Is there a skills shortage?

[Swampy]

One anomaly is that, even in our slow economy, there are vacancies waiting to be filled, despite the high unemployment rate. Economists say this is due to the mismatch between skills and the unemployed - IOW, those who need jobs don't have the skills to fill those vacancies.

That's the standard argument, which I agree with. But Robert Samuelson, a noted economist, says there're no skills shortages. He agrees there are vacancies in many fields. He says these vacancies are due to the lack of confidence by businesses, because, if they lack confidence, they would be reluctant to hire.

Well, if they're not hiring, there wouldn't be vacancies. So his argument fails. That said, he has a good point in saying that, if there is a skills shortage, wages would be rising, and they're not. But I think they're not rising overall, except in those areas which have shortages - for that, I'll have to wait for further economists to weigh in.

For the moment, I'll stick with the standard argument.

[mcnoch]

I think it is a mix of both. Taking the company I work for as an example: We have currently 600 vacancies in Germany, but are not pushing the re-hiring process for two reasons:

a) Some positions require skills which are simply not available on the market at all or not in the salary-range we could pay. If you would look only for the skill and would be ready to pay any price for that, the salaries of those with the searched skill would rise. But most companies can’t pay any price as they can’t recharge the rising costs to its customers, which themselves are only able to pay a given price as else their products would become more expensive. So at a given point the salaries for a skill stagnate at a given level as nobody on the market is able/willing to pay significantly more. So while there might be a high demand for projects and so skilled persons within a given price-range this demand will not lead to higher prices/salaries as the demand would disappear with rising prices.

b) The workload inside companies is permanently changing; old contracts are expiring, new contracts are coming in. The number of employees is normally based on an estimation of the future demand. But like all predictions there is a risk, as long as you are not very confident that the additional people are really needed you might prefer to buffer the missing staff by asking the other employees in the same team to work overtime. You would have to pay some surcharges for the over-time but you won’t have the risk to have to lay off somebody you just hired. While hire-and-fire might look good from a pure economical point of view, in reality this gives you very quickly a bad reputation and so will make it harder and harder to find new staff. Especially high-skilled people don’t like to be treated like this and might sign at a different company for even less money but better working-conditions in general. So the confidence in the own predictions, the more likely is that the vacancies on the paper are really re-staffed.

[Swampy]

May 9, 2013 3:03:07 GMT -5 mcnoch said:

a) Some positions require skills which are simply not available on the market at all or not in the salary-range we could pay. If you would look only for the skill and would be ready to pay any price for that, the salaries of those with the searched skill would rise. But most companies can’t pay any price as they can’t recharge the rising costs to its customers, which themselves are only able to pay a given price as else their products would become more expensive. So at a given point the salaries for a skill stagnate at a given level as nobody on the market is able/willing to pay significantly more. So while there might be a high demand for projects and so skilled persons within a given price-range this demand will not lead to higher prices/salaries as the demand would disappear with rising prices.

I think this is the single most likely reason. Well said, Matthias.

[boxcar]

If a certain skill is required, but not available at the going price, management should try training.

Give an aptitude test and those who come close to the target can be trained for the job for probably less money than the “skilled worker” demands.

[Sir John]

A zillion people out of work and we both have a "skills shortage"

Immigration scam to me.



SJ

[mcnoch]

Yes, training or retraining of people would be a good tool, but most managers don't like the costs for this and so it isn't done. There are solutions, but for short-term profit reasons the management often don't want to put them into place, to the long-term disadvantage of the company.

Some other skills are less a training but more an experience thing.

[boxcar]

Experience is letting people try a task again and again and again. Some people learn from their mistakes, others do not.

Training is having an expert observe the worker’s habits and methods and then pointing out mistakes or better methods of doing the task.

Good training has many advantages. It allows the employee to be promoted within the company and fosters employee loyalty. Try to put a price tag on this.