Labour Shortage Insights
The global economy is grappling with a persistent labour shortage, significantly impacting key industries like logistics and warehouse management. This issue is not confined to a single region; countries like the UK, USA, Australia, and Singapore are all experiencing challenges in filling labour vacancies. The crisis is driven by a complex interplay of factors, including the lingering effects of the COVID-19 pandemic, an ageing population, technological advancements, and economic conditions. This blog explores the root causes of the labour shortage, its impact on specific sectors, and strategies businesses can adopt to overcome these challenges.
Reasons Behind the Labour Shortage
1. Impact of Covid-19
Covid-19 remains a significant factor in the ongoing labour shortage. As of early 2024, the pandemic has claimed over 7 million lives globally (WHO, 2023). Beyond these losses, millions more continue to struggle with long-term health effects, complicating their return to the workforce. The pandemic has also led to increased mental health issues, with approximately 45% of the global workforce reporting anxiety and burnout (WHO, 2023). These challenges have particularly impacted industries like logistics, where the demand for on-site workers is high, but the available workforce is limited.
2. Low Wages and Economic Factors
Wages continue to play a critical role in labour shortages. A 2023 survey found that 65% of workers consider low wages the primary reason for leaving their jobs (Randstad, 2023). In the US, over 52 million workers earn less than $15 per hour, representing a significant portion of the labour force (Oxfam, 2023). Similarly, in the UK, around 6% of workers, or nearly 1.8 million people, are paid at or below the minimum wage (House of Commons Library, 2023). Coupled with rising inflation, the disconnect between wages and the cost of living is driving more workers away from low-paying jobs. The global economic uncertainty, wage stagnation, and inflation further exacerbate the problem by discouraging workforce participation and job-seeking activities.
3. Ageing Population
The ageing population is another driver of labour shortages. In 2024, about 12% of the global population is over 60 years old, and this figure is expected to rise to 21% by 2050 (UN, 2023). Countries like Japan, where 30% of the population is over 65, face a rapidly shrinking workforce (PRB, 2023). Similarly, Europe is witnessing a growing percentage of older workers, contributing to a significant decline in labour force participation among younger individuals. As more people retire, fewer workers are available to fill the growing number of job vacancies.
4. Technology Skills Gap
As industries increasingly adopt advanced technologies, the gap between available skills and job requirements widens. By 2024, 89% of global employers report difficulties in finding workers with the necessary technological skills (McKinsey & Company, 2023). This skills gap is projected to cost the US economy over $9 trillion by the end of 2024 if not addressed (PwC, 2023). Companies need workers who can effectively navigate digital tools, but the lack of adequate training and skill development programs exacerbates the shortage.
Labour Shortage in Warehousing
The warehousing sector has been hit particularly hard by the labour shortage. In 2023, 75% of warehouse operators reported difficulties in finding enough workers (Instawork, 2023). Fulfilment volumes increased by 60% in 2023 compared to 2021, further straining the limited workforce. The continued growth of e-commerce has only amplified the demand for warehouse workers, making it increasingly challenging to keep up with the workload. In response, many warehouses have had to increase wages by up to 35% to attract and retain staff, leading to higher operational costs (Reuters, 2023).
Warehouse automation has been adopted to mitigate these labour challenges, but it requires a skilled workforce to operate and maintain these systems. The technology skills gap means that finding workers capable of handling advanced automation is becoming more difficult, further complicating the labour shortage in this sector.
Labour Shortage in the UK
The UK’s labour market continues to struggle post-pandemic. As of mid-2023, the employment rate is still 1.2 percentage points below pre-pandemic levels, with around 124,000 fewer people employed than in 2019 (ONS, 2023). Additionally, there are currently 1.35 million job vacancies in the UK, a figure that exceeds pre-pandemic levels by nearly 510,000 (ONS, 2023). Despite these vacancies, economic inactivity remains high, driven by health issues and burnout, particularly among younger workers. The lack of affordable childcare options also continues to hinder labour force participation, especially for women.
Labour Shortage in the USA
The US is experiencing one of its worst labour shortages in history. In 2023, over 48 million workers quit their jobs, continuing the trend known as “The Great Resignation” (US Bureau of Labor Statistics, 2023). Currently, there are more than 11.5 million job openings in the US, but only 6.2 million unemployed workers available to fill them. This mismatch between supply and demand has created significant challenges for employers across the country (US Chamber of Commerce, 2023). The increase in personal savings, driven by pandemic-related unemployment benefits and stimulus checks, has also reduced the urgency for some workers to return to the labour market.
The Future of Labour Shortage
Looking ahead to 2024 and beyond, the labour shortage is expected to persist. The global unemployment rate is projected to rise to 6.1%, adding approximately 3.5 million more unemployed individuals by the end of 2024 (ILO, 2023). While this might increase the labour pool, it could also reflect a growing reluctance among workers to take on jobs that don’t meet their expectations in terms of wages, flexibility, and working conditions. Automation and AI are poised to further impact job markets, potentially creating new roles while making others obsolete.
To bridge the skills gap, companies must invest in reskilling and upskilling their workforce. Workforce development programs can prepare employees for future job opportunities, helping to mitigate the impact of technological advancements on employment. Additionally, the rise of remote work and the gig economy may offer flexible work arrangements, creating new employment opportunities and potentially easing the labour shortage.
Conclusion and Call to Action
The global labour shortage is a pressing issue with far-reaching implications for businesses and economies alike. To address this challenge, companies must invest in strategies like the Labour Management System software that attract and retain workers. This includes offering competitive wages, providing opportunities for skill development, and ensuring a supportive work environment that prioritizes employee well-being. By adopting innovative solutions and adapting to the changing labour landscape, businesses can better navigate the complexities of the current market and position themselves for long-term success. For any further details, check out our website today!
Colleen Ballantine
Author
UPDATED ON: 19th July 2022
Colleen is a marketing specialist at Canary7, writing in-depth blog content on warehouse management, inventory control, and logistics. With extensive industry experience, Colleen focuses on delivering informative and insightful posts
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