Labor market under strain from rising skills mismatch
Labor productivity or wages have not improved amid a global economic growth and the labor market is under pressure due to a rising mismatch between the skills workers possess and those required by employers, according to report released by recruiting firm Hays plc.
The global labor market was under strain in 2017 as the Hays Global Skills Index measuring the ability of companies to access skilled workers rose slightly from 5.3 to 5.4, the report, co-published yesterday by Hays and Oxford Economics, said.
The skills index examines professional employment markets across 33 countries and regions and allocates a score for each country/region of between 0 and 10. An overall score above 5 indicates the labor market is “tighter” than normal while a score below 5 points to a “looser” market.
The main factor behind the tighter market is the growing mismatch between the skills workers possess and those required by employers, Hays said. The trend was seen across almost half of the markets assessed (16 out of 33), with the European markets of Austria, France and Belgium showing the largest rises in the mismatch of skills.
The report indicated that many countries across Europe, the Middle East and the Americas are stuck in a low growth trap suffering from weak productivity growth that has led to reduced investment in labor and capital, which further weakened overall productivity levels. Hays noted that this stagnation may be part of a longer-term trend.
The fast-changing work environment has led to the global labor force failing to develop the skills required to fill today’s roles, Hays said. To bridge this gap, education and on-the-job training need to be prioritized, the report said.
“We are at a critical junction, where if we don’t seek to address these issues in the very near future, then the skills crisis risks spiraling out of control and the global labor market will struggle to keep up and provide the skills the world needs,” said Alistair Cox, CEO of Hays plc.