Due to global labor shortages, companies around the world and in all sectors are struggling to fill vacancies. In the past two years, supply has been hit by the Great Resignation, as workers leave their jobs in striking numbers and by a lack of migration due to travel restrictions.
But what are companies around the world doing to fill labor shortages? Common responses include increasing salaries and increasing investment in technology that allows staff to devote more time to fulfilling work.
Japan was struggling with an aging population and low birth rate before the pandemic. Its population is the oldest in the world, with 29% aged 65 or over. There are shortages across all sectors, with particular pressure on nursing as the national workforce shrinks and more people need care. The Department of Health said in July nearly 690,000 more nurses would be needed by 2040 to meet growing demand. But almost 60% of care homes say there is already a shortage, according to a survey by an industry advisory group.
Sompo Holdings, an insurance group that entered Japan’s healthcare business in 2015, hopes digitalization will help. In 2020, he invested $500 million in Palantir, a Colorado-based data analytics group, with the idea of maximizing its technology to build a platform with data collected from over 280 nursing homes. from Sompo across Japan.
Ken Endo, chairman of Sompo Care, the nursing unit, thinks the technology will reduce paperwork, allowing staff to spend more time caring for residents. In Japanese society, responsibility for care traditionally rests with families. This has led to low wages and a lack of a training system in the care sector, according to Endo, who is “surprised to see an industry so reluctant to train people”.
Sompo responded by creating training centers and programs. Combined with salary increases, this has helped attract and retain talent. Employee turnover, once above 20%, is now 11%, and more university graduates are joining the company every year.
US sanitation group Waste Management has also turned to technology amid the country’s big quit. About 4.5 million American workers quit their jobs in November alone, the Labor Department reported earlier this month. It was the highest “quit rate” since it began tracking in 2001. The data indicates the majority quit their jobs after receiving better offers.
Waste Management said it has started rolling out partially automated garbage trucks that don’t require drivers to empty bins themselves. “We no longer compete solely in the waste industry for [truck] drivers,” says Tamla Oates-Forney, its director of human resources, noting that the company had to compete for staff with companies like Amazon and Walmart.
Long-term pressures
U.S. business leaders say they don’t see labor pressures easing in the near term, as the existing workforce ages, immigration remains low and millions of Americans who left the workforce during the pandemic show no signs of returning. The new willingness of many workers to quit their jobs has been a hurdle for employers, who say high turnover makes it impossible to maintain consistent staffing levels.
The effectiveness of hiring bonuses and gimmicks like car and cash deals that U.S. employers relied on at the start of the pandemic have worn off, forcing companies to reassess who could do their jobs.
Communications consultancy Hotwire has started recruiting non-technical account executives for its US offices, despite that sector being the company’s primary market. “We can’t take the same approach as before,” says Heather Kernahan, its chief executive.
Food processor JBS is trying to attract employees who are no longer interested in long-term work in the warehouse by offering education and housing benefits while they move on to other careers . The company has launched a program that funds the college education of employees or their dependents, even if their education leads them to a career outside of JBS in as little as two years.
“I think for a number of our hourly production workers, despite our best efforts, a job is just a job for them,” says Chris Gaddis, who leads human resources at JBS USA.
Register vacancies
The UK saw a record 1.2 million job vacancies in the three months to November 2021, and more than half of businesses that reported labor shortages said they didn’t were unable to respond to requests.
According to the Institute for Employment Studies, a think tank, the UK labor market is the tightest in at least 50 years. The pandemic has converged with the UK’s departure from the EU, further intensifying shortages. However, Russell Beck of Imagine Think Do, a people strategy consultancy, says the pandemic has “amplified a trend that was already playing out”.
Analysis by the London School of Economics of how UK businesses are responding to shortages indicates that around a third have raised wages and around 20% are investing in new technology.
Simon Roberts, chief executive of British supermarket group J Sainsbury, said that due to “challenging operational times over the past 18 months, we’ve had to be really nimble and adaptable”.
To address the shortage of HGV drivers, for example, he said the retailer had “taken drastic steps to ensure we have the capacity on the road to move product”. These efforts included higher salaries and the offer of retention payments. Sainsbury’s has also raised wages for employees in all Sainsbury’s and Argos stores. Other companies, such as Aldi, the supermarket, and Pret-a-Manger, the sandwich chain, have also raised wages.
Shortages are also being filled by salary increases in professional sectors such as banking and law. The legal sector is also turning to temporary staff, following a boom in mergers and acquisitions that has increased the workload – deals worth more than $5.8 billion have been closed in the world in 2021, a 64% year-over-year increase – and higher attrition rates due to factors such as burnout.
However, Beck, who is also a speaker for Vistage, an executive network, adds that raising wages is only a short-term solution because its effect wears off quickly. “Money is a bit like lip balm,” he says. “Our lips are chapped, they’re a little sore, I need a little lip balm. But it’s fading so I need a little more.
He adds that if someone quits and an employer counter-offers a raise, “statistics all show that around 80% of people still leave within six months.”
Edward James, who owns three hairdressing salons in south-west London, employs 75 people and is keen to focus on retaining staff. It spends more on training and development. “It’s fine to pay people a higher salary,” he says, “but we have to perfect people.”
After Brexit, he saw a drop in the number of applicants from across Europe, adding that the industry is notoriously bad at “staff burnout” and the number of hairdressing trainees has plummeted.
It is also unable to sponsor staff from other countries as hairdressing in the UK is not considered ‘skilled’ work, in contrast to countries such as New Zealand and Australia, where qualifications in hairdressing are a legal requirement.
For now, his salons are well-staffed and James says he makes sure to spend time at all three locations: “I know everyone who works for me,” he says. Salon trainees take courses at local colleges, supplemented by more in-house training due to the “huge difference” in standards between colleges.
Beck says addressing the challenges of skills shortages “is going to be really tough” for small and medium-sized businesses.
Eric Chevée, vice-president of the French Confederation of Small and Medium Enterprises (Confederation of Small and Medium Enterprises) agrees, saying that in France, two-thirds of SMEs are struggling to hire.
The pandemic has exacerbated existing labor shortages in European sectors such as IT, construction and healthcare. Hotels and restaurants in France lost around 237,000 employees between February 2020 and 2021, according to the Directorate of Research, Studies and Statistics of the French Ministry of Labor.
Find the right balance
Wage increases and other benefits are offered to attract and retain hospitality workers. “We have to adapt working hours, increase salaries and make students want to join hotel schools,” explains Julia Rousseau, founder of the recruitment firm Ethique RH.
Spending time away from work during shutdowns has caused many workers with unsociable schedules to question their routines, Rousseau believes. She has helped many chefs and kitchen assistants turn their lives around and of those who remain in the industry, many are drawn to ‘dark kitchens’ where food is prepared only for delivery, with a predictable number of orders.
In Paris, more and more high-end restaurants are closing on Saturdays and Sundays. Others have reduced hours or use different shifts for lunch and evening shifts.
Michelin-starred chef Guy Savoy was already closing his eponymous restaurant two and a half days a week before the pandemic, to allow his staff to rest, and believes this practice, plus the salaries he offers and the strength of his brand, l helped keep them.
“It makes more sense to close an extra day and keep the same squad,” he says. But he acknowledges that not all businesses can afford it. A longer term solution? “The education system must emphasize that manual professions are as important as academic professions.”
Additional reporting by Jonathan Eley and Domitille Alain.
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