Labour shortage in developed economies, notably those of North America, Europe and Japan is said to be because of a failure in looking far ahead towards sustaining the workforce on a futuristic scale.
Specific causes of labour shortage that are quite concerning, are the massive ageing population–declining labour force participation and a failure to adequately develop human capital by way of up-skilling and re-skilling due to internal mobility restrictions.
Labour shortage in the developed western economies is a pressing concern. This issue may be attributed to several reasons. Two interesting reasons that contribute significantly to this problem are explained here:
1. Massive ageing population
Implication of a massive ageing population is that there would be an insufficient supply of labour to meet the demand for human capital.
Firstly, industrialised regions of North America, Europe and Japan have a high ageing population. Europe is projected to have 34% of the population to be aged 60 years or over in 2050. North America–28% and Japan, by 2070 is projected to have 38.7% of its population age 65 years or over.
This is indicative of a decline in the labour force participation. Implication of this is that there would be an insufficient supply of labour to meet the demand for human capital. This kind of situation usually leads to higher labour costs, declining productivity and a heavy reliance on migrant workers. The heavy reliance on migrant workers is to compensate for the insufficient supply of labour.
2. Internal mobility restrictions
Secondly, internal mobility is very essential for talent development. It allows for deployment of staff to other roles within the organization. This affords talent the opportunity for growth and multi-skill development.
Employees are willing to remain in their organizations if their organizations provide them a favourable environment for internal mobility that will allow them to build skills.
This Microsoft report indicates that 72% of respondents are willing to remain in their organizations if their organizations provide them a favourable environment for internal mobility that will allow them to build skills.
A work environment that creates internal mobility restrictions holds talent back from skills development and so this in a way contributes to the shortage of skills in the labour market.
Therefore, it is evident that internal mobility contributes positively towards employee retention and skills development. So it is safe to say that favourable internal mobility conditions could very well contribute towards fighting labour shortages.
Talent sourcing from emerging economies
Emerging economies of Africa and parts of Asia have a huge and growing population of educated, skilled and multilingual young talent. As a result, this population class is fast catching up with the labour force of the developed economies.
A consequence of the labour shortage in emerging economies is a reliance on emerging economies for labour. This results in a pattern of worker migration from emerging economies into developed economies, where labour is needed.
Young talent from developing economies could make impactful contributions in the developed regions, while also taking advantage of economic opportunities for themselves.
What chiefly fuels said outward migration pattern is an abundance of educated and skilled young people, coupled with a high unemployment rate. Hence, young talents will be driven to take advantage of the labour shortage in these developed economies. Doing this may allow these young talent find beneficial economic opportunities in the developed economies.
For example, Nigeria, West Africa is home to a large population of young people of working age( 57.8% of the entire population). These people are sufficiently educated with about 16.8% having advanced university degrees and skills in Engineering, Medicine, IT, The Humanities and so on. With all of these, the major economic problem here is the high level of youth unemployment at 42.5%.
These developed economies understand that these young talents from the developing regions have the potential to make significant contributions to their economies that will allow for growth and development, hence some of these countries have put in place favourable visa and immigration policies to attract young talents.
Some notable immigration plans and policies are;
- The United Kingdom-Global Talent Visa
- Canada-Express Entry
- Japan- Special Highly Skilled Professionals (J-Skip) and the Japan System for Future Creation Individual Visa (J-Find).
This article was inspired by the content on the Talent Intelligence Collective Podcast.