The Factors Contributing to the Labor Shortage in the Global Economy - Case Study Example

The Factors Contributing to the Labor Shortage in the Global Economy In partial fulfillment of the requirements for (Subject Code) (Professor) (Date) Table of Contents Page Abstract 3 Introduction 4 Survey on Global Labor Market 5 Current Trends 7 Job Mismatch 8 Conclusion 9 References 10 Appendix 11 ii Abstract Job market faces its crisis of having high unemployment rate due to economic conditions. The economy is still in the midst of challenges before its full recovery happens. People have problems financially as many do not have jobs and they do not have incomes as a result. The fast pace of changes due to globalization may have brought about that challenge which also renders the skills of employees to be less in-demand. Studies also found out that learning support system in companies is weakened and experts suggest that it should be enhanced to cater the new skills required by the emerging jobs offered. Also jobs are impossible to be gone as resignation and employees get redundant in firms. Probably the job mismatch is the problem that makes other people unemployed while the firms continue to look for replacements to fill-in the vacancies for months. As a solution, other companies tap the Internet and computer to outsource their works despite of geographical limitations as it offers cost-effective ways on doing the tasks for both the employers and workers. The Factors Contributing to the Labor Shortage in the Global Economy Employment has always been the common way for people to earn income to sustain the needs of their own and their families. They work in exchange for money and other forms of remuneration wherein the rate of salary is on a per-hour basis. It started in the Industrial Age where the factories were very popular and the prevailing trend was equal pay for equal work. In the economy of today, the same trend seems to be declining and problems arise. As globalization started and continue to progress from the late twentieth towards the twenty-first century, various changes occurred in the way people work and conduct businesses. Various perspectives have been used to study, identify and analyze the situations to come into terms on how to deal with the arising problems. It is about management, but it seems to be many things must be managed and it is not only about control. Perhaps the past principles in management and leadership may still be applied for the present conditions, but new theories, perspectives and improvements must be done to further understand and cope up with the fast pacing of the world today. People are caught in the confusion as knowledge and skills advance so quickly that the former in-demand abilities are rendered to be less in-demand today or even obsolete as the worst case scenario. Economic turmoil follows the trend of the advancement and globalization and many people are left with many problems to deal with from personal challenges to economic obstacles. Those problems in the twenty-first century require a new way to deal with them, so that people may be able to solve them eventually. Afterwards, growth and development that lead to prosperity may be attained for most people around the world. Before having a new perspective, the problem must be first identified and later on one can make specific and clear solutions based not only on established ideas, but also innovative ones that might have been used by successful companies and new ideas that may be tried so that the challenges will be slowly solved and do not remain as obstacles toward progress. Probably, people need to do some changes and adapt them in their daily lives that start from the existing problem identification. The paper focuses on one of the problems in the global economy which focuses on the labor market and its current challenges. The biggest challenge is the labor shortage which has been studied by various research groups and is still being covered by researchers as they try to solve it by having a clear image of the current problem. As an overview of the current labor market challenge, statistics and quantitative approach may help in understanding the prevailing conditions. According to the survey conducted by the United States of America Region Leader of Mercer named Mindy Fox conducted in the first half of 2011, for every three individuals, one employee decides to resign from his current job which is typically higher than the survey result way back in 2005 which was only 23 percent. In addition, about 21 percent of the whole survey do not decide to leave their jobs but look at their bosses or employers negatively that affect their efficiency and productivity at the workplace (IW Staff, 2011). The accuracy of the survey was backed by the number of respondents of about 30,000 employees including United States workers which was about 2,400 and the others came from 16 other nations. In detail, the people who were in good financial condition were 47 percent in 2005 down to 43 percent in 2011. When it comes to the view of employees about the willingness of their bosses to help them financially there was only a slight increase from 38 percent to 41 percent. In terms of health benefits provided by their employers, the percentage dropped from 66 percent of the surveyed workers who were satisfied down to 59 percent. The holistic benefit program perceived to be good declined from 76 percent down to 68 percent. When it comes to the minimum wage rate, the overall satisfaction declined from 58 percent to 53 percent in 2011. In terms of career development, the ratings were still low though improvements were seen. 42 percent said that the rank increase and benefit increase were matched according to the qualifications of the employees as compared to 29 percent of the respondents that were surveyed in 2005. Equal pay for equal work that is adequate was believed to ranked up based on the satisfaction of the respondents from 33 percent in 2005 went up to 46 percent. Leaving the company is seen to be common to younger employees aged 34 and below and in particular, 44 percent of those planning to leave the company came from 24 and younger age bracket while the other 40 percent came from the age bracket of 25 to 34 (IW Staff, 2011). Probably, the results showed the existing challenge in the labor market as the general trend was towards the dissatisfaction in current job conditions as many people think of leaving their current work in search for a new one. In addition, the personnel development was not fully-developed as the workers were dissatisfied in general. That part of the company management may require some changes and further studies toward improvement or else companies will continue to lose their workers worldwide. When it comes to remuneration, credibly the current income gained by the workers was not enough to sustain their lives especially for those who have a family to support. Also the survey result showed how employees looked at their financial condition to be away from the job security that they desire and the current condition is far from adequate to sustain them towards retirement. The trends of that concluded survey still left a puzzling question onto what really went wrong and what were the problems that led to the big dissatisfaction and many employees leaving and resigning from their current work. The answer may come from the condition of having vacant jobs that span about more than six months across the existence of many people unemployed. In the US, about 14 million people do not have jobs and half of that unemployed population experienced having no work for six months and above (Samuelson, 2011). The condition may be attributed to the challenges in the hiring process being faced by the employers. According to the survey made by Aon Hewitt in 2011 suggested that more hiring were expected in the next years but only few organizations were capable of handling the quality of the applicants. Majority admitted that they were not that prepared to handle the surge of the many applicants. The condition may be attributed to the problems in recruiting resources that are used to gauge and choose the right candidates for the jobs offered (Hewitt, 2011). Another possibility is the mismatch in jobs that caused the unemployment. Experts even call the condition as structural employment which may be explained by Harry Holzer as he said that it is estimated that 9.1 percent which is the current unemployment rate may have been lowered to eight percent if no job mismatch occurs (Samuelson, 2011). Probably that is true as people may experience the hardship of looking at the right job for them. Another explanation is rendered by Prakash Loungani who works for the International Monetary Fund and he is also an economist. According to him, about three million jobs were mismatched due to structural unemployment (Samuelson, 2011). It then boils down to the leadership and management regarding the matching of the jobs to the right candidates. It is also about the leaders who motivate their employees to go beyond the job descriptions as many tend to leave their jobs that add up to the problem of looking for another candidate to fill the job positions (Cable, 2011). The length of time in looking for the right candidates transcends more than six months as confirmed by McKinsey Global Institute in their survey conducted in 2011 from the response of 2000 companies (Samuelson, 2011). Those conditions mentioned in the preceding paragraphs may be explained by the changes in the trends in the global market as globalization advances at the same time as technology progresses. Big companies try to save resources and become more practical by hiring flexible workers as non-regulars. According to the interview of McKinsey, Quarterly to the leader of an international labor agency called Manpower, about a quarter of the workforce of the big companies consists of the flexible employees and not the traditional ones. The information provided by U.S. Bureau of Labor Statistics may not be as big as the estimate given by Manpower as the Bureau gave an average of three percent. The difference in figures provided may be attributed to the changes spearheaded by the big companies while the smaller ones have not yet adapted that technique (McKinsey Quarterly, 2006). Probably cost cutting is one of the reasons behind the adaptation of such procedure by the big companies. They need to save from the costs of running their businesses without sacrificing their productivity. They also made use of the labor force from developing countries where the services of those workers are cheaper (Barrar and Gervais, 2006, p. 45). With those circumstances, the current conditions in the labor market face the rising of the unemployment that may be attributed to job mismatch that can be solved by having a healthy economy. Another thing is that the world economy always has job vacancies since employees fulfilled the contract without renewal, fired from the job and even company expansion. Most likely specialized jobs require specialized skills and people possessing those requirements are not easily found which still remains to be a challenge (Samuelson, 2011). Another challenge is the fast pace of required skills which need retraining of current employees or else they are deemed to be relieved from their jobs (McKinsey Quarterly, 2006). The solution joins with the flow of change as the trend requires new skills, new strategies and new ways of educating and hunting for qualified workers. Manpower then suggested that a holistic approach to employee management is needed and business strategies must be revised as the older work models may not work efficiently in the world today as collaboration is needed with the help of institutions like the schools and governments and participation of the citizens (Burnson, 2011). Retraining efforts must also be forwarded by companies to ensure that their workers are updated with the skills for efficient performance (McKinsey Quarterly, 2006). The continuing education and skill development support system must be strengthened by the companies to further adapt to the changes in the global marketplace (Samuelson, 2011). Since technology advances quickly, some companies even take that as an advantage to get flexible workers and get the jobs done with minimum efforts and reaching the global workforce. Online freelancing sites are available matched by online learning providers to give the freelancers and online workers the effective skills to accomplish and get the jobs offered by the companies being outsourced to them (Stansfield and Connolly, 2009, p. 142). The present condition of the global economy and the labor market faces the shortage in jobs and increase in unemployment may need a different approach from the firms to cope up with the fast changes. The workers may also look for ways on upgrading their skills to get the jobs as job offers will never become unavailable. The Internet and computer may be used to the advantage of both the workers and the firms as they can connect, collaborate and work together despite of the geological limitations. Also the training support system must be enhanced to broaden the skills and knowledge of the workers to follow the changing trends globally. References Barrar, P., & Gervais, R. (2006). Global outsourcing strategies: An international reference on effective outsourcing relationships. USA: Gower Publishing. Burnson, P. (2011, May 25). “Manufacturing” talent for the human age. Logistics Management. Retrieved from http://www.logisticsmgmt.com/article/manufacturing_talent_for_the_human_age/ Cable, J. (2011, June 29). How to manage rotten employees. Industry Week. Retrieved from http://www.industryweek.com/articles/how_to_manage_rotten_employees_24989.aspx Connolly, T. (2009). Institutional transformation through best practices in virtual campus development. USA: IGI Global. Hewitt, A. (2011, May 3). Aon Hewitt survey shows gap in leadership effectiveness and lack of confidence to drive change: Hiring trends on the rise for the majority of organizations. Aon. Retrieved from http://ir.aon.com/phoenix.zhtml?c=105697&p=irol-newsArticle&id=1558628 IW Staff. (2011, June 20). Employees in U.S. aren’t very happy. Industry Week. Retrieved from http://industryweek.com/articles/employees_in_u-s-_arent_very_happy_24897.aspx McKinsey Quarterly. (2006, January 2). The future of the global workplace. Forbes. Retrieved from http://www.forbes.com/2005/12/30/manpower-careers-employment-cx_0102mckinsey.html Samuelson, R. (2011, June 19). The great jobs mismatch. The Washington Post. Retrieved from http://www.washingtonpost.com/opinions/the-great-jobs-mismatch/2011/06/19/AGWdB3bH_story.html Appendix Figure 1. The Graph showing the Job Resignation based on the Mercer survey cited from: IW Staff. (2011, June 20). Employees in U.S. aren’t very happy. Industry Week. Retrieved from http://industryweek.com/articles/employees_in_u-s-_arent_very_happy_24897.aspx Figure 2. The Graph showing the Financial Preparedness of Employees based on the Mercer survey cited from: IW Staff. (2011, June 20). Employees in U.S. aren’t very happy. Industry Week. 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