the pandemic. With the proliferation of different COVID variants and an at-home equilibrium established, it’s no surprise that workers all over the world are hesitant to return to the office. Self-starters and those working for well-managed organizations also saw that productivity can remain strong in a remote work arrangement, and few are eager to return to pre-pandemic workspaces.
In the U.S., at least two out of three tech workers would rather look for work elsewhere than relinquish the privilege of working from home. Only a third of tech workers in the U.K. intend to remain with their current employer for another year, and in Southeast Asia, as many as 85% of employees want some level of flexibility in their work arrangement. If organizations do not respond appropriately, there’s a high chance they will fail to attract or retain top talent.
Organizations that retain and/or find top performers recognize the importance of embracing work-from-home arrangements. Monica Maralit, Vice President of PSG Global Solutions, says that their outsourced recruiting support team has maintained stability for this reason.
Monica says, “The Philippine Economic Zone (PEZA) incentivizes companies to keep their workforce remote, offering a tax holiday through September if we do so. Moreover, people want to work from home since they already have the flexibility, know it can be done, and recognize there are companies willing to offer remote work more permanently. Keeping a collaborative and resourceful RPO team is one of the reasons we anticipate remaining remote until Q1 or Q2 of 2022.”
Higher compensation and benefits
In between all of the binge watching and bread-baking last year, people had plenty of time for introspection and reflection on what they want from their lives and careers. As a result, we’ve outwardly seen an increase in American professionals quitting their jobs. In April, a record 4 million people quit their jobs and an additional 3.9 million quit in June.
What are the prime motivations of the Great Resignation? As usual, compensation and benefits are likely contributing factors. According to the Dice Tech Salary guide, 46% of tech workers feel they are underpaid. The Conference Board recorded a decline in annual pay raises from 3.1% in 2019 to 2.5% in 2020, which is likely an element of their dissatisfaction with tech industry pay. Plus, there were a number of tech companies, in a move to control costs, that reduced the pay of those working from home or moving to cities with lower costs of living.
The United States isn’t an anomaly. Gergely Orosz, an experienced engineer and thought leader, notes that many salaries throughout the Netherlands and the European Union are not benchmarked up against regional or global companies. However, skilled professionals in India are seeing suitable salary increases in several information technology, BPO, and financial services roles.
The above story creates a clear narrative: what has been called the global skilled labor shortage might be more of an adjustment in compensation expectations. If average compensation for supermarket and restaurant workers is growing to top $15 an hour after the first wave of COVID, then it’s apparent that more skilled position need to expand as well.
Let’s return to India for a moment. As the demand for digital technology booms across industries, some organizations are offering a 30% salary premium to attract top people and surpass the momentum of their competition. That lesson should resonate everywhere. Unless an organization is willing to adjust compensation to new benchmarks, they will likely remain behind the curve.
Increased burnout rates
Though the sense of unknown that permeated the early days of the pandemic are gone, there’s still a prevailing sense of burnout across industries. Consider the nursing industry. With high patient ratios during the height of COVID’s alpha variant and another brutal wave with the delta variant, as many as 46% are less committed to their work. Though pronounced in healthcare, it has become very clear that many organizations have not done their due diligence to provide their employees with any sort of emotional release valve.
Research conducted by the Work Institute found that physical, emotional, and family-related health issues (what they call the health and family category) are among the most common reasons people are leaving their jobs. With Americans working an average extra four hours per week, lines between work and personal time are increasingly blurring.
More so than in the past, organizations need to take an active role in the mental wellbeing of their employees. At w3r Consulting, we have striven to maintain good employee engagement habits. Whether conducting regular check-ins, recognizing the excellent work of our team (with tools like Great Recruiters), or maintaining an internal reward program, we take the initiative to keep our employees energized.
If you have already cultivated this type of environment, it’s important to showcase this selling point during the hiring process. Though we more than understand the impulse to remain humble, organizations that speak up about the career and personal value they provide to their employees are better equipped to hire and retain top talent.
The risk of hiring the wrong candidates
Though the ability to work from home has been attractive to many workers, it’s important for organizations to remain vigilant about who they are hiring. Since candidates are not required to physically commute to an office, there have been a small group of candidates that abuse the system, double dipping with permanent roles.
Additionally, the expansion of remote interviews has caused a surge in fake candidates across the IT field. For a number of disciplines, candidates will hire an actual technical expert to take the interview for them, feigning web camera malfunctions or bandwidth issues to allow an off-camera person to give their answers.
In general, organizations are working to respond to the heightened issue. Mario Enriquez, Co-Founder and President of 24HRPO, has noticed an uptick of these types of challenges and has some additional insight. He says, “There is a growing challenge when talking with candidate. Unlike face-to-face conversations, it can be hard to determine the commitment of a potential employee virtually, especially since you cannot always see how they will react. More companies are hiring people who are poor fits or will not last past the short-term. We’ve updated our process to address this challenge and remain dedicated to keeping up.”
The importance of an exceptional staffing partner
With a greater demand for remote opportunities, higher compensation, and work-life balance, it’s vital for organizations to get in the heads of the ideal candidate. The more they can appeal to their motivation, the more likely they’ll be able to hire and retain premium skilled workers.
In fact, working with a technical staffing partner can boost overall talent acquisition efficiency. Using national networks of top talent, proven screening methods, and strong relationships with the talent themselves, the right staffing and recruiting partner can help your recruitment efforts bear more fruit across the revised hiring landscape.
Want to further discuss the global skilled labor shortage? Reach out to our thought leaders at w3r Consulting to determine ways you can overcome talent scarcity in your industry.