Moving into the coming decade, developed countries around the world, from Australia and New Zealand to the US, Canada and the UK and Ireland are facing a growing skills shortage. Compounding this, it’s important to note that some major developing countries are also affected. In the past, developed countries could compensate for skills shortages through immigration, by importing skilled workers from countries such as China and India. However, these countries are today facing their own growing skills shortages due to their own rapidly growing economies and demographic changes.

While labour shortages are typically a sign of strong and growing economies, they present a serious challenge to businesses. In this case, the issue presents some unique difficulties, specifically because it’s unclear from where businesses will be able to source the talent they need.

The skills shortage is multifaceted

There are several reasons that businesses are having an increasingly difficult time finding candidates with the right skill sets and experience for their needs. The populations of these countries are ageing rapidly, even while much of today’s workforce operates on an outdated model of employment and career development, which compounds the issue further.

Ageing populations are impacting the labour pool

In Australia, 15 per cent of the population is 65 or older. In the UK that figure is 18 per cent, while in Germany it’s already above 21 per cent. As these large high-skill economies move forward, they need to find adequate replacements for the retiring workforce. With too few young people entering the market locally, these wealthy economies create a powerful draw for foreign labour. The difficulty now is that the countries they’ve historically relied on for supplemental labour and immigration are facing the same problem. The number of skilled workers entering the labour market in the coming years simply will not be sufficient to meet the demands of these growing economies.

Business needs are changing faster than workers adapt

Just a few decades ago, it was still expected that the specific skills and education someone acquired early in their career would still be relevant at the end of it. Today, many skilled workers spend months developing proficiency with particular technologies that may well be obsolete in just 5 years’ time. In terms of what businesses need today, a skilled worker is not so much someone that has a particular university degree or a background in a particular field, but rather someone who can acquire and apply new skills to perform their role.

Unfortunately, many workers haven’t adapted to this way of thinking, and many who have don’t have access to the time and resources to re- and up-skill quickly enough to meet the demands of employers. The result is that more businesses are increasingly forced to compete over an ever more limited pool of skilled workers.

Businesses need to adapt to changing labour conditions

Because of the circumstances causing the issue, businesses can’t do much to grow the future labour pool. However, that doesn’t mean they can’t act to ensure that they have the talent they need going forward. To combat the skills shortage within their own organisations, businesses need to change their approach to employee retention, and how they develop employees over time.

Working on employee retention

Since the global financial crisis, employees have become far less likely to remain at a single job for more than a few years. Since unemployment was relatively high following the crisis, replacing employees was not an issue. Going forward, however, businesses will need to focus much more on providing incentives for long-term retention. This is because businesses will not only face far more difficulty finding replacements, but they’ll also need to invest far more in training and developing potentially underskilled candidates.

Improving employee development programs

In order to grow, businesses need skilled workers. In an economy where there simply aren’t enough to go around, the obvious solution is to simply make your own. To do that, businesses will need to encourage significantly more participation in skill development programs than most do today. Additionally, businesses may be forced to invest in more comprehensive training for new employees, who may increasingly not have all the needed qualifications when they show up on their first day.

In the coming decade, the success of a business will rely much more heavily on its ability to acquire, train, and retain the talent it needs than has been the case in the past. By planning ahead, and adapting to the emerging skills shortage now, businesses can find the specific solutions that work best for them before less aware competitors even become fully aware of the magnitude of the problem.