Global labor shortages have left companies around the world and across sectors struggling to fill vacancies. In the last two years, supply has been hit by the large resignation as workers leave jobs in striking numbers and a lack of migration due to travel restrictions.
But what are companies doing worldwide to fill gaps in the job market? Common reactions include raising wages and increased investment in technology that allows staff to spend more time performing work.
Japan struggled with an aging population and low birth rates before the pandemic. Its population is the oldest in the world, with 29 percent aged 65 or older. There is a shortage across sectors, with particular pressure on nursing, as the national workforce shrinks and more people need care. The Ministry of Health said in July that nearly 690,000 additional nurses would be needed by 2040 to meet the growing demand. But nearly 60 percent of nursing homes say there is already a shortage, according to a study by an industry advisory group.
Sompo Holdings, an insurance group that entered Japan’s healthcare sector in 2015, hopes digitization will help. In 2020, it invested $ 500 million in Palantir, a Colorado-based data analytics team, with the idea of maximizing its technology to build a platform with data collected from Sompos’ more than 280 nursing homes in Japan.
Ken Endo, chairman of Sompo Care, the nursing unit, believes the technology will reduce paperwork, allowing staff to spend more time caring for residents. In Japanese society, caring responsibilities have traditionally fallen on families. This has led to low wages and a lack of an education system in the care sector, according to Endo, who is “surprised to see an industry that is so reluctant to educate people”.
Sompo has responded by establishing gyms and programs. Combined with salary increases, this has helped to attract and retain talent. Employee turnover, once more than 20 percent, is now 11 percent, and more university graduates come to the company every year.
The American sanitation group Waste Management has also turned to technology in the midst of the country’s great resignation. About 4.5 million U.S. workers quit their jobs in November alone, the Department of Labor reported earlier this month. It was the highest “stop rate” since it began tracking it in 2001. Data show that the majority left their jobs after receiving better deals.
Waste Management said they had begun installing partially automated garbage trucks that do not require drivers to empty trash cans themselves. “We no longer compete only in the waste industry [truck] drivers, ”says Tamla Oates-Forney, its Chief People Officer, noting that the company had to compete for staff with people like Amazon and Walmart.
U.S. business leaders say they do not see labor pressures easing in the short term as the existing workforce ages, immigration remains low, and the millions of Americans who left the workforce during the pandemic show no sign of returning. Many workers’ newfound willingness to leave their jobs has been an obstacle for employers, who say high turnover makes it impossible to maintain uniform staff levels.
The effectiveness of employment bonuses and gimmicks such as car and cash offers, which U.S. employers relied on earlier in the pandemic, has disappeared, forcing companies to reconsider who could do their jobs.
Communications consulting firm Hotwire began recruiting account managers with no technical experience to its US offices, despite the fact that this sector was the company’s core market. “We can not take the same approach that we used to,” said Heather Kernahan, its CEO.
Food processor JBS seeks to attract employees who are no longer interested in long-term warehouse work by offering training and housing services while working towards other careers. The company launched a program that funds college education for employees or their relatives, even though their studies lead them to a career outside of JBS in as little as two years.
“I think for a number of our hourly-paid production staff, despite our best efforts, a job is just a job for them,” says Chris Gaddis, Human Resources Manager at JBS USA.
The UK had a record 1.2 million job vacancies in the three months to November 2021, and more than half of the companies reporting labor shortages said they were unable to meet the requirements.
According to the Institute for Employment Studies, a think tank, the UK labor market is the tightest in at least 50 years. The pandemic has converged with Britain’s exit from the EU, further exacerbating the shortage. However, Russell Beck of Imagine Think Do, a human resources consulting firm, says the pandemic has “amplified a trend that was already unfolding”.
An analysis by the London School of Economics of how UK companies respond to shortages says about a third have raised wages and about 20 per cent are investing in new technologies.
Simon Roberts, CEO of UK supermarket group J Sainsbury, says that as a result of “challenging operational moments over the last 18 months, we’ve had to be really agile and adaptable”.
To address a shortage of truck drivers, for example, he said the dealer had “made radical steps to ensure we had the capacity on the road to move products”. These efforts included higher salaries and offers of retention payments. Sainsbury’s has also increased the salaries of employees across all Sainsbury’s and Argos stores. Other companies, such as Aldi, the supermarket, and Pret-a-Manger, the sandwich chain, have also raised wages.
Deficiencies are also met with wage increases in professional sectors such as banking and law. The legal profession is also targeting temporary staff following an M & A boom that has increased the workload – agreements worth more than $ 5.8 billion were agreed worldwide in 2021, a 64 percent increase from year to year – and higher attrition rates due to factors such as as exhaustion.
Beck, who is also a speaker for Vistage, a leadership network, adds, however, that a pay rise is only a short-term solution as its effect quickly disappears. “Money is a bit like lip balm,” he says. “Our lips are chapped, they feel a little sore, I need a little lip balm. But it disappears, and so I need a little more.”
He adds that if someone resigns and an employer opposes offers with a pay rise, “statistics show everything in the direction of 80 percent of people still leaving within six months”.
Edward James, who owns three hairdressing salons in south-west London, employs 75 people and is keen to focus on retaining staff. He spends more on training and development. “It’s all very good to pay people a higher salary,” he says, “but we have to upskill people.”
After Brexit, he has experienced a decline in European applicants, adding that the industry is notoriously bad at “burning staff through” and that the number of hairdressing students has plummeted.
He is also unable to sponsor staff from other countries because hairdressing work in the UK is not considered “skilled” work, in contrast to countries such as New Zealand and Australia where hairdressing qualifications are a legal requirement.
For now, his salons are well staffed, and James says he makes sure he spends time in all three places: “I know everyone who works for me,” he says. Salon students attend courses at local colleges, supplemented by more in-house training due to the “big difference” in the standards between the colleges.
Beck says it “gets really hard” to face the challenges of lack of skills for small and medium-sized businesses.
Eric Chevée, Vice-President of the French Confédération des Petites et Moyennes Entreprises (Association of Small and Medium-sized Enterprises) agrees, saying that in France two-thirds of SMEs struggle to hire.
The pandemic has exacerbated the existing shortage of labor in sectors across Europe such as IT, construction and healthcare. Hotels and restaurants in France lost about 237,000 employees between February 2020 and 2021, according to the French Ministry of Labor’s Directorate for Research, Studies and Statistics.
Finding a balance
Wage increases and other benefits are offered to attract and retain hospitality workers. “It is necessary to adjust working hours, increase salaries and make students want to go to hotel schools,” says Julia Rousseau, founder of the recruitment consulting firm Ethique RH.
Spending time away from work during lockdowns caused many workers with unsocial hours to question their routines, Rousseau believes. She has helped many chefs and kitchen assistants change their lives, and among those who stay in the industry, many are attracted to “dark kitchens” where food is only prepared for delivery with a predictable number of orders.
In Paris, an increasing number of exclusive restaurants close on Saturdays and Sundays. Others have reduced working hours or use different teams for lunch and evening shifts.
Michelin-starred chef Guy Savoy already closed his eponymous restaurant two and a half days a week before the pandemic to allow his staff to rest, and he believes in this practice plus the salaries he offers and the strength of his brand. , has helped him hold on to them.
“It makes more sense to close an extra day and keep the same team,” he says. But he acknowledges that not all companies can afford this. A long-term solution? “The education system must emphasize that manual professions are just as important as academic professions.”
Additional reporting by Jonathan Eley and Domitille Alain.