Global economies are recovering from a near complete economic collapse experienced in the last three years. Their recovery is slow and uneven and the thought of going back to the “normal” conditions as experienced before the recession is almost nil. This is because economic models and systems used before the downturn have been battered by new global economic forces to a point that they are no longer sustainable.
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Businesses have adopted operating systems that have established “new normal” conditions as explained by Blayney, Blotnicky, & Semadeni, (2010). Under these new circumstances, businesses have been forced to accomplish more with fewer resources, which has produced promising results for some enterprises. The key to this new phenomenon as Ruhs & Anderson, (2010) say is to have the right people in the right place.
This simply means that having the right talent is changing the way businesses are conducted, and the results are amazing. However, shortage of labor, and specifically the right talent, in the midst of “high unemployment” levels is the biggest problem as Blayney and her colleagues continues to say. Other than a shortage of talent in the labor market there are other factors that are contributing to labor shortage in the global economy.
Factors and influencers that is/are contributing to the labor shortage in the Global Economy
Shortage of labor in the global economy is being influenced by the dependence on the baby boom workers who are in retirement age or will retire in a few years. In a country like USA, the baby boom workers are found across all industries and occupations from insurance to manufacturing, public administration to the utility industry.
In 2006, the oldest baby boomer reached 60 years, which is within the traditional retirement age, and as Levine, (2008) says the business community is a worried lot since labor supply is falling short of demand which jeopardizes the competitiveness of the USA economy.
For the industries that are dependent on baby boomers, replacing them is not a simple matter of recruiting since they have years of experience and most importantly they occupy positions and occupations that are critical to these industries operations.
Some quarter’s argue that replacing baby bust generation will not bring any shortage in the long run based on the assumption that companies will implement labor strategies to address this but, as International Organisation for Migration, (2008) say few companies have drawn out any plans for this situation since they are busy dealing with the economic pressures brought about by recession.
Another argument against shortage caused by baby boomers is based on continued assumption that they will be actively involved in work activities after retirement due to the changes made on the Social Security retirement system and age discrimination law. However, we have seen that a shortage of a talent and specific skills pool is a reality and the baby boomers have years of experience and skills perfected over the years.
Their continued participation in the labor market is not something that businesses can bank on as supply of labor since it is unreliable also the way business is conducted changing due to innovations in things like information and communication technology (Blayney, Blotnicky, & Semadeni, 2010).
The labor shortage brought about by baby bust generation can be addressed by revising immigration laws to allow foreign labor to come to the country through offshore outsourcing and guest worker programs.
The Australian agricultural sector is one such industry that is experiencing severe labor shortage. This is attributed primarily on lack of labor in general as Industries Development Committee, (2009) says. Generally labor shortage in this industry is attributed to declining rural population as young people head to the urban areas to look for better chances.
It is also due to the negative picture people have of the industry in that agricultural working conditions are not favorable also an ageing population that is less productive. On an industry, specific factor that contributes to shortage is the competition it receives from other industries in the labor market and poor promotion of this industry in the country.
On the aspect of shortage of labor due to lack of a skilled pool, the agriculture industry in Australia has specific factors that influence this shortage (Industries Development Committee, 2009).
Climate change and “global food” shortage have brought new challenges in the agriculture industry which will require innovation, strengthening competitiveness, boosting resilience and seeking ways of capitalizing on available opportunities to meet “global food” needs. This has led to an increased need for improved skill levels to meet the new challenges in the workforce.
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On this category of challenges, the agricultural industry has not been able to participate in education and training needs of the industry in tertiary institutions and local universities leading to low number of students enrolled in, agricultural related, courses at all levels; tertiary courses, undergraduate and graduate.
Another factor that contributes to skills shortage in agriculture industry is the poor awareness of career pathways in the industry (Ruhs & Anderson, 2010).
In relation are other factors such as the low competence of institutions and education and training system to offer innovative training solutions in the country. Secondly, there is limited accessibility to detailed labor and skills data for the agriculture industry to be able to assess current and skills need for the country. Finally, the industry has not been able to engage the stakeholders effectively in shaping the future.
The indigenous Australians, youth, women and migrants participating in agricultural labor and other agencies have been left out. This has resulted to poor planning of the workforce and human resources management capacities (Industries Development Committee, 2009).
The agricultural industry is not the only one experiencing labor shortage due to ageing workers who are going on retirement without experienced enough replacement to replace them. The mining industry according to the Deloitte’s Australian mining Advisory Division head, Tim Richards, the industry is going to experience difficulties in replacing ageing workers in the next four years (Blayney, Blotnicky, & Semadeni, 2010).
This is a phenomenon that countries like Canada, Australia and even USA are experiencing now and has created panic in the industry as young graduates are being promoted at a much faster rate than is the norm.
Strategies to attract new talent into the industry are forcing employers to offer incentives such as bonuses, more vacation time, increased benefits and more competitive salaries among others. This according to the Canada Mining Industry Workforce Information Report may bring “short term” gains at very high costs (Blayney, Blotnicky, & Semadeni, 2010).
The “longer term” employees feel the incentives are unfair to them and demand their own which will likely result to strained labor relations. The woes being experienced by the mining industry just like in the agriculture industry are a result of poor communication and branding of the industry to talented young labor. It is inevitable then that fierce competition for this talent with other industries affects it negatively.
Unlike the agriculture industry, the mining industry has made an effort of training skilled labor for its needs through partnerships with education institutions on areas such as bursaries, scholarships, seminars and forums. In addition to this tapping global talent, is another way through which labor force growth is being addressed (Industries Development Committee, 2009).
In some countries, labor shortage is a result of emigration. When nationals from a country outflow to other nations, the skills composition in a country are greatly affected since it is high skilled workers who leave in search of better opportunities elsewhere (International Organisation for Migration, 2008).
In the developed nations, professional leave in search of more attractive research or business environment in “third world” countries whereas in “third world” countries, they move in search of better remunerations, working conditions and work opportunities.
Ruhs & Anderson, (2010) gives an example of the United Kingdom where emigration from 1960 to 2005 was estimated to reach 2.7 million people with two-thirds of them left to take up or seek job opportunities abroad.
The global economy is recovering from the recent economic recession. In these new circumstances, businesses are trying to use less of the scarce resources available to produce more. This is possible with the right labor force. Labor force shortage is the new reality that businesses are facing due to a number of factors. One of them is the lack of talent in the market.
Beside this, other factors influencing labor shortage are baby boom workers who are on retirement age, new challenges facing agriculture industries such as climate change and “global food” shortage which require new sets of skills, the failure of agriculture and mining industry to brand themselves to attract young talent, unattractive labor conditions and emigration which brings shortage of skills in a country.
All these problems need to be addresses at the industry level and in collaboration with other stakeholders such as education institutions.
Blayney, C., Blotnicky, K., & Semadeni, P. (2010). Exploring the Labour shortage in the Halifax Accommodations Industry: Industry Perceptions of Cause and Effect. Nova Scotia: Mount Saint Vincent University.
Industries Development Committee. (2009). Workforce, Training and Skills in Agriculture. Australia: Primary Industries Ministerial Council.
International Organisation for Migration. (2008). World Migration 2008: Managing Labour Mobility in the Evolving Global Economy. United States of America: Hammersmith Press.
Levine, L. (2008). Retiring Baby-Boomers=A labour Shortage? United States of America: Congressional Research Service.
Ruhs, M., & Anderson, B. (2010). Who Needs Migration Workers? Labour Shortage, Immigration and Public Policy. Oxford: Oxford University Press.