1. Labour market shortages in times of unemployment
Joost Bollens HIVA K.U.Leuven

2. Labour market shortages
Some figures & facts
Causes & explanations
Some possible policy answers

3. Preamble : why it matters
Potentially very high cost
Unemployment
Productive capacity that remains idle
Unemployment benefits, activation cost
Effects on well-being
Unfilled (or hard to fill) vacancies
Less production
Lower income for society (taxes, social security,…)
Hampers innovation and growth
Estimate : 7% of GDP

4. Quarterly job vacancy rate (NL)

5. Quarterly unemployment rate (NL)

6. Unemployment & Vacancy rates (NL)

7. Business cycle effects
Vacancies : leading
Unemployment : lagging
→ Sometimes both series will move in the same direction
→ It is not necessarily “unnatural” to observe increasing vacancy rates (≈± shortage) and rising unemployment at the same time (also : leading and lagging economic sectors)

8. Unemployment & vacancy rates (Germany)

9. Unemployment & vacancy rates (Sweden)

10. Unemployment & vacancy rates (Czech Rep.)

11. Unemployment & vacancy rates (Spain)

12. Previously : aggregate level (labour market)
Macro versus micro
Previously : aggregate level (labour market)
But also imbalances for specific subgroups:
Occupations
Qualification and/or skill
Economic Sectors/Industries
Regions
Age groups …

13. Hard-to-fill jobs

14. Hard-to-fill vacancies : reasons (1/2)
“Quantitative” : Too few (or no) job seekers available for the post (e.g. “engineers”, “nurses”)
“Qualitative” : Enough applicants, but lacking certain qualities
Lacking required skills/qualification/experience : “skill shortage”
Other perceived qualitative inadequacies (motivation, work attitude,…)

15. Hard-to-fill vacancies : reasons (2/2)
Nature of the job: employment conditions, unattractive work (low wage, health, safety, stress, working time, work-life balance, training opportunities,…), bad reputation,…
Overlapping
Unrealistic requirements?

16. Evolution? (for Flanders, Belgium)

17. Is the problem getting worse?
Recent evolutions that (possibly) explain why currently some imbalances are becoming more severe than what used to be the case

18. 1990s : Skill biased technological change
bias in favour of skilled workers
Job polarization? Technology replaces labour in routine tasks
(+) Well-paid skilled jobs (non routine cognitive skills)
(+) Low paid least skilled jobs (non routine manual skills) (e.g. cleaning)
(-) Middle jobs : routine man. & cog. skills

19. Globalization
Import low-skill-commodities from low wage countries instead of producing them here: relative demand for unskilled labour decreases
More realistically : import commodities and services for which place of production does not matter: e.g. canned food vs fresh food, but also software development vs nursing. Low skill? High skill? Routine or non routine?
16 november 2011
Joost Bollens

20. Baby boomers are reaching retirement age
Demography and other
Demography
Baby boomers are reaching retirement age
Active population decreases, difficulties to replace retired
Short time work arrangements
Temporary adjustment of working hours instead of dismissals
Labour hoarding more important in firms with high skill intensity
Effect on composition of unemployment?

21. Sense of urgency? ↔ Piecemeal development
How to solve?
Many parties involved, they have to act together (employers, individual workers, social partners, central and regional governments and EU, PES, education & training sector, industries/sectors,…).
Sense of urgency? ↔ Piecemeal development
No one-size-fits-all solution
Quantitative vs. Qualitative vs. Employ. Conditions
Specificity : sectoral, occupational level
16 november 2011
Joost Bollens

22. Education & training
Dis/incentives for choice of specific study fields?
Making curricula more responsive towards labour market needs?
Qualifications or skills?
Recognition of non-formal/informal learning
Promote standing of vocational education
Not only at “the age of 20”. Make “LLL for all” a reality (avoiding skill obsolence, but much more)
Over-qualification discussion : too many university graduates (…)
16 november 2011
Joost Bollens

23. Employers Change recruitment practice Use more channels
Look for workers in other regions, or move plant?
Migrant workers (but 1 & 2) …
Change working conditions
Change work organization
Drop/reduce hiring standards and compensate with training of new recruits
Upskill existing employees
Recur to overtime working (… )
16 november 2011
Joost Bollens

24. Invest in brokerage role Invest in effective ALMP’s
PES & Governments
Invest in brokerage role
Invest in effective ALMP’s
Exploit shortage situation to upskill & promote vulnerable groups
Fight l.market discrimination by all (legal) means
Promote mobility of individuals
Invest in anticipating skill needs development
Increase employment rate (e.g. (effective) retirement age)
16 november 2011
Joost Bollens