Talent shortage: Addressing the growing gap in the workplace

While the pandemic and ‘The Great Resignation’ are rapidly gaining distance in the rearview mirror, a global talent shortage persists and intensifies.

At this point, it’s clear that the underlying issues behind the shortage of skilled workers stretch far beyond the waning influence of the COVID-19 pandemic.

While the shift to remote work and an increased focus on work-life balance undeniably changed the job market in recent years, other, more pressing reasons exist behind the current talent gap.

These include:

  • Technological advancements like AI and automation
  • The emergence of new skills that employees haven’t had the chance to train for yet (like AI prompting)
  • Stark changes in demographics due to baby boomers retiring in large numbers
  • A lack of labor force participation and significant skill shortages in younger generations

As you can see, there are many reasons why the world faces a giant talent shortage, affecting virtually all industries.

According to a recent study by Korn Ferry, more than 85 million jobs could go unfilled by 2030 due to a lack of skilled workers available to fill them.

To put this in perspective, that’s approximately the size of Germany’s current population. This shortage could cause $8.5 trillion in lost revenues if left unchecked.

What can employers do to help mitigate this crisis before it gets even more out of control?

While employers can’t solve everything, they can become part of the solution. Read on to discover more about the global talent crisis, including what you can do to expand your talent pipeline and fill your open positions.

Just how bad is it? The scope of the talent shortage across the globe

The United States is one of many countries struggling with talent acquisition right now.

Japan is especially having a hard time, as it recently announced an initiative to bring in 820,000 skilled foreign workers over the next five years due to a lack of available talent in its own country.

Organizations outside major metro areas are getting hit the hardest due to aging populations and a need for more young talent to replace them.

In Europe, 42% of SMEs (small-to-medium-sized enterprises) report facing skill shortages. In particular, the industry and manufacturing sectors need help finding top talent to fill highly-skilled positions.

Things could be better in Australia, with 36% of organizations reporting talent shortages and skill gaps. The industries reporting the most trouble were information and communications technology (ICT), science roles, and technicians and trade workers.

There’s a noticeable lack of technical skills happening worldwide, and the technology industry is feeling the impact of the talent shortage on their bottom lines (if they aren’t now, they likely soon will).

According to an IDC research survey, 90% of organizations will experience a tech skill shortage, which could cause up to $5.5 trillion in losses.

Of the companies surveyed, they listed the following skills as the most in-demand for their current needs:

  1. Artificial intelligence (more on this later)
  2. IT Operations
  3. Cloud architecture
  4. Application maintenance
  5. Generative AI

It’s important to note that two of these skills (AI and Generative AI) are from virtually new fields, which is part of why a lack of skilled workers is available to fill those roles.

How did we get here? Underlying causes of the talent shortage in the workplace

As stated previously, there are numerous reasons why the labor market is in its current state, and they stretch far beyond the influence of the pandemic (although it certainly still plays a role).

Here’s an in-depth look at the main reasons why there’s a talent crisis happening worldwide.

Disruptive technological advancements

The public release of ChatGPT in November 2022 kicked off the AI revolution, and it’s been in full swing ever since.

AI chatbots, generative AI, automated robots, and multimodal AI are just a few examples of rapidly emerging technologies associated with artificial intelligence.

Since these technologies were so widely and rapidly adopted, they created the need for new skills that many employees haven’t had the chance to develop yet. For instance, many job descriptions want applicants to be familiar with prompting chatbots and verifying the accuracy of their outputs.

The same is true for professionals working with generative AI and automated machines.

Educational institutions still need to update their materials to reflect these recent technologies, which is part of the reason why it’s so challenging to find skilled workers in these areas.

Businesses should move forward by encouraging employees to develop these skills through training programs and opportunities for continuous learning.

Declining birth rates and demographic shifts

Baby boomers still hold the most highly skilled positions in the US, and they’re retiring in record numbers.

This is leaving a significant skills gap across many industries.

Here’s a look at the industries where baby boomers hold a majority of the skilled positions:

  • Electricians (542,680)
  • Civil Engineers (262,170)
  • Welding, Soldering, and Brazing workers (403,100)
  • Mechanical Engineers (258,630)
  • HVAC (251,700)
  • Machinists (391,130)
  • Electrical Engineers (168,100)
  • Mechanical Engineers (258,630)

As you can see, most of America’s skilled trade workers are baby boomers, and they’re getting ready to virtually leave the workforce by 2030 (75 million boomers plan to retire by then).

The trouble is that there needs to be more skilled talent around to replace these workers as they retire. Since younger generations need more skills to perform these roles, it’s causing a significant knowledge and skills drain (not to mention millions of vacancies).

Declining labor force participation

Another reason it’s so difficult to find new hires is that a record number of people choose not to work.

There are a variety of reasons for this, including the following:

  • A lack of available, affordable childcare
  • Substance abuse
  • Fewer college graduates
  • Skill sets currently out of applicants scope (such as AI)
  • Holding out for flexible work or better pay

According to the US Chamber of Commerce, younger potential employees aged 25 – 34 prioritize personal growth and well-being over searching for a new job. Before re-entering the job market, they want to focus on reskilling, training, and furthering their education.

This is understandable, considering the number of new skills popping up in many job descriptions.

Not enough emphasis on soft skills

Another reason why employers need help finding skilled employees is the way they trained employees in the past.

There was an emphasis on teaching employers how to perform tasks but not educating them on why those tasks needed to be done in the first place.

In other words, employers must provide employees with a bigger picture to understand their work’s role in the larger scope of things. There’s also not enough of an emphasis on soft skills such as:

  • Communication
  • The ability to learn
  • Problem-solving
  • Business acumen
  • Business strategy

These soft skills are so valuable because they transcend specific tasks.

For example, you teach a worker how to operate a forklift, but your training ends there. As a result, they become highly skilled at operating a forklift, but that’s all. They need to understand the greater purpose the brick pallets they’re moving play in the overall construction operation (or how the shift structure works at your organization).

If an AI can operate their forklift, they won’t have any reason to stay at the company.

If, however, the employee received training (or was hired with) the aforementioned soft skills, they could still serve a valuable role as a manager.

What can employers do to mitigate the crisis?

It’s clear that if employers and employees don’t act now, Korn Ferry’s dire prediction for 2030 may come true.

To ensure that doesn’t happen, here’s a look at the top ways employers can help create more skilled workers.

Focus on long-term skill development

The forklift example illustrated a poor investment in employee skills for the organization. Short-term skill development is where you only teach employees the skills they need to complete their daily tasks.

Long-term skill development may be a steeper investment. It focuses on building skills that pay off in the future – such as resilience, active listening, and time management.

Also, remember to upskilling and reskilling your existing employees.

One of the best (and quickest) ways to fill open positions is to promote someone from within: don’t forget to provide them with the proper training to do so.

Set up knowledge transfer programs

The retiring baby boomers will leave a sizable knowledge and skills gap in their wake, but it doesn’t have to be that way.

Before they leave, do your best to set up knowledge transfer and mentoring programs.

That way, they’ll get the chance to teach younger employees everything they know. This is one of the best ways to upskill new hires since they’ll learn from experienced minds who have been on the job for decades.

Also, you can contact recently retired employees to see if they’d be willing to participate in mentorship or sponsorship programs. You could also offer them the chance to continue working part-time while they mentor new employees instead of retiring fully (if they’re up for it, that is).

Rethinking hiring standards to address the talent shortage

A big reason young people need help finding employment is the stringent hiring standards most companies still utilize.

As stated previously, there are fewer college graduates right now (the number just fell for the second year in a row). This is because A) younger people aren’t eager to rack up student debt, and B) there’s a higher emphasis on certifications instead of degrees.

If you want to expand your talent pool, removing college degree requirements significantly is a good idea.

Instead of requiring a 4-year degree in a specific field, opt to hire for specific skills instead.

This will open you up to a ton of new talent, which will help you fill open positions.

Also, employers should realize that hiring can’t solve the talent shortage entirely. Instead, there needs to be a focus shift toward hiring candidates with high potential and positive attitudes and then developing the necessary skills from there.

While this involves more upfront investment via training programs, it’ll pay off dividends in the future. Since you’ll actually have a skilled workforce.

Improve the employee experience

Lastly, employers can attract top talent by improving their employee experience. If The Great Resignation taught us anything, modern employees have different priorities than prior generations.

Rather than grinding it out for more money, younger generations are more focused on the following:

  • Remote work
  • Flexible work schedules
  • A better work-life balance
  • Mental well being
  • A positive and engaging company culture

If you offer hybrid work schedules and a diverse company culture, you’ll easily attract employees.

It’s important to note that some of these workplace improvements can also present their own skills gaps.

For example, if you begin offering remote or hybrid work schedules, your managers must know how to manage employees working from home properly. This has been a noticeable challenge for managers since the pandemic, as they need more visibility/influence over their workers.

As a result, it’s imperative for organizations to provide the proper training necessary for managers working with staff not physically present in the office. They’ll need to know how to use any remote time-tracking software you implement and how to communicate with staff (such as through Slack or Zoom).

Wrapping up: Facing the talent shortage

Those are some ways employers can fight back against the rapidly growing talent shortage taking place worldwide.

Disruptive technologies, shifting demographics, and a declining labor force participation rate are all steep challenges facing the labor market. However, they aren’t impossible to overcome.

As long as you focus on developing your most-desired skills in your current employees while doing your best to appeal to top talent, you should fare fine in the coming years.