Supply Mismatches: Worker Skills/Qualifications versus What Employers Need

It is not just that job contacts are poor and job search methods may be inefficient, biased against key groups, or non-existent. A key and growing problem is that available jobs go unfilled or are filled by those who may not have the basic skills or qualifications. In short, employers are looking for workers with certain skills and can’t find them. Employers don’t have the right supply of job seekers to fit current demand, let alone sufficient confidence in the labor force to make investments in better jobs for future growth. This is often called a skills-mismatch problem, or as Manpower Group calls it, a “talent shortage.”

Manpower Group, an international private placement firm, surveys employers worldwide each year, asking whether they are having difficulty filling jobs and, if so, which jobs. The skills-mismatch problem is clearly not confined to developing countries. Rather, it is more country-specific and it is on the rise. In 2015, the countries where employers reported the most difficulty in filling jobs were Japan (83%), Peru (68%) and Hong Kong (65%).21 Graph 1.3 shows that more developing and middle-income countries exceed the global average (35% in 2015) than fall below, but that this pattern is not consistent when countries are grouped by income level.22 A region like Central and Eastern Europe is equally divided between economies where employers find comparatively large skill shortages (Bulgaria, Romania) and those well below the global average (Slovakia, Czech Republic).

A skills mismatch has many roots, from education and training institutions not producing sufficient numbers or sufficiently qualified graduates in the fields where jobs are, to perverse incentives, misinformation or cultural stereotypes prompting job seekers to get skilled in areas where there is little work. A problem noted in the Middle East is that highly educated young people stay out of the labor market for years preparing for and awaiting public sector jobs for the sake of prestige and security, despite the dwindling number and value of these positions. While Graph 1.3 shows

Graph 1.3 Employer difficulty in filling skilled jobs (% of surveyed employers) (Source: 2015 Talent Shortage Survey, Manpower Group, 2015. Regional classifications based on World Bank Country Classification by Income, 2016 Fiscal Year, July 2015.)

the skills-mismatch problem is large throughout the world, it is the consequences that may be greater for developing countries. Many of the lowest- income countries were not surveyed, but South Africa demonstrates how mid-sized skill mismatches can exist simultaneously in low-income countries with high unemployment (31% of employers with difficulty finding skilled workers even with unemployment rates of 50%).23 The institutional and informational gaps feeding the skills mismatch can occur all along the skills spectrum. Even though it is relatively low-skilled work, Manpower Group found that drivers moved up to a high position among the jobs that were hard for employers to fill. Despite job growth Southeast Asia has a diverse range of jobs “problems.” Indonesia’s “jobs problem” has been determined to be more a poor job creation problem as so much employment (44%) is in low productivity agriculture. Nearly half of all Indonesian firms in a recent USAID review had vacancies for professional and skilled workers, but this figure was still lower than in nearby Thailand and Bangladesh where 70% of firms couldn’t find professional workers and

80% couldn’t find the skilled workers they needed.24 To be fair, services to match workers to jobs which include labor market information systems cannot in themselves fix a skills mismatch in a given country, but they can play a role in improving the labor market information and market signaling needed to reduce the mismatch.

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