Imagine trying to run a marathon without enough runners to fill the race. That’s what businesses worldwide are facing—a significant talent shortage that’s projected to hit 85 million by 2030.
What is the 85 Million Talent Shortage?
The term “85 million talent shortage” refers to the expected shortfall of skilled workers needed to meet business demands by 2030. This isn’t just a number pulled from thin air. It’s based on extensive research by Korn Ferry, which analyzed labor supply and demand trends globally. Essentially, if current trends continue, by 2030, businesses around the world will face a deficit of 85 million workers, equivalent to the population of Germany.
Statistics and Projections for 2030
- Global Impact: By 2030, the talent shortage could result in a staggering $8.5 trillion in unrealized annual revenues. This loss is due to the inability to fill critical roles, which hampers productivity and growth.
- Regional Disparities: The shortage won’t be uniform across the globe. For instance, the U.S. is expected to face a shortfall of 6 million workers, while Japan could see a gap of 4.4 million. Developing countries, while less affected now, may also see significant talent gaps as their economies grow and demand for skilled labor increases.
- Sector-Specific Projections: Certain industries are already feeling the pinch and are expected to be hit hardest by the talent shortage. These include technology, media, telecommunications, financial services, and manufacturing.
Key Industries and Sectors Most Affected
| Industry/Sector | Scope | Challenges |
|---|---|---|
| Technology | Encompasses software development, cybersecurity, data analysis, and AI. |
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| Healthcare | Involves medical professionals, healthcare administrators, and support staff. |
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| Financial Services | Includes banking, insurance, investment, and financial analysis. |
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| Manufacturing | Covers production line workers, engineers, and technicians. |
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| Energy | Encompasses both traditional energy and renewable energy sectors, including engineers and technicians. |
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Why Is The Talent Shortage Happening?
Several factors contribute to the looming talent shortage:
1. Demographic Shifts
One of the most significant factors driving the talent shortage is demographic change. Many countries are experiencing aging populations coupled with declining birth rates. Here’s how this plays out:
- Aging Populations: As the baby boomer generation (those born between 1946 and 1964) reaches retirement age, a large segment of the workforce is exiting. In countries like Japan, Germany, and the United States, the number of retirees is surpassing the number of new workers entering the workforce. This creates a gap that is challenging to fill quickly.
- Declining Birth Rates: Many developed countries have seen a steady decline in birth rates over the past few decades. Fewer births mean fewer young people entering the workforce in the future. This trend is evident in countries such as Italy and South Korea, where the birth rate is well below the replacement level needed to maintain a stable population size.
2. Rapid Technological Advancements and the Skills Gap
Technology is evolving at an unprecedented pace, transforming industries and creating new job roles. However, this rapid change also contributes to the talent shortage in several ways:
- Skills Gap: The skills required for modern jobs are changing faster than the workforce can adapt. For example, in the tech industry, there is a high demand for skills in artificial intelligence, cybersecurity, and data analytics, but there are not enough trained professionals to meet this demand. This mismatch between the skills workers possess and the skills employers need is a major contributor to the talent shortage.
- Lifelong Learning: To keep up with technological advancements, continuous learning and upskilling are essential. However, many workers are either unable or unwilling to undergo constant training, leading to a stagnant workforce that cannot meet the evolving needs of businesses.
3. Economic Factors Influencing the Availability of Local Talent
Economic conditions play a significant role in shaping the labor market and the availability of talent:
- Economic Growth and Job Creation: In periods of strong economic growth, the demand for labor increases as businesses expand and create new jobs. However, if the supply of skilled workers does not keep pace with job creation, a talent shortage can occur. This is currently seen in sectors like technology and healthcare, where rapid growth outstrips the supply of qualified workers.
- Wage Stagnation: In some regions, wages have not kept up with the cost of living, making certain jobs less attractive. This can lead to a talent shortage as workers seek better-paying opportunities elsewhere or leave the workforce altogether.
4. Impact of Global Events
Global events have a profound impact on the labor market and can exacerbate existing talent shortages:</p
- Pandemic: The COVID-19 pandemic disrupted labor markets worldwide, leading to widespread layoffs and a re-evaluation of work priorities. Many workers left their jobs or changed careers, and some have not returned, contributing to the current talent shortage. Additionally, the pandemic accelerated the adoption of remote work and digital transformation, increasing the demand for tech-savvy employees.
- Economic Downturns: Economic recessions and downturns often lead to job losses and reduced hiring. However, when the economy recovers, there can be a sudden surge in demand for workers, leading to a talent shortage. The 2008 financial crisis is a prime example of how economic downturns can have long-lasting effects on the labor market.
What Are the Best Strategies to Mitigate the Talent Shortage?
Investing in Employee Upskilling and Reskilling Programs
- Upskilling: This involves training employees to enhance their current skills, making them more proficient in their existing roles. For instance, a marketing professional could learn advanced data analytics to better understand customer behavior and improve campaign performance.
- Reskilling: This focuses on teaching employees new skills to transition them into different roles within the organization. For example, an administrative assistant could be trained in project management, allowing them to take on new responsibilities and fill gaps in project coordination.
By prioritizing these programs, companies can develop a versatile and adaptable workforce ready to meet evolving business needs.
Promoting STEM Education and Vocational Training
Long-term solutions to the talent shortage also involve nurturing future talent through education:
- STEM Education: Science, Technology, Engineering, and Mathematics (STEM) are critical fields driving innovation and growth. Encouraging students to pursue STEM education helps build a pipeline of skilled professionals. Businesses can support this by partnering with schools, offering internships, and providing scholarships.
- Vocational Training: Not all roles require a traditional four-year degree. Vocational training programs provide practical skills for specific industries, such as manufacturing, healthcare, and IT. These programs can quickly produce job-ready candidates, helping to fill immediate labor gaps.
By supporting these educational pathways, businesses can help ensure a steady flow of skilled workers into the labor market.
Enhancing Employer Branding to Attract Top Talent
- Company Culture: Promote a positive work environment where employees feel valued and supported. Highlighting a culture of inclusivity, collaboration, and innovation can attract candidates who prioritize these values.
- Career Development Opportunities: Showcase opportunities for growth and advancement within the company. Offering clear career paths, mentorship programs, and ongoing training can make your organization more appealing to ambitious professionals.
- Employee Benefits: Competitive salaries, comprehensive benefits packages, and work-life balance initiatives are key selling points. Highlight perks such as flexible work hours, remote work options, and wellness programs to stand out from competitors.
A strong employer brand not only attracts new talent but also helps retain existing employees, reducing turnover and maintaining a stable workforce.
What Is the Role of EOR and PEO Services in Mitigating the Talent Shortage?
Navigating the talent shortage can be a daunting task for businesses, but Employer of Record (EOR) and Professional Employer Organization (PEO) services can provide significant relief. Here’s how these services can help businesses overcome talent gaps and access global talent pools.
- Employer of Record (EOR): An EOR becomes the legal employer of your employees, handling HR functions like payroll, taxes, and compliance. This allows businesses to hire talent anywhere in the world without the need to set up a legal entity in each country.
- Professional Employer Organization (PEO): A PEO partners with your business to manage HR responsibilities, such as benefits, payroll, and compliance. Unlike EOR, the employees are co-employed by both the business and the PEO.
By leveraging these services, companies can focus on their core operations while EOR and PEO providers handle the complexities of HR, making it easier to attract and retain talent globally.
