Businesses worldwide are struggling to find suitable talent. A recent survey of over 40,000 employers revealed that 75% are finding it difficult to source the right talent in the right locations. Countries like Japan, Germany, Greece, Israel, Ireland, Portugal, India, the UK, France, and Canada are experiencing severe talent shortages.

This article explores some of the factors contributing to global skilled labour shortages and suggests some people-focused options to address them.

Geopolitical, environmental and demographic influences on labour supply

The reasons behind these shortages are complex, ranging from an aging workforce to changing industry perceptions. The shift in workplace preferences post-pandemic has further intensified the recruitment crisis.

The impact of Brexit on the UK workforce has been significant, with reduced migration from European countries and, more recently, stricter immigration policies. This has intensified skills shortages, particularly in the health and care sectors. Despite low unemployment, the UK faces over 900,000 job vacancies, leading to fierce competition for talent.

On a global level, the pandemic has driven significant talent migration. One example of this is the movement of people from Hong Kong to Singapore. Hong Kong’s stringent anti-covid restriction regimes led to many individuals emigrating to Singapore where several international companies moved their Asia headquarters.

An aging workforce is impacting employers, and this is particularly felt in Asia Pacific region. It is projected that by 2050, one in four people in this region will be over the age of 60. Consequently, Japan is now facing the most severe talent shortage in the world.

Geopolitical events, like the war in Ukraine, have further impacted talent mobility, with countries like Poland welcoming millions of Ukrainians, posing long-term labour market challenges.

People-based options for addressing skills shortages

Although investment in technology may increasingly form part of the solution to skills gaps, a well thought-through people strategy will be critical for employers around the world to successfully compete and serve the needs of the wider economy. This is likely to include being more flexible on how and where people work and focusing on staff training.

Immigration and global mobility

One of the ways countries are responding to these challenges are with new immigration policies.

The EU is currently improving laws to better attract skilled workers, and nations such as France, Greece, Slovakia, Ireland, and Sweden are simplifying immigration processes to attract skilled workers.

On a local level, many progressive businesses are allowing employees to make use of digital nomad visas when travelling to countries such as Spain, Italy and the UAE on a temporary basis. A digital nomad visa allows individuals to work remotely from a foreign country, for an employer based outside of that country, on a temporary basis. This type of visa is particularly attractive amongst remote workers and freelancers who do not need to be physically present in their company’s office, or even in the same country, to carry out their work. These visas do require careful consideration, however, to ensure compliance with local regulations as, whilst the digital nomad visa may solve the immigration issue, there are other global mobility considerations such as income tax withholding social security withholding, local employment law compliance, which will still need to be addressed.

From a more permanent perspective, some employers are adopting location-agnostic approaches to gain a competitive edge in recruiting and retaining talent. This type of approach can, however, present challenges. Employers should, therefore, take care when developing a global mobility strategy to:

• evaluate the risks, such as income tax and social security withholding obligations, permanent establishment risks and employment local laws, to name a few, against the potential benefits for employees and the business; and
• develop a process for dealing with requests in a commercial and cost-effective way which ensures consistency, transparency, and clarity in decision-making.

Upskilling, reskilling and flexible working

Upskilling and reskilling existing talent may also be an essential factor in addressing skill shortages. Employers should focus on creating tailored programmes to develop existing employees. For example, retaining and extending the skills of older, experienced workers, is advantageous.

To support employee retention, employers should also consider implementing flexible working arrangements, putting into place career progression plans and offering other benefits to employees to make roles more attractive.

Conclusion

The war on talent demands employers to innovate in talent acquisition and retention. Understanding the global mobility landscape, leveraging immigration policies, and embracing flexible working are crucial. Employers must also focus on retaining and continuously training existing employees to build a resilient workforce for the future.

If you have any queries about the matters raised in this article or would like to find out more about how our expertise in global mobility and immigration can help your business, please contact a member of our global mobility team.