Conquering the Skills Gap

The labor market in the U.S. has come a long way since the woes of the 2008 financial crisis, yet some challenges remain. One such challenge is the skills gap — the concern that businesses are struggling to find qualified candidates for available positions.

Source: Randstad Sourceright

There are many theories on whether or not this skills gap actually exists, and why — both anecdotal and concrete. Survey data suggest that U.S. businesses are in fact facing a lack of “skilled labor”, while actual data on job openings and hiring show a growing gap between the two — jobs are being left unfilled. The survey data leave us with at least some inclination as to why these jobs aren’t being filled. While we can’t know for sure that a lack of skilled labor is definitely to blame for the hiring gap, one thing is clear: there is a serious issue in the labor market that needs to be addressed in the context of a more productive and innovative future.

Source: BLS

Manufacturing, in particular, is an important industry at the center of the skills gap discussion. The slow pace of job growth in the manufacturing sector is accompanied by concerns about increasing automation. With more than 3 million manufacturing jobs expected to come open over the next 10 years, the question remains whether these positions will be filled by people or robots. A lack of available human capital might force businesses into faster adoption of automated processes. The evidence is that human attributes like problem-solving and creativity remain irreplaceable, and that human-machine collaboration is the way to maximize productivity. However, if we do not build the right skills into the workforce, innovation could lean more towards automation, and job growth will remain slow.

Education and training will play a significant role in this transition to a more adaptable and innovative workforce. The U.S. is losing its competitive advantage as the most highly-educated society in the world, which does not bode well for American employers looking to hire the most qualified candidates. Increased emphasis on life-long learning and on-the-job training that coincides with a high quality formal education will better prepare both employers and employees to tackle the digital transformation in the global economy.

Source: BLS

Concrete and anecdotal evidence weigh in favor of a skills gap — the right skills to foster a more innovative society. The World Economic Forum’s 2015 skills gap assessment puts it perfectly: “Schools and universities educate the graduates of tomorrow in the skills needed in the industries of yesterday.” Public and private efforts need to be more innovative in order to hone a different skillset in this digital era that the traditional world of education is not adequately providing. Encouraging students to become more “skilled” and tackle an advanced education is not the problem, but rather it’s the specific skillsets that are missing. When it comes to the digital transformation of the workforce, the labor market is lacking the appropriate skills to make “across-the-board digitization a reality”, and more jobs need to better adapt to new tools and technologies to boost productivity.

A skills gap can have significant consequences, such as long-term structural impact on the labor market that may be hard to revert. Also, there is often a direct link to inequality, where the skills in demand are out of reach for many workers due to increasing costs of education. It is therefore important to address the issue to avoid further challenges for employers and employees, as well as to prevent growing inequality.

New jobs will continue to emerge in this fast-paced and innovative environment, and it is imperative for businesses to think toward the future of the workplace and how to get their employees ready for that world. However, we don’t quite know yet what those new jobs will be or what skills will be needed. With machines taking over more and more tasks, the workforce will need to focus in on more human elements, like problem-solving and creativity. Providing access to and encouraging life-long learning for employees to continuously adapt to more productive ways of working with more productive technology will be a success in the long run, as long as the education is of high quality. Businesses also need to remain creative and partner with the traditional side of education and training to “build a pipeline of skilled employees”. In return, these employees will provide a better foundation for businesses, and the economy, to prosper.

Here’s the full analysis, with sources.