Staffing Sector Growth in 2023: Stagflation with a growing Talent Shortage

In 2023, the Staffing sector will continue to grow in an economy where we will experience both stagflation and an acceleration of the talent shortage for skilled jobs. Companies will not enjoy the hiring relief they need, instead, they will have to double down on recruiting spend and internal training in 2023 - all the way through to 2030.

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Although I want to be careful about “crystal ball predictions”, this article wouldn’t have any teeth if I didn’t take a stand on where the staffing industry is heading in 2023 & 2024. So below I’m outlining my?“crystal ball predictions”.?You can visit my background at?https://www.dhirubhai.net/in/william-spengler-2193433a/ ?and view previous articles where I correctly predicted the “staffing shortage of 2021” the “likes of which we have never seen”:?https://www.dhirubhai.net/pulse/candidate-market-2021-william-spengler/

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Similar to the housing market growing in 2020, companies waiting for?hiring relief?from a skills shortage?will wait just like home buyers that waited for home prices to come down in 2021. What will be contradictory and unexplainable is that unemployment numbers will rise in 2023, but the talent shortage for skilled roles will continue to grow. How is that even possible?

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In an article published by Korn Ferry about the $8.5 trillion talent shortage expected by 2030, Michael Franzino, their President writes about the larger economics at play in regard to the supply and demand of skilled labor globally.?https://www.kornferry.com/insights/this-week-in-leadership/talent-crunch-future-of-work .

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In summary, Franzino talks about the exit of the baby boomer generation from the workforce by 2030 which will lead to a skills gap expected to be filled by an under-trained and under-skilled millennial generation. He predicts that in?tech alone the US could lose $162 billion worth of annual revenues unless it finds more high-tech workers. The United States’ inability to replace the jobs is due to the inferior education of our people and the advancements of emerging technologies at a pace that cannot be addressed by the available talent. This means both the United States educational programs and companies will have to widely invest in education and training from 2023-2030 to have a chance at competing with, for example, India, which is expected to have a surplus of tech talent in 2030 (in contrast to most of the global economies experiencing a technical talent shortage). One of the many side-effects is that we are going to continue to see a rise in “coaches” and “training gurus” on our social media platforms. We will be confronted with a fundamental employment shift where people will need to completely change their skills to be competitive in the available jobs of the future. Demand for those who have the right skills will accelerate.

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Outside of technology, in a Harvard Business Review article Deloitte predicts that “the problem is especially acute in manufacturing”. Deloitte?anticipates ?that will have 2.1 million unfilled jobs in the U.S. by 2030.” In yet another article the consulting firm McKinsey states “more than 100 million workers globally will need to find different occupations by 2030, at least half of them with new, more advanced skills”.

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What all this points to is that the supply and demand of labor are more strongly impacted by demographics, misaligned education systems, and emerging technologies than interest rates and short-term employment numbers. Although the oncoming stagflation is concerning to companies and the staffing/recruiting industry, in particular, the broader themes of demographics, insufficient educational systems, and emerging technologies will continue to drive an acute need for human resources and training professionals.

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The final factor that may increase the talent shortage is the fundamental change in employment expectations (e.g., work from home, flexibility, benefits, desire for a better standard of living) brought on during the COVID era. There is a shift in the employee/employer relationships and, despite Elon Musks’ recent and brave attempt to flip the script, the script isn’t going to flip any time soon. It is “old news” not “fake news”, people want more from their employer. We can thank COVID for the rapid rise in the empowerment of the employee. “What can the employer do for me?” will continue to supersede “what can I provide the company”.

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To counteract all the pressures and economics at play, companies are going to have to substantially increase internal recruiting, internal training, benefits, etc. to attract and fill employment gaps and not leave business transformations or business projects by the wayside. As the skills shortage continues to heighten, the government and private institutions will also have to reorganize, realign, and strengthen educational programs to compete in the skills shortage environment of 2030.

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In addition, to complement internal talent acquisition and training efforts companies will need to increasingly seek and?partner with?external recruiting firms. Your outside search firm partner will need to be an extension of your business, representing you very effectively in the marketplace and helping to brand you as an employer of choice. The noise in the employment marketplace will increase, therefore your message needs to be increasingly focused and professional, the better candidates will not be interested in simply being another resume thrown at an opportunity. In addition, your external partner will need to use the most advanced search tools available to find candidates. The “easy to find” candidates will either be oversubscribed or jaded by yet another inquiry. Finding those “hard to find” candidates and bringing them to you is specifically the advantage Frederick Fox brings to the table.

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Consider joining us as we enter into this new phase of recruiting in a rapidly evolving market.

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