Skills shortages

Skills shortages can affect growth through their adverse effects on labour productivity. At the firm level, shortages can increase the hiring cost per skilled worker and hinder the adoption of new technologies.

Unfortunately, identifying skills shortages is not easy. Some shortages are only apparent. This is the case when the conditions of employment – wage, working time and working conditions more generally – are such that workers are unwilling to take up job offers. This type of shortages should be reabsorbed as working conditions and wages adjust. Genuine skills shortages exist when vacancies remain unfilled despite attractive working conditions.

Genuine skills shortages can be cyclical and structural. On the one hand, shortages are common during periods of rapid economic growth, when unemployment is low and the pool of available workers is reduced to a minimum. However, these type of shortages tend to be overcome along the cycle. On the other hand, some structural changes, such as the adoption of new technologies, may increase the demand for certain skills that are not immediately available in the labour market, creating skills shortages even when unemployment is high. In fact, having a large pool of unemployed people provides no guarantee that employers can find appropriately skilled individuals to fill their vacancies.

In order to ensure that skills needs are addressed, education and training systems need to have access to information on the demand for skills and the drivers of changes in skills demand. Maintaining a long-term perspective on skills development, even during economic crisis, may reduce skills shortages and their impact on economic growth. Finally, facilitating entrance for skilled migrants  can also help deal with skills shortages if focused on occupations for which vacancies are hard to fill.


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