How innovation and new approaches can help overcome skills and labour shortages in the post-Covid era

07, January

By Denis Pennel, managing director, World Employment Confederation Today, many countries face significant skills ...

By Denis Pennel, managing director, World Employment Confederation

Today, many countries face significant skills and staff shortages. The disruption to labour markets caused by the Covid pandemic has compounded the already existing shortfall in technical and STEM skills, with the result that finding the right staff and skills to meet demand is now a top priority for companies across the globe.

World Employment Confederation’s 2022 Social Impact Report seeks to place the situation in context and explore what it means for businesses, workers, and economies. It considers solutions to jobs market mismatches and the skills and staffing squeeze. The report includes statistics from several Latin American markets including Argentina, Brazil, Chile, Colombia and Mexico, and provides case studies and examples from around the world that demonstrate the role of the global HR services industry in helping to address the challenge.

Vacancies have continued to rise in 2022 with nearly all sectors affected. Feedback from national employment federation members at the front-line of national labour markets demonstrates the real-life impact of these skills and labour shortages. Brazil, for example has experienced significant disruption across key sectors with many workers unwilling to return to the same role after lockdown. There are longer-term concerns linked to the decline in student numbers on the back of the pandemic – something that will affect the average qualification of workers, with literacy rates estimated to have fallen back to where they were 15 years ago.

The report concludes that vacancies are a major obstacle to growth and affect a wide range of sectors from health, IT and logistics through to construction and manufacturing.

The shortages are also pushing up pay levels and salaries with the result that companies are increasingly turning to flexible, temporary agency workers. Agency work offers a steppingstone into permanent work – particularly for people aged under 24 years. They account for 40% of the agency workforce in Argentina and 39% in Brazil. The share of agency workers being converted to direct staff is 55% in Mexico and 40% Argentina. In Colombia, 80% of agency workers are on assignments lasting 3 months or longer.

As well as a vital outlet for employers, temporary staffing is also seen as a positive outlet for individuals. In Brazil, the percentage of agency workers who are satisfied with their employment situation is over 70%.

Importantly for their future employability, agency workers also receive training. Data gathered from WEC members shows that 100% of agency workers in Argentina received training in 2020 – some 60,000 people. The figures were 33% in Brazil (200,000 people) and 85% in Mexico (65,500 people).

The Mexican market, however, has seen a shift from temporary to permanent placements. The pandemic had a negative impact on overall employment rates – also linked to changes to labour law prohibiting the subcontracting of personnel and negatively impacting flexible working

Our report explores how good workforce management and skills-matching drive business growth, including greater productivity and agility. It shows that shortages have a negative impact on worker well-being and organisational energy – eroding the core platforms of the ILO’s Decent Work agenda and impeding delivery of the UN Sustainable Development Goals linked to health and well-being, equality, decent work and economic growth.

In seeking practical solutions, the report makes a number of recommendations for policymakers, employers and the sector itself. And the good news is that many of them already exist.

The global HR services sector is urged to ensure that it has the right skills, expertise and incentives to meet the challenge. Continuing to maximise its contribution and build on what is already being achieved in helping to address intensifying staffing and skills shortages. In sustaining and amplifying social impact the industry is encouraged to act in a number of areas from influencing the policy agenda and supercharging the contribution of individual professionals to using data to support advice and sector-specific knowledge and taking a lead on the future of work.

We propose seven solutions where the sector is making a positive impact now – ranging from helping employers review resourcing strategies and delivering agile staffing solutions to adopting sector specific approaches and supporting international recruitment drives.

When it comes to employers and the wider business community, we outline several steps to be taken in making progress on current staffing and workforce challenges in both the short and longer-term. Businesses are advised to invest in recruitment and workforce planning and to be prepared to innovate in the way that they source and employ talent. They should ensure that their brand and its reputation are future-proofed and are encouraged to work with a professional HR partner in securing talent. Companies are also directed to take a lead in sharing their knowledge and experience in order to shape debates around skills and the future of work.

There is advice for national governments and international institutions too. It includes basing policy decisions on data and creating long-term and integrated national workforce strategies. These should encompass driving change on a regional level and taking public/private cooperation to the next level. Furthermore, policymakers are counselled to harness diverse forms of work and the social security provisions that need to accompany them. Governments are advised to enable more effective career support including providing targeted workforce management support for SMEs. All of this should be underpinned by promoting responsible practices through effective enforcement.

Addressing critical staff and skills shortages is a major priority globally. Our World Employment Confederation’s 2022 Social Impact Report seeks to quantify the challenge and highlight innovative solutions that already exist to solve it.