Talent shortage is defined as having lack of skills to do a
work and considered as one of the most important reasons of
unemployment in many countries. According to the Manpower
Group’s statistics global talent shortage has increased significantly
in the last decade1 (Figure 1). The main reason behind this trend is
the widening gap between skills needed at work and current skill
set of labor force. Specifically, we observe a rapid digitalization
and automation of production processes at work. However, skill
set of current labor force do not change at the same phase to adopt
new environment. The unavoidable result is the evidence of skill
shortages across countries (Figure 2). Interestingly, this is not only
the problem of developing economies but also problem of advance
economies as well. In addition, a report published by the World
Economic Forum argues that one third of skills required to find a
job will change in the near future2. This implies that this problem
will intensify further in the near future.
1Talent Shortage 2020, Closing the Skills GAP: What Worker Want?, Manpower Group, 2020.
COVID19 will reshape economies and societies. We have
already started to see this transformation. Evidently, we know
that demand and supply shocks, as in the case of COVID19, lead
to persistently higher unemployment rates in economies. Aghion
et.al. (2005) shed light on the reasons behind this phenomena.
They argue that firms prefer to implement structural changes
in their operations during crisis times. Therefore, workers who
become unemployed during crisis times cannot find a similar
job in the post crisis period. In addition, some sectors grow and
some sectors shrink during crisis times. This necessitates a shift
from declining sectors, such as tourism during COVID19 period,
to booming sectors, like online shopping. However, moving from
one sector to another requires new skill sets. As Hyman and Ni
(2020) show workers who lost their job during crisis times and
attend training courses can find a job relatively quickly in the post
Unlike other crisis periods, this structural change has
become faster due to COVID19 pandemic. Companies that can
shift their sales to online platforms easily, that can meet hygiene
requirements, that can adopt changing international supply
chains, that can adopt automation and that can shift to distance
work swiftly will stay competitive, hence, stay alive. On the
other hand, these transitions imply significant changes in skill
requirements of workers as well as sectoral shifts of work force. In
a recent report, International Labor Organization (ILO) mentions
that tourism, transportation, automobile sectors are on decline
and health and retail sectors are booming. Therefore, we should
expect a workforce shift from declining industries to booming
industries. However, the question is whether former tourism
and transportation employees have the relevant skills to work in
health and retail industries?
3Hyman B.G., Karen X. Ni, 2020, Job Training Mismatch and the COVID-19 Recovery: A Cautionary Note from the Gareat Recession. Liberty Street
Considering the recent developments and our previous
insight about the effects of crises on labor market we propose the
following policy recommendations:
i. The problem we face with is gigantic and requires swiftEconomics, Federal Reserve Bank of New York
ii. Governments, universities, non-governmental
organizations and companies should set up a discussion platform
to share their views and ideas.
iii. Booming sectors and required skill sets in these sectors
should be identified.
iv. The number of work force that needs a new skill set
should be identified.
v. Swift workforce shift possibilities across sectors without
any additional training should be considered.
vi. Some sectors need “on job training” to adopt new
business environment. Such trainings should be arranged without
waiting the end of the COVID19 pandemic.
We argue that there is no time to waste to take such measures.
If we do not care about the talent/skill shortage across countries
there will be high and persistent unemployment problem in many
countries. Needless to say, future of our societies depends on our
current actions about labor markets.
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