– Companies face the challenge of a reduced worker pool, even as they need to attract talent to sustain their growth and productivity, Bettina Schaller tells Anadolu
– Many employees have been reluctant to return to the full-time office work post-pandemic, impacting labor market imbalances globally
LONDON (AA) — Labor markets across the world have entered a new era with employers’ demand for flexibility increasing in many sectors, according to the president of the World Employment Confederation (WEC).
Flexibility is the biggest dynamic defining this shift in labor markets, both for workers and companies as it substantially affects the entire approach of how labor markets function, Bettina Schaller, president of the WEC, told Anadolu in an interview.
Workers’ growing search for flexible working conditions come at a time of talent shortage in labor markets, she said.
Flexibility at work means employees can make greater demands from pay to hours, workplace, and benefits.
“Companies, when they struggle to access talent, need to find new ways to still be productive and adjust their employer value proposition. But also they need access to different pools of people and this is where the notion of open talent comes up,” Schaller said.
“It is about having access to flexible people with a flexible contract. Companies need and want that flexibility to be open to bring in talent just for certain projects. That is why flexibility also needs to be a topic for governments because they need to create the frameworks so that there are all these contracts in the market.”
She noted that in most countries, the ratio of freelancers to full-time staff is much higher, with the healthcare and IT sectors being the most notable in this regard.
In health care, COVID-19 was a milestone as sector professionals were unable to cope with the pandemic.
Schaller said healthcare professionals are joining agencies that provide private employment services. According to her, so-called “travelling nurses,” which have boomed in the US, are a prime example of this.
Employment agencies offer much better pay and professionals can take on as many projects as they want, she said.
COVID has also impacted the labor market and worker demands in other sectors, too, Schaller noted, adding that many have resisted going back to the office full-time since the end of the outbreak after experiencing remote and hybrid work.
Across countries of all income levels, she said average hours worked have risen less than total hours worked, remaining below their 2019 pre-pandemic levels.
This has weighed on the overall available labor input and triggering labor market imbalances, especially in key sectors in advanced and some emerging economies.
However, Schaller also underlined that the social contract of the past decades is not fully fit for the new socio-economic and societal realities.
“The implications of longer working lives will be profound for individuals, businesses, communities and governments. Policies to empower and protect all should be closely linked to the UN sustainable development goals,” she noted.
– Global North-South rift
The growing trend of flexibility in labor markets comes at a time of talent shortage, especially in the Global North.
Talent scarcity is most prevalent in Japan, where 85% of employers report finding it challenging to find a particular skill set in the market.
That country is followed by Germany, Greece, and Israel, where that ratio is 82%, while 81% talent scarcity is reported in Ireland, Portugal, and India. In the UK, it is at 80%.
“We see that in European countries, and also in the US, there is a shortage of workers,” Schaller said.
She also pointed to a growing rift between the Global North and Global South in terms of talent shortage.
“We have the Global South, which has fantastic talent pools and amazing numbers of people — countries like India, Brazil as well as African countries.
“They have an amazing pool of talent and young people that we are missing in the Global North,” she said.
The skillsets that employers are seeking more are reliability and self-discipline as soft skills while IT and data are top technical skills.
Healthcare and the life sciences have the highest ratio of talent shortage with 77%, followed by the consumer goods and services, information technology, transport, logistics, and automotive sectors with 76%.
“That is why on the business side, there is a need for adaptation much more these days. Companies need to really work on their employee branding. They need to be attractive in this very reduced pool of workers that they are the ones that are able to attract and therefore sustain their growth and productivity as well,” she noted.
– More layoffs expected this year
Despite these shortages, companies are likely to lay off more workers this year, Schaller cautioned, pointing out that they are adjusting their own digitalization processes.
“It is still early days, but we see it is becoming common because people do not have the right skills anymore. Companies are very likely going to want to hire people with other skills and types of competencies.
“Thus, digital-related effects will lead to more layoffs,” Schaller cautioned, adding that shortages will remain acute in several sectors.
As labor markets are changing with demands for flexibility and pressure by talent workers, there have been widespread layoffs driven in many sectors by a gloomy economic outlook, high inflation, and increasing costs, with the technology industry most disproportionately affected.
According to Schaller, this is likely a rectification for that sector, in which employment has been booming for many years, notably during the COVID-19 outbreak.
Despite the layoffs, labor markets have shown resilience and unemployment rates fell globally by 0.2 percentage points last year to 5.1%. However, people still tend not to be working the same number of hours as before the pandemic.
“We actually see that there is less people in the activity than there should be so it is not necessarily layoffs,” she concluded.
