Labor Shortages

There is an exodus of employees and a loss of institutional knowledge happening at organizations around the globe — and it's shaking up the workplace in ways we haven't seen or prepared for. How organizations react will determine whether this is a long-term trend or just a reset.

Over the last year, many companies have faced a reckoning as large numbers of employees quit their jobs, launching a movement of sorts that Anthony Klotz, professor at Texas A&M University, Texas, USA, named the Great Resignation.

In January 2022, the U.S. Bureau of Labor Statistics announced that 4.5 million Americans left their jobs in November — the highest level since the agency began tracking this data in 2000. The quits rate once again reached 3%, rebounding to a recorded high first set in September of 2021

The Organization for Economic Cooperation and Development (OECD), which includes 38 member countries, found that 20 million fewer people are working now compared to before the pandemic with a slow rebound predicted. A recent survey conducted for the Bertelsmann Foundation reported that 66% of company decision-makers in Germany, Europe's largest economy, said they are currently short of skilled workers, an increase from 2020. In Australia, 40% of employees said they plan to look for a new job within the next six months. And in Singapore, 49% of employees surveyed as part of Microsoft's 2021 Workplace Work Trend Index said they are considering leaving their employers this year.

The period that initiated these rising quits rates can be traced to the onset of the COVID-19 pandemic when millions of employees around the world were laid off or furloughed. In some countries, unemployment benefits and government relief funds provided individuals the opportunity to remain at home for health reasons and to take care of their families. But even now, as vaccination rates increase and organizations begin to normalize working environments, and as more companies offer bonuses and incentives for new employees, millions of positions remain unfilled.

These historic labor shortages are further complicated by the disproportionate marginalization of women, a situation that is exacerbated by inequalities of caretaking and opportunity. At the beginning of the pandemic, workforce sectors with jobs primarily filled by women, such as the hospitality industry, were more at risk. In Latin America, research found that the pandemic stalled progress the region had previously made toward gender equality in the workforce, with 12 million women leaving the regional workforce due to the elimination of jobs.

Even as companies actively seek employees, many women are having trouble resuming or starting new careers. The National Women's Law Center (NWLC) reports that women's labor force participation was just 57.3% in October 2021, the lowest participation rate since 1988. Unemployment rates for Black women and Latinas exceed the figure for women overall.

The pent-up desire to seek a better work experience and greater flexibility is being released as the restrictions brought about by the pandemic recede. This additional factor has organizational leadership questioning how they can retain the employees they have while attracting new talent. To find the answer, leaders must be willing to address the surge of disillusionment felt by many employees about work/life balance, and what they now want from their jobs and the organizations they work for.

With 25 million new project professionals needed by 2030, according to PMI's 2021 Talent Gap report, these labor shortages will only intensify the challenges of delivering projects that are on time, on budget and that meet customer expectations. In the near-term at least, many organizations may experience significant turnover and schedule delays as team members and stakeholders alike leave for new opportunities. If not closely monitored and controlled, quality could decline as the burden put upon remaining team members grows.

While the Great Resignation has not hit home in every part of the world or every industry, the threat of labor shortages and discontented employees looms large. Organizations will need to reset the employer/employee relationship to create a successful retention culture, aligning on social impact initiatives of importance to workers, and providing greater recognition and rewards for employee contributions. It's a shift to the world of work that promises to last for decades to come.

References

1. DETV.us. (2021, November 4). It is getting worse and worse: The end is not in sight if there is a shortage
   of skilled workers. DETV.us.
2. Employment Hero. (2021, October 29). 25 HR trends to watch out for in 2022.
3. International Labour Organization (ILO). (2021, March 8). 13 million women in Latin America and the
   Caribbean saw their jobs disappear due to the COVID-19 pandemic. [Press release].
4. Microsoft. (2021, May 18). Microsoft work trend index: 49 percent of Singapore workers are considering
   leaving their employer this year.
5. OECD. (2021). Employment Outlook 2021: A once-in-a-lifetime opportunity to build a better world
   of work.
6. Project Management Institute (PMI). (2021, June). Talent gap: Ten-year employment trends, costs, and global
   implications.
7. Tucker, J. (2021, November). Women gained 57% of jobs added to the economy in October but still need
   almost 8 months of growth at October’s level to recover pandemic losses. National Women’s Law Center (NWLC).
8. U.S. Bureau of Labor Statistics. (2022, January 4). Job openings and labor turnover summary. [Press release].