Worldwide, there is ongoing mismatch between employers and job seekers. In many occupations, both high and low skill, employer demand is greater than the supply of candidates.
In some cases, these shortages are due to a low number of candidates in the population—perhaps due to aging or migration. In other cases, it is due to skills mismatch, or a misalignment of interests: employers are hiring for one type of job while candidates are seeking another. Real-time job search data coupled with other sources can show us where this mismatch stems from.
With this information in hand, employers are better empowered to match candidates with the right opportunities, and to better understand the systematic barriers to talent attraction.
The global economy is recovering but growth is modest
In late 2015, the International Monetary Fund and the World Bank gathered in Lima, Peru for their annual meeting. The central bankers, finance ministers, private sector executives, and academics in attendance were there to discuss the global economic outlook, and their assessment was sobering. As one communique from the meeting began, “The global recovery continues, but growth remains modest and uneven overall. Uncertainty and financial market volatility have increased, and medium-term growth prospects have weakened.”
Throughout most of the world, prospects are mixed with advanced economies improving year over year and developing countries experiencing weaker outcomes. Recovery from the global financial crisis has been remarkably slow and while we’re now seeing signs of improvement in many places, this comes with new challenges.
What does this mean for employers?
According to the 2015 ManpowerGroup Talent Shortage Survey, 38% of employers report difficulty filling jobs globally. In some markets, workers may be plentiful but due to a weak economy, they may not be utilized to their full potential. And with resources tight, employers may not be able to invest in their workers to develop them and increase productivity. In addition, in locations with high unemployment rates, employers are likely sifting through large numbers of applications searching for a quality hire.
The difficulties that these employers face can be grouped into two kinds of mismatch: one based on a lack of job seeker interest and the other on a lack of skills.
The mismatch between employers and job seekers provides a partial explanation for an aspect missing from the global recovery thus far: productivity growth, measured by an economy’s output with a given level of input. Economies with higher or rising productivity levels produce more goods and services with less input, such as capital or labor, fueling economic growth and increases in the standard of living. According to The Conference Board estimates, global labor productivity growth remained stuck at 2.1% in 2014, while showing no sign of strengthening to its average of 2.6% from 1999-06. The issue is most pronounced in developed countries, as labor productivity in mature economies grew by 0.6% in 2014, slightly down from 0.8% in 2013. During the same time frame, emerging and developing economies saw a minor improvement in labor productivity growth, from 3.3% to 3.4%. The Conference Board forecast for productivity growth in 2015 is quite cloudy, as falling productivity growth in China and declining productivity in Brazil and Russia weigh heavily on the global outlook (PDF).
For this study, we are focused on the 12 largest economies by GDP in 2014, as defined by the IMF: Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Russia, United Kingdom, United States. Of those economies, Germany, India, the UK and the US are all registering measured progress but will face new obstacles, particularly the US and the UK as their economies transition from economic recovery to expansion. After years of steady growth, the Chinese economy experienced a significant slowdown in 2015. This substantially clouds the short-term outlook for countries who rely on China’s strong demand for commodities, including Australia, Brazil, Russia, and Canada.
In this report, we examine four factors that are contributing to movement in the labor market:
Consistent GDP growth in OECD countries over the past few years resulted in increased migration rates not seen since 2007. With the populations of many advanced economies aging, increased rates of inflow are vital to additions to talent pool. Our measure of Net Interest offers a glimpse into which countries are attracting the most interest from job seekers abroad and which may be losing a significant number of workers to emigration.
We live in a time of unprecedented rates of educational attainment worldwide. The average rate of tertiary educational attainment in OECD countries (which include eight of the 12 countries studied in this report) increased by more than 10 percentage points from 2000 to 2012, from 22.1% to 32.6%. Yet, in the past five years, an increasing share of employers worldwide report difficulty filling jobs. Either education rates aren’t rising quickly enough, or the education people are attaining isn’t preparing them to meet workforce needs. In this section, we’ll explore how these shortfalls in education are affecting global mismatch and how employers can contribute to a solution.
New Forms of Work
New technologies have given rise to new forms of work. In the 12 countries studied, interest in flexible work arrangements is rising—increasing by 43.7% from 2013 to 2015. These searches include terms like remote, work from home, and telecommute, which indicates that job seekers want to have a greater say in when and where their work is done. From the employer side, the availability of these kinds of jobs varies from country to country. In this section, we examine how employers might attract job seekers who are after flexibility—both by offering those types of arrangements and considering alternative solutions to attract talent.
Tightening labor markets in healthy or recovering economic conditions typically lead to an increase in wages. As employer demand for labor rises and the supply of available talent decreases, wages are a key incentive for workers considering one job over another. But, according to OECD data, global wage growth from 2011 to 2014 registered only 0.5%. The International Labour Organisation (ILO) reports that global wage growth decelerated in 2013 compared to 2012, and has yet to rebound to the rates seen before the global financial crisis (PDF). A lack of wage growth is concerning for the overall health of an economy for various reasons, but perhaps most importantly is the drag it exerts on economic growth—leaving workers with less income to pump back into the economy in the form of discretionary spending. In this section, we explore how salary factors into talent attraction across markets. Another aspect of wages we cover in this section is the polarization of jobs into high-wage and low-wage occupations, with middle-wage jobs disappearing from the economy at quick rate.
Why do gaps between employers and job seekers persist?
Candidates come from a global talent pool
Increasing rates of education aren’t making it easier to hire
New Forms of Work
Candidates are seeking alternative working arrangements
Wage growth is lagging in the global economic recovery
How Yahoo is Reimagining Recruitment
Data and methodology
About the author
Tara M. Sinclair, PhD, is chief economist at Indeed and an associate professor of economics and international affairs at The George Washington University. Her research focuses on examining historical patterns in data to understand both the current and past structure of the labor market and to forecast future movements. Under Tara’s direction, the Indeed Hiring Lab conducts original research using proprietary Indeed data to uncover exclusive insights into the labor market.
In addition to conducting her research, Tara is frequently invited to brief the media on economic and labor trends as well as offer commentary. She has been quoted in the New York Times, the Wall Street Journal, and the Washington Post, and she has appeared on CNN, C-Span, NPR, Fox Business, Bloomberg Radio and TV, and many other local and international news programs.
About the Indeed Hiring Lab
The Indeed Hiring Lab is a global research institute committed to advancing the knowledge of human resource and talent management professionals worldwide.
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