There is a shortage of labor in many countries. However, this should not be seen as a crisis, but as an opportunity to make up for lost ground in a phase of low unemployment. Social innovations are needed to make working conditions more attractive or to improve childcare. In this way, the compatibility of work and family can be promoted or older people can be better integrated into the labor market. Economic innovations are needed to increase productivity and enable higher wages. It is not certain, as is often argued, that there will be a permanent shortage of labor due to demographic change. After all, it is quite conceivable that such a permanent labor shortage could be reduced either through closures, relocations abroad or poorer quality in the healthcare sector, for example. However, it would be much better if labor shortages could be reduced through higher productivity and better working conditions.
A few years ago, we often read that artificial intelligence would take away our jobs and make many of us unemployed. Now the headlines in many countries are suddenly dominated by a shortage of skilled workers, which is expected to continue for years to come due to demographic change. Recently, the economic upturn following the coronavirus pandemic, together with demographic change, has led to even more widespread shortages of skilled workers – particularly in technical professions, but also among teachers, for example. The shortage extends across many qualification levels, so there is also talk of a labor shortage. This also includes professions that do not require vocational training or a degree.
The current situation is far too often referred to as a problem or crisis. In fact, not being able to fill vacancies with suitable people for a long time is a major challenge for the sectors and companies affected. But for society as a whole, a dried-up labor market can have many positive aspects and is much better than a situation with high unemployment. Most people do not have to worry about becoming unemployed when there is a shortage of labor. Wages and working conditions usually improve (although not automatically) when unemployment is low and employers need to become more attractive. Efforts to improve the work-life balance or to better integrate older people into the labor market are increasing.
Improve working conditions…
The labor shortages should therefore be seen as an opportunity to tackle improvements in the labor market even faster. Even if some work is already underway, there is still a need for action to make work more attractive and pleasant. Significant progress has been made in many countries in recent years in terms of reconciling work and family life. However, there are still gaps. Many parents – mostly women – therefore work less than they would actually like. Better working conditions also include integrating older people more strongly and flexibly into the labor market. Here, too, there has been some progress in recent years, albeit rather modest in some cases. In particular, making work more flexible – especially in terms of location and time – can help to increase labour market participation. In addition, professions with a shortage or bottleneck of skilled workers should become more attractive, especially for young people who are faced with the decision of which area they would like to complete their training or studies in. Care or training professions are an important part of the social infrastructure. Work in these professions has often become more intensive in recent years, which has led to more stress and cases of burnout. Even more effort is needed than before to make these professions more attractive again so that more people want to do them and work longer hours.
Such social innovations are important, regardless of the shortage of skilled workers, in order to make our work more pleasant and increase intangible prosperity. However, such measures can only partially reduce the shortage of skilled workers. This is because the proposed solutions often focus too much on increasing the amount of work performed – be it through less part-time work, more labor force participation or through politically controversial immigration.
…and increase productivity
The public debate often neglects another aspect that can effectively reduce labor shortages without having to increase the amount of work. Advanced economies need higher productivity growth. In recent years, productivity growth – i.e. economic output per hour worked – has been positive in many European countries, but also in the United States, but low by historical standards. The mediocre productivity growth increases the demand for skilled workers because the same material prosperity has to be achieved with more working hours and an intensification of work. However, it is precisely this intensification of work – when we think of healthcare professions, for example – that in turn leads to more mental stress, fluctuation or part-time work.
Productivity gains would have considerable potential to reduce the need for skilled workers and make the professions in these areas more attractive, not least because greater productivity can make work more pleasant and is also associated with higher wages. It is often argued that productivity increases cannot be achieved in the care sector or among doctors, for example. In fact, the possibilities here are limited, but still far from exhausted. Nurses, for example, are too often occupied with administrative tasks or activities such as sorting medication. Technical and organizational changes could bring improvements here. Technological progress in the healthcare sector has the potential not only to lead to better care for the population, but also to reduce costs more than in the past.
Conclusion: Choosing the better way to reduce skills shortages
The shortage of skilled workers, or in some cases the current shortage of skilled workers, is unlikely to persist on a large scale in the long term. Demographic change will continue to lead to bottlenecks, because in many professions more people will reach retirement age than will be newly trained. However, a permanent shortage of labor or skilled workers is unlikely. After all, if there is a permanent shortage of workers, production will be reduced, activities will be relocated abroad or services will be cut back in the healthcare sector, for example. However, it would be much better if the shortage of skilled workers could be reduced through higher productivity and better working conditions and higher wages in occupations with a shortage of workers, which are desirable anyway. Social and economic innovations must complement each other and would thus also help to secure prosperity.
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