Workforce shortage, Skills Mismatch, New Jobs Creation and Layoffs: What Does this Mean?!
There is record unemployment and millions of new jobs being created. And yet, thousands of people are being laid off. But there are over 10 million job openings in the U.S. Hiring new employees is difficult in the North Bay (and beyond). Talk about mixed signals! What is going on in the workforce?
In You might be jobless in 5 years, (Link), we learn one aspect of understanding what is happening. There has been acceleration of companies changing their business practices and creating jobs requiring different skill sets than they previously sought. In Career Insights, Shatakshi Sharma, Co-CEO Global Governance Initiative, answers these questions based on the research done by BCG, LinkedIn and World Economic Forum: “Are you wondering if you should switch your job? Or do you question if you even have the right kind of skills for your job profile?”
- The relative importance of skills
The research talks about different skill groups. It showcases whether their importance is increasing, decreasing or remaining stable. Skills such as critical thinking, problem-solving, self-management, working with people and tech and development see a growth in their importance. Whereas, on the other end of the spectrum, skills such as management and communication activities, core literacies and physical abilities are experiencing a relative decline in importance.
- Top 15 skills for 2025
The highest-ranked skills are analytical thinking and innovation, active learning and learning strategies, complex problem-solving, critical thinking and analysis. These skills test whether you are actively trying to learn and upskill yourself or are you happy to do an MBA and cease your growth henceforth. It also talks about your ability to ring structure in a messy situation and get a clear solution.
The next set of important skills are creativity, originality and initiative, leadership and social influence. It involves your ability to think out of the box and influence without having authority. Skills such as technology use, monitoring and control, technology design and programming help you talk to product management or coders. It also involves using IOT, Cloud Computing and Artificial Intelligence to solve problems.
Certain character-based skills such as resilience, stress tolerance and flexibility and emotional intelligence also make the list. It emphasizes how EQ in addition to IQ is important.
Troubleshooting and user experience, service orientation, system analysis and evaluation are important to solve problems and improve customer service.
Last, but not least, we have persuasion and negotiation. This particular skill will not only help you excel in your career but also get you a good salary.
Besides sharpening skills to match employers’ needs, there are other aspects to consider. In Three shifts to expect in the hiring market in 2023, by Ty West (Link), he says, “One thing unlikely to change? The need for speed in the hiring process. Corey Berkey, senior vice president of people and talent at recruiting technology company Employ Inc., said signs continue to point to the labor market remaining tight this year, but with some improvements compared to 2022. Even with those improvements, experts say companies won’t be able to revert to their pre-Covid hiring practices without increasing the risk of missing out on talent.”
“I think that companies are going to evolve because they’ve learned a lesson, or they’re going to get run over,” Berkey said.
West says, “A recent survey by Employ found 77% of organizations have not reduced hiring plans or implemented a hiring freeze, and 8% anticipate making fewer hires in the next 12 months, with the bulk of companies planning to pull back concentrated in the technology, manufacturing and financial sectors — a trend that dovetails with recent layoffs. But the survey did find a 10.4% decrease in job openings between the second and third quarters of 2022, and an 8.7% increase in the number of job applicants.”
Even with those shifts, Berkey anticipates the intense competition for talent will remain in a number of sectors, making it pivotal for recruiters to follow best practices. Here are some of the trends Berkey anticipates and how employers can respond:
“1. Employers will rethink hiring strategies
Since the Covid-19 recovery ramped up in early 2021, companies across a range of industries beefed up their payrolls. The result was a tight talent market, soaring salaries, elevated turnover and labor shortages in many sectors.
But as the economy has slowed, many companies are trimming positions and, in some cases, admitting they hired too many employees or increased salaries too much. Both 2022 and 2023 have been banner years for budgeted average raise amounts. While metrics show many companies plan robust hiring in 2023, Berkey said those efforts are likely to be more targeted.
‘It’s no longer going to be, ‘Hey, this role has been vacated. Let’s get that backfilled,’ Berkey said. ‘I think we’re going to see businesses prioritize around roles that they know are going to drive that strategic value of the organization forward.’ He said that trend will contribute to an increased focus on candidate quality for many businesses.
2. Hurdles at the offer stage
Employ’s data found about 40% of offers are being accepted, echoing some of the obstacles recruiters have discussed with The Playbook. Pay expectations are a common sticking point, with the increasing number of counteroffers playing a role. Due in part to the high cost of replacing talent, recruiters say they are seeing a relatively high rate of counteroffers. I think a lot of Hail Mary, last-minute saves by the current employer are what’s driving this number up,’ Berkey said.
The push for pay transparency is another factor — often affecting companies that aren’t having the salary conversation early enough. In the absence of those discussions, candidates are doing their own research and making assumptions.
‘I think a lot of candidates are getting to the finish line in the recruiting process and because the company hasn’t openly had that conversation around compensation, the candidates are almost getting surprised by it,’ Berkey said. ‘They’re often driven by what they see online, which online, you can find some crazy, crazy benchmarks that are completely inaccurate.’
He said candidates often hear stories about people who are changing jobs and getting a 40% raise. ‘That’s real. It’s really happening, but it’s not happening 100% of the time,’ Berkey said. ‘If you’re holding out for that 40% increase, that’s going to be few and far between.’
3. A shift in pay strategy is coming, but not for everyone
Berkey anticipates that top-flight candidates will remain in a strong negotiating position in 2023 — in part due to the increased focused on candidate quality. Berkey said ‘stretch candidates,’ whom he described as candidates who don’t necessarily have the experience but have the attitude and aptitude that make them compelling applicants, will have a tougher time than they have in the past two years and will be met with more reasonable salary offers.
Overall, Berkey expects the pendulum to swing toward pre-Covid compensation levels but not quite a full return. ‘I still think wages are going to climb more than we’ve seen in the past,’ he said. That’s particularly true for highly skilled candidates. Berkey expects they will still receive aggressive compensation packages.
There are growing signs of a disconnect on pay, with the inaugural Monster Work Watch Monitor finding 42% of employers saying salary expectations have reached unreasonable levels. That’s up from 30% a year ago. That’s not a surprise to recruiters, who have previously told The Playbook that many companies were backing themselves into a corner with salary offers and raises they were approving in 2022.”