Why are companies struggling to recruit despite labor shortages? In countries like France, Germany and the UK, recruitment difficulties are hampering the dynamism and growth of the labor market. What does this mean for professionals with moving abroad plans? Is it the right time to move overseas?
Growth and labor shortages worldwide
Europe is managing to sustain growth. France defies the odds with a 0.5% GDP increase in Q2, while Spain holds up well with a 0.4% GDP increase in the same period. However, the German economy stagnated in Q2, and the threat of recession persists. With a 6.4% inflation rate, Germany is more affected by rising prices than its European counterparts, with 4.3% in France and 2.3% in Spain. Labor shortages are evergrowing amidst these challenging economic times.
Conversely, the United States experienced faster-than-expected growth at 2% in Q2, surpassing the projected 1.3%. The shadow of a recession is receding, yet caution remains paramount. Economic recovery is driving job creation, with 296,000 jobs added in the service sector alone in April, double the forecasted number. However, wage increases are slowing down. While the labor shortage initially led to wage hikes, it hasn't entirely resolved recruitment difficulties. Labor shortages and recruitment challenges are also prevalent in countries such as the UK, South Korea, and Australia. France is no exception, as the modest economic upturn fails to compensate for the labor shortage. Even in Spain, companies are grappling with labor shortages, while young German graduates prefer seeking opportunities abroad in more dynamic regions.
Why are companies struggling to hire?
The situation is quite paradoxical. In countries facing labor shortages, unemployment rates don't necessarily plummet, yet companies find it hard to recruit workers. For instance, France experiences high unemployment (slightly over 3 million job seekers), unfilled job positions (over 350,000 in April), and recruitment difficulties. Other countries encounter similar challenges.
According to many analysts, the solution lies in training. Now that the "pandemic effect" has started to subside, the economic recovery has lessened its impact compared to other factors. Moreover, the health crisis remains a "short-term" cause, while the training issue, which was pointed out before COVID-19, is structural. During the pandemic, workers who lost their jobs in sectors heavily affected by anti-COVID measures retrained in different fields and didn't return once businesses reopened.
Even though a workforce is available, their qualifications do not always match the demands of companies, creating difficulties in hiring. The dynamism and tensions in the labor market alone do not fully justify the challenges companies face in recruiting. Many companies point to the qualifications of applicants as a crucial factor. Some sectors are more affected than others, and wages can also be problematic, especially in highly competitive industries with demanding working conditions. Generally, companies that offer lower wages encounter more recruitment difficulties than others.
Is Germany facing a brain drain?
Germany is currently looking for skilled workers, with an increasing number of companies reporting recruitment difficulties. The situation has become more acute post-COVID, with certain sectors facing even greater pressure. The healthcare and IT sectors, in particular, need more skilled workers. In 2022, the Federal Employment Agency (BA) expected an average of 845,000 vacancies by 2022. Other sectors significantly affected include education, crafts (particularly energy renovation), and scientific professions (engineering, mathematics, etc.).
In Germany, 9.7% of 18-24-year-olds leave school without a diploma, unable to find jobs or undergo training. Many young people opt for extended university studies, which could lead to potential employment opportunities, rather than apprenticeships. Another cause of recruitment difficulties is the aging population. According to the Federal Ministry of Economics and Climate Protection, the working-age population (20-65 years old) is likely to decline by 3.9 million by 2030 and 10.2 million by 2060. The estimated labor shortage is 240,000 by 2026.
Furthermore, brain drain among the youth contributes to these challenges. By 2022, an estimated 270,000 Germans will have moved abroad, with an average age of 35 and holding university degrees. Dissatisfaction with German bureaucracy and preference for working abroad in countries like Austria, Portugal, Switzerland, or the USA leads them to seek opportunities elsewhere. However, these departures are partially balanced by the immigration of foreign talent and the return of some German nationals.
France
France also faces recruitment and skills shortage challenges. A study by the Confederation of Small and Medium-Sized Enterprises (CPME) in September 2022 revealed that 94% of company directors struggled to find the right candidates. The study highlights higher turnover rates, with candidates less committed to the company or professional life. Approximately 51% of employees desired to change sectors, while 53% sought to pursue non-professional interests. Additionally, 30% were waiting for opportunities to move to competitors offering better conditions, and 16% considered starting their own businesses.
According to the latest figures from the French Ministry of Labor, there were 3,011,000 jobseekers in the second quarter of 2023. This marks a 0.2% decrease compared to the previous quarter, representing a slower decline than the 7 times faster reduction experienced in the first quarter. Despite the 5% decline in the number of jobseekers throughout 2022, the figure remains close to the 3,000,000 mark. Simultaneously, the Banque de France Bulletin published in April 2023 reveals that 350,000 jobs remained unfilled in 2022. The dynamic French job market is still facing constraints due to recruitment difficulties, impeding economic growth.
Recruitment difficulties and labor challenges
According to the Direction de l'Animation de la Recherche, des Études et des Statistiques (DARES) and the Conseil Économique, Social et Environnemental (CESE), other, more structural causes contribute to the persistently high number of jobseekers and the recruitment difficulties faced by companies. Demanding professions, such as those involving heavy loads, staggered working hours, contact with hazardous chemicals, on-call duties, emergencies, repetitive tasks, noise, night shifts, etc., are more affected by the labor shortage.
What are the solutions? In 2022, 67% of companies opted for salary increases, while others offered employee bonuses. Pôle emploi, the French employment agency, launched "Action recrut'" in 2020, a service aiming to advise companies on crafting job offers tailored to their target audience. Services offered by Pôle emploi include assistance in drafting job offers, suggesting candidates, advising on the recruitment process, and allowing candidates to immerse themselves in the company. Initial findings indicate that 85% of companies are satisfied with the service.
What are the opportunities for foreign talent?
Can professionals around the world leverage these opportunities to move abroad? Absolutely, provided they possess the appropriate skills and qualifications. Technical skills are increasingly in demand, even in sectors previously considered easier to access. Healthcare, IT, banking, renewable energies, commerce, accounting, administration, education, training, crafts, mechanics, robotics, information and communication technologies, personal assistance, and more are actively seeking foreign professionals.
Several countries, such as Germany, are introducing new immigration rules to facilitate the arrival of foreign professionals. Other countries like Canada offer a variety of programs targeting foreign workers, shortage sectors, and geographic areas lacking labor. For countries facing labor shortages, immigration acts as an engine of growth and plays a crucial role in addressing the demographic crisis. Foreign talent is encouraged to seize these opportunities.
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