Reconciling with Unemployment and Talent Shortages | DCR Workforce Blog

Reconciling with Unemployment and Talent Shortages

unemployementAccording to the Society for Human Resources Management (SHRM), hiring in the manufacturing sector is increasing. However, the services sector is decreasing even as the scarcity of skilled candidates in various industry sectors are driving wages higher. The upcoming holiday season retail hiring has already been kicked off by the supermarket chain Kroger, which plans to hire 20000 new grocery workers to meet existing need in its stores as well as near-term growth plans.

In the current economy, job gains and losses seem applicable to specific industries rather than the economy as a whole. But, by all accounts, the unemployment rate is coming down. The Bureau of Labor Statistics puts the unemployment rate at 6.1% in Aug 2014, changed by 0.1% from the previous month–inching that slight bit closer to the natural unemployment rate of 5.5%.

Reconciling with Unemployment

 Source: Bureau of Labor Statistics

Of course, it is better not to get complacent because the very calculation of the unemployment rate has recently come under question. According to an academic study, the rate is calculated using 8 rotation groups as samples with a formula that suffers a “rotation group bias”. The resultant error could have been compounded over the years, making the calculation of the unemployment rate unreliable and open to question.

So, if the real unemployment rate stands at a much higher level than predicted, the mystery of the talent shortages deepens further! What is affecting the availability of skilled workers so strongly that one in five businesses claims to be affected by the lack of access to skilled candidates? Also, what can be done to bridge the gap? As recent research suggests, it not just America but most countries of the world that would be facing these shortages, so immigration might also stop being a viable option at some point.

Points to Ponder:

  • Lack of skilled candidates would result in wage inflation affecting economic growth. According to a survey by National Association of Lecturers and Employers (NACE), the starting salaries for 2014 college graduates went up by 7.5%.
  • Unfilled roles will cause a similar constraint, affecting growth.
  • When economic growth suffers, the availability of jobs could also be affected.
  • A change in the mindset of employers, who are currently accustomed to having their way when hiring people, may be required. The recession enabled many employers to demand and receive all required skills (along with some additional attributes) at the lowest price possible. This is no longer possible when highly sought after candidates are needed.
  • Employers who are unwilling to invest in training and development of candidates to meet their requirements will affect their ability to fill open positions.
  • All industries are not facing a problem with skill availability, and this makes it all the more necessary for employers in industries which are plagued by a shortage of skilled workers to develop internal candidates, re-train candidates from similar businesses, and launch collaborative programs with educational institutions and training institutions as well as staffing agencies.
  • Turning to contingent workers has always helped companies to bridge supply and demand gaps in labor. Candidates are prepared by staffing firms to meet the clients’ requirements for a short assignment, which helps to bolster their abilities further – as they move from strength to strength with each assignment undertaken.

Governments will need to focus on the critical skills required to fuel the economy and take appropriate targeted measures to improve the availability of skilled workers through training and additional incentives. Immigration could also be an option, only if there is political will, which needs the modification of existing policies which may make it difficult for new talent to enter the country.

The truth is that today’s America is faced with serious manpower shortages in engineering, IT, healthcare, and other fields. Many industries, including utilities, power transmission, nuclear reactors, waste treatment systems and aerospace, to name a few, struggle to replace retiring employees.

There is no time like now to effectively employ training to meet business goals and outcomes.


Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.