Is there a labor shortage problem?

Even though industries are now stabilizing, and production levels return to pre-pandemic levels, businesses around the world face a new challenge: the ongoing labor shortage. According to research, there will be an estimated 85 million job shortages worldwide by 2030.

Currently, several factors contribute to the skills gap in the United States. As well as overcoming barriers to specific locations, markets, and job categories.

In this article, we will talk about the labor shortage, discuss the factors that caused it, and how companies are dealing with this problem.

What is a labor shortage?

A labor shortage happens when there are insufficient workers available in the labor pool to meet the demand for employment.

In the current year, in the United States, there are about 11 million jobs available, but only 6.5 million people are classified as unemployed. We assume that even if all the unemployed in the country were hired, there would still be approximately 4 million job openings.

This large number of job opportunities is harming employers worldwide. Businesses in Europe were struggling to fill over 1.2 million available employment positions as of early 2022. While on the other side of the world, employers in Australia are currently struggling to fill about 500,000 open positions.

What are the root causes of the labor shortage?

Labor shortages vary by location and industry, and are one of the biggest challenges facing businesses in general. A persistent skills gap could inhibit the world's ability to recover in a post-pandemic economy. To solve this major challenge, need to identify the root causes of such a severe labor shortage.

These are some of the causes of the labor shortage.

The COVID-19 pandemic

It would not be possible to look at the current workforce crisis without addressing the impact of the pandemic. At the beginning of 2022, the World Health Organization stated that over 6 million people had died because of pandemic-related complications. This figure hit one million in the United States. Around the world, many more are still struggling with the virus's long-term repercussions.

According to experts, while skills shortages created by the pandemic are noticeable in many areas of the economy, determining their long-term durability has proven to be challenging.

Low salaries

Many people are quitting the labor market, but the vast majority are switching careers to take advantage of better job opportunities. Many leave for better wages. It seems most people around the globe find income to be the most significant reason for changing careers.

In most countries around the world, the continuous labor crisis has created a candidate-driven market. Many employees and job applicants seek bigger pay and better benefits. Yet, salary increases differ worldwide. For example, in North America, all countries forecast pay increases by 2022.

Immigration is decreasing

Migrant workers make up 17% of the workforce in the US

Because of policy changes, immigration has slowed, leading to the growing problem of labor shortages in the country. Immigration has fallen from the Statistics Department's annual forecast of one million new immigrants per year to less than 200,000 in 2021. This means that many work-eligible potential immigrants who could help ease the labor shortage are not around.

Because of regulations, immigration was already slowing down before the pandemic hit. Extra immigration restrictions imposed by the epidemic affected the US's already tight labor market.

Aging population

The world's population aging seems to be another element influencing today's labor shortage. Businesses in several regions have been worried over the years about replacing a vast number of retired workers. In fact, in the United States alone, up to 10,000 people reach the age of retirement daily.

The elderly population is likely to grow in the next few decades. According to statistics, one in five people worldwide will be older than 65 by 2030. This figure will most likely double in the next two decades. Besides the crisis, several nations' birth rates are also declining.

What are the repercussions of a labor shortage?

There are many problems associated with unemployment. These, yet, have the greatest impact on industries.

Businesses have a declining profit

One of the most visible consequences of the labor shortage is a decrease in revenues for many companies.

Employers have had to innovate to find and retain talent. Many people believe that this means raising wages and benefits for the company, but these increased labor expenses come at the cost of profit.

Rising prices

Several businesses will endure reduced earnings to maximize profits and keep employees. Some, however, will adjust to compensate for increased labor costs, which means raising their sales prices. This can cause a chain reaction of price increases, resulting in massive inflation.

A slowdown in production

Some industries will also experience a delay because of the "Great Resignation." Businesses could not sustain the same levels of productivity as it became difficult to locate and keep employees. They may have to reduce output to expand their resources or find alternative options.

Slowing production will reduce several companies’ profits, but it will also harm other businesses that rely on them.

What can businesses do to find talent?

What will companies do if they can't find the right talent to hire, even with perks and benefits like higher salaries, better healthcare, and remote work options?

Particularly with essential tasks that need a full-time presence when people are unwilling to work, urgent employment is required. With a growing talent shortage, you will not find qualified individuals from the same pool of applicants. The solution is to collaborate with a company that embraces your cultural values and goals ​​as its own.

When personnel is scarce, outsourcing overseas is a viable option. Costa Rica is an ideal location for this field because it is one of the most literate countries in the world, with 95% of its citizens completing their education. Companies that outsource talent in Costa Rica can have a high-quality service, reducing costs significantly.

Final words

Outsourcing companies offer international resources that can provide low-cost and high-quality services that are comparable to those offered by in-house staff.

Expand Solutions has a decade of experience providing skilled workers from Costa Rica to fulfill your workforce gap. We help you to hire individuals with unique professional skills for specialized tasks.