EU Skills Shortage: Is It As Bad As It Seems?

Skills shortages across Europe have been making headlines for the past few years, but since the result of the Brexit referendum, the issue has really been thrust into the spotlight.

The potential for future challenges in international recruitment due to tighter borders between Britain and the remaining EU Member States has caused many businesses to think about how they can ensure they’re creating a strong workforce that will support their business objectives. This has heightened the focus on existing skills shortages. Research by Cielo has found that nearly half of all Talent Leaders today cite skills shortages as the biggest obstacle to securing high-quality talent. These shortages were highlighted as being more significant issues than the usual suspects, such as cost of hire, time to hire, and so on.

The Anomaly

As with most research, the Cielo study identified an anomaly, and in this instance it’s an anomaly that is proving difficult to ignore. A direct and inverse correlation was discovered between businesses that use recruitment process outsourcing (RPO) and those feeling the pressures of the reported skills shortage. It was found that just 31% of businesses who work with an RPO are impacted by the skills shortage, compared to 43% that recruit in-house. This is a very interesting find, and it poses an important question: Is Europe’s skills shortage really as bad as we believe it to be?

Based on these findings, we need to be asking ourselves whether Europe’s skills shortages are in fact real, or whether they are instead a reflection of the fact that businesses are not fully utilising the most effective techniques to (a) attract the best talent and (b) hire them. Such strategies could include compensation and benefits, location strategy and intelligent working.

We have certainly proved that an “imagined” skills shortage in Europe exists. Now let’s look at the facts for and against a “true” European skills gap.

1. There is a Skills Shortage in Europe.

It is important to consider how recruitment in Europe is evolving, and how candidates are beginning to emerge from different sources. Recently, there has been extensive research undertaken into the advantages of internal hiring over external hiring, and the outcome of this research appears to be impacting European recruitment. Matthew Bidwell of Wharton University in the United States claims that external hires receive “significantly lower performance evaluations” compared to internal hires. More people are working their way up the ladder, so when a senior position cannot be filled internally, there is a very obvious skills gap between what a company is expecting and what is available externally.

We hear about the “war for talent,” and how in some industries there is a tremendous amount of competition for top quality candidates. The emergence of organisations creating a validated and honest Employer Value Proposition (EVP) is symptomatic of companies responding to the skills shortage. Organisations are shifting their attention to strategies that make them a talent magnet – attracting the best people with the best cultural fit for the role. This EVP spans the whole candidate lifecycle, from initial contact to the website through to onboarding. Organisations addressing this challenge are able to see the crucial importance of having this in place when recruiting in areas that have more competition for talent, as it provides differentiation and information which in turn allow the candidates to be able to make better informed decisions.

We do understand that in some industries, retention is a real issue, and there appears to be an increasingly limited talent pool. The education sector is a prime example. According to Russell Hobby, former general secretary of the National Association of Head Teachers, more and more UK schools are “forced” to hire staff without the necessary experience to fill the skills gap. The Department for Education reports that in recent years there has been a 10% increase in unqualified teachers being recruited for teaching positions in the UK. For these roles, early adoption is vital, with organisations needing to engage with candidates at an early stage – enabling them to understand both the sector, organisation and typical job roles that may be available to them in the future. Education is key.

2. There is Not a Skills Shortage in Europe.

If we look at the other side of the argument, there are plenty of data points that can be cited when arguing against the existence of a skills shortage. Firstly, we need to consider not only the number of applicants per job, but also the number of skilled applicants per job. It has been reported that the average graduate job – one which requires a specific set of criteria including a 2:1 degree at university – receives 39 candidate applications per position. So why do we feel that the majority are not suitable hires? While this could suggest many things, one scenario is that some businesses are not in a position to undertake an end to end process and finalise the hire. It could also imply that some organisations may not have the capability to provide learning and development opportunities should a candidate need upskilling on one area of the job role. So are organisations equipped to manage the recruitment process so that it produces quality outcomes, and do they provide the appropriate training and development to a new graduate coming into their organisation?

Organisations continue to prefer full-time, office-based employees. However, if they were to change the parameters of the role to offer flexible working times and home-based working, for example, this could help fill any perceived skills gaps that an organisation may have. It would certainly help those companies that have a limited talent pool in their office locations.

How many companies can currently claim that they have an effective Talent Acquisition strategy? One which is capable of delivering an end to end process, and transporting candidates right through from the application form to the first day on the job with a great experience? A report by iCIMS software states that “many organisations do not have strategic global recruitment plans in place” - we must consider this in terms of the skills shortage argument. It could be that businesses simply don’t know how to recruit, and that therefore the skills gap is wider than it needs to be.

The State of the Skills Shortage

What the above demonstrates is that there is no definitive yes or no answer to whether Europe is experiencing a skills shortage from a data perspective – but we definitively know that it “feels” like there is one. There are arguments both for and against the perceived skills gap, with a number of solutions that organisations could be looking into to ensure they have the best talent for the future. However, even if there is a skills shortage, businesses don’t have to suffer in silence. Better Talent Acquisition can be attained in a number of different ways, such as investing in training for recruiters, talent leaders and others acting within HR capacities on how to engage with diverse talent, or by investing in the “right” channels to attract the “right” talent for the “right” roles. It could also be achieved through working with an RPO to lighten the load on your HR team. Either way, a skills shortage doesn’t have to be the challenge that is perceived to be. The right talent is out there.

For more information, read Cielo’s report “European Talent Acquisition Trends: Productivity, Profitability and Personal Impact.” Based on interviews with more than 400 Talent Leaders across Europe, this research reveals the impact Talent Acquisition has on business performance and identifies the challenges faced by Talent Leaders today.

 

Post contributed by Sally Hunter, Senior Vice President. Connect with her on LinkedIn.