Is Upskilling The Answer To Global Labour Shortages?

Publié le 19 May 2023 Par Jon Munnery

With current challenges in hiring and recruitment facing companies around the world, employers and job seekers are asking is upskilling the answer to global labour shortages?

Looking at the labour market, there’s a notable imbalance between the number of candidates actively searching for a job and the number of job openings, which is greater. The most recent figures from Statistics Canada show 372,000 job vacancies in Ontario during the third quarter of 2022, which is nearly double the average number of vacancies (195,000) reported between 2017 and 2020.

This indicates a shortage of workers and a possible lack of appeal for jobs that demand a particular skill set. While employers experience disruption on the front lines, what action are they taking to tackle the root of the problem and mitigate the effects of global labour shortages? There is a question many companies are now asking themselves: is upskilling the answer to global labour shortages?

Tackling the global shortfall in skilled labour

Businesses around the world are contending with the skills shortage, exacerbated by the coronavirus pandemic. While the number of empty posts outweighs the number of skilled professionals available to fill these positions, this will likely bite into company bottom lines if the problem persists.

Labour challenges currently impacting Canadian employers mean that recruiting skilled employers is expected to be an obstacle over the next three months for nearly 36.9% of businesses, with the following sectors leading the way:

Construction – 49.5%

Manufacturing – 47.4%

Accommodation and food services – 46.3%

The US labour market is experiencing a similar turn of events, fuelled by difficulties in retaining staff. The following industries are experiencing quit rates higher than the national average of 2.6% (March 2023).

Accommodation and Food Services – 4.9%

Retail – 3.3%

The Great Resignation which took place at the beginning of the pandemic resulted in millions of workers leaving their roles in search of a better work-life balance, increased flexibility and a more rewarding work culture.

According to the JOLTS report from the Bureau of Labor Statistics, about 50.5 million people quit their jobs in 2022, which is greater than the 2021 record.

Here are some of the factors contributing to the global skills shortage, according to a US Chamber of Commerce survey:

Care for children or other family members

Ill health

Covid-19 concerns

Low pay

Pursuing education and acquiring new skills before re-entering the job market

The final point shows that professional enrichment is highly valued by workers, and if this was offered as standard to employers, it could reduce the number of individuals leaving work to seek better training and professional development opportunities. This raises the question – is upskilling the answer to global labour shortages?

Investing in your workforce for long-term growth

While there is no one solution for the skills shortage, providing employees with the opportunity to upgrade their skills and further their talent can help fill the skills gap and fuel long term retention. By removing the skills barrier, workers will be able to acquire the technical knowledge, expertise and skills required to complete a broader spectrum of tasks.

Investing in staff and allowing them the opportunity to acquire skills that are high in demand can increase the value of a workforce and ramp up their employability. By providing individuals with the lifelong skills required to climb the career ladder, you also improve your chances of retaining them.

According to global consultancy, Gallup, the cost of replacing an individual employee can range from one-half to two times the employee’s annual salary. This shows that investing in existing staff can save you money in the long run and generate a higher return on investment.

The current state of the job market illustrates that as roles are becoming harder to fill, employers are willing to pay more which could lead to a greater number of outgoing employees, incurred at a heavy cost to the employer. Invest in your staff, and more importantly – invest in their futures to prevent high staff turnover.

Preserving the value of humans as businesses embrace automation and technology

It’s no secret that with the power of technology comes the opportunity to automate business operations to heighten efficiency and make long-term savings. As technology advances and revolutionises the way businesses operate, it’s important to stay grounded and invest in your workforce to maintain a people-first approach and develop the skill set needed to incorporate certain beneficial aspects of automation into the workflow process.

More than 1 billion jobs, which is almost one-third of all jobs on a global scale, are likely to be transformed by technology in the next decade, according to OECD . The only way to combat this is by investing in reskilling your workforce, starting with the fastest growing professions. The only way to combat this is by investing in upskilling and reskilling your workforce, starting with the fastest growing professions.

The pandemic supercharged investment in technology following the introduction of remote and hybrid workforces, with spending forecasts set to reach approximately $3.4 trillion by 2026.

This includes the adoption of digital technology to transform business processes and services from non-digital to digital which encompasses, among others, moving data to the cloud, using technological devices and tools for communication and collaboration, as well as automating processes.

Universal remedies for the global labour shortage

While upskilling provides a solution for the labour shortage, there are many alternative ways through which businesses are also combatting the problem. From recruiting temporary staff, such as freelancers and consultants, to launching recruitment campaigns targeted to candidates at an earlier stage of the career ladder, such as school leavers and new graduates, here are some of the remedies employers are seeking to recruit and retain talent.

According to PWC’s Hopes and Fears survey, employers are taking a combined approach which includes considering both internal and external measures to mitigate the effects of the labour shortage.

Internal focus

Upskilling workers – 40%

Increasing pay – 33%

Supporting workers with physical and mental well-being – 29%

Automating and/or enhancing work via technology – 26%

External focus

Widening recruitment to include more diverse workers – 25%

Recruiting workers with lower qualifications or less experience – 24%

Outsourcing work to third parties (e.g., consultancies, suppliers) – 20%

Hiring qualified workers from overseas – 20%

While upskilling is not the sole answer to global labour shortages, it has the potential to address certain needs of employers and employees. Employers are finding new ways to nurture a new generation of workers which takes the form of implementing both internal and external measures, from dipping their toes in international waters and recruiting overseas staff, to recruiting staff that are less seasoned and more receptive to acquiring new skills through training.