Which policies could turn the wheel on the global labor shortage and skills mismatch?

The complexities and challenges of the global labor market are more pronounced today than at any other time in recent memories, in part due to the ongoing transformation of the global economy. Digitalization, demographic changes, and talent scarcity are all reshaping the world of work. As a result, we are witnessing severe labor shortages in some segments of the global economy and growing unemployment in others. 

Skills shortages and mismatches are not new to the labor market, but the problem is growing and we are not doing enough to address the root causes. The International Labor Organization estimates that only half of the world’s workers are in roles that correspond to their level of education, and one-third are considered undereducated. According to the World Economic Forum, hundreds of millions of youths are not in employment, education, and training (NEET), leaving them with limited employment opportunities. 

Even executives are concerned about falling behind. One study conducted by Harvard Business School researchers found that the perceived rate of skill obsolescence among C-suite leaders increased by 71.7% during the pandemic. 

The fallout from the pandemic introduced considerable friction to the global labor market. Skills mismatched worsened. Working women lost billions in real income and career growth. Service sector employers laid off significant numbers of experienced employees at the beginning of the crisis and are still struggling to hire them back.

Randstad has long supported a well-functioning labor market through the daily work we do with clients and talent, the advocacy efforts within our industry, and cooperation with local NGOs to create sustainable and impactful employment initiatives. All of these measures have benefited millions of working people, uplifted economies everywhere, and improved the conditions of underserved communities around the world. However, as the world of work moves past the disruptions of the past two years, we find some chronic challenges stubbornly intractable.       

Global labor and skills challenges are among the most perplexing for employers and policymakers, even as we now face a potential global recession in the months ahead. This is because the problem is a structural deficiency in the labor market and not a cyclical one. As such, we are advocating for a more proactive undertaking by all stakeholders in initiatives that have been proven to successfully advance labor market functions. These include:

• Prioritize raising awareness on skilling, including reskilling and upskilling, ultimately empowering people to acquire the skills they need to navigate the changing world of work.
• Increase labor participation through Active Labor Market Policies, facilitating and supporting cross-sectoral mobility and transitions to increase labor participation.   
• Broaden the talent pool by fostering all talent, leaving no one behind and including those who need support to access the labor market.

In Randstad’s latest position paper, “Global Labor Shortage and Skills Mismatch: Which Policies Could Help Turn the Wheel” we examine these market difficulties and highlight successful initiatives to address them. As millions face obsolescence due to technology and automation, governments and employers have an obligation to invest more in training and development to help afflicted workers regain marketable skills and jobs. Not only is this good for society, but these programs also alleviate the skills gap.

In India, for instance, we have created the Randstad Skilling Academy, which provides participants with in-demand skills through hands-on, live job assignments. Numerous workers have successfully completed training and found decent employment since.

As proof of Active Labor Market policies benefiting people and governments, the Baanbrekend program that began 13 years ago in the Netherlands as a joint initiative among Dutch municipalities, Public Employment Services UWV, and Randstad Netherlands. This program, whose name means “groundbreaking jobs” in English, prepares long-term unemployed enrollees for the job market within 8 to 13 weeks and was found to help cut public assistance costs by €19.3 million during a two-year period studied by regulators. Policies such as these have a significant impact on people’s ability and desire to acquire jobs. 

And because the global community is increasingly diverse, we must make sure that no one is left behind or locked out of the labor market. We’ve known for a long time that a diverse and inclusive workforce is good for business and for workers. Randstad is an avid supporter of this principle for our talent, clients and employers. It’s why our ambition is to be the world’s most equitable and specialized talent company.