Until recently the words 'great resignation' were the alpha and omega of any analysis of the current state of the job market. But as the scars of the Covid-19 pandemic fade, we need to take a new approach.
The job market is, in fact, struggling with chronic imbalances.
A mismatch between the supply and demand for labour, in terms of both quantity and quality, has emerged and turned into a major macro and microeconomic issue.
Companies that adjust their HR policies to meet current market requirements will gain a lasting competitive advantage.
They will also be the key to righting the current macroeconomic imbalance.
The latest International Labour Organisation report is highly instructive. It points out that global unemployment has continued to fall and is now at 5.1 per cent.
However, taking into account all those who wish to work but are not considered as unemployed, the figure exceeds 12 per cent of the global workforce, representing 435mn people.
Looking at it through a quantitative lens, one could believe that labour supply is abundant and accessible to job seekers.
This has never been more wrong.
Companies in the west have never had so much trouble hiring
Some 77 per cent of companies struggle to hire people with the requisite skills. This compares to 35 per cent just 10 years ago.
In the US, there are 1.5 job offers for every unemployed person, or 9mn available positions.
This deficit is set to worsen as the global workforce shrinks. The UN estimates that the global working population in developed countries will fall from 820mn in 2020 to 760mn by 2040.
This cocktail of high unemployment and hiring difficulties is a lose-lose situation for all concerned.
Skills deficit and continuing high unemployment call for renewed investment in education.
The root of the problem stems from the mismatch between the skills in demand and those of the workforce.
In France for example, more than 30 per cent of employees do not have the skills required for the position they hold, and 23 per cent are blatantly under-qualified, according to the OECD.
To make the jobs market more fluid and enable a better match between labour demand and supply, the ILO suggests a couple interesting avenues: redefining working conditions, particularly in the manufacturing sector; and improving professional mobility via incentive housing policies.
But this cannot, and should not, be the only way.
Tackle the problem at its roots: renewed investment in education
Skills deficit and continuing high unemployment call for renewed investment in education.
It is by channelling private and public investment into training that we can hope to see the revival of innovation and create productivity gains.
A number of companies understood the advantage of investing in training or setting up their own universities early on.
Thanks to their internal training procedures – and virtuous HR policies – they have succeeded in attracting, training and retaining employees who embody their savoir-faire and/or their technological edge.
This type of approach has never been as relevant as it is today. And as the talent gap widens, others should be inspired by their success and follow their footsteps.
The macroeconomic impact of skills shortage: governments must act
By boosting employee training programmes, these companies contribute to levelling up their workforce.
They generate productivity gains, foster innovation, boost macroeconomic growth potential and ultimately the job demand, offering a solution to high unemployment. This is why governments need to look at the tax incentives in place.
The European Commission’s Pact for Skills programme in 2020 marked a step in the right direction, and has already enabled 2mn individuals to enhance their skills.
States must go further to encourage companies to train their employees, just as tax credits help drive research programmes.
Budgetary constraints are no obstacle: the OECD has already proved that spending on education generates double-digit returns on investment.
In a world in which the war for talent is becoming more and more entrenched, the ability to train one’s workforce is becoming a critical competitive issue.
Companies are becoming increasingly aware of this, and governments must now follow suit.
Aymeric Gastaldi is a fund manager – international equities at Edmond de Rothschild Asset Management
