The pandemic, population aging, and the Russo-Ukrainian war all contribute to the growing labor shortage, resulting in canceled flights, dirty toilets, and a lack of staff who could serve customers. What can be the solution to the pressing issue of labor shortage?
Predictions suggest 85 million job vacancies worldwide by 2030, and the contribution of COVID-19 to this cannot be neglected. Besides the high death toll, the lockdowns significantly impacted people’s mental health. In addition, labor migration was also hindered by the pandemic. Countries such as the United States, Saudi Arabia, and Germany depend heavily on the influx of workers from abroad. Due to the pandemic, this dependency resulted in severe difficulties as the countries have introduced entry restrictions. As if that were not enough, workers’ attitudes have also changed: people are looking for jobs with greater flexibility, preferably in a workplace where remote work is an option.
Unfortunately, one of the most important causes of the global labor shortage is still the world’s aging population. Employers in many countries have been struggling to replace retiring workers for years, and the situation is getting worse. According to the European Union Labour Force Survey, the share of people aged 55 years or more of the total workforce in the EU increased from 16% in 2015 to 20% in 2019.
Another major reason for the skills shortage and the lack of an experienced workforce is that the currently available workers are often not prepared to adapt to new technological trends, which significantly limits their competitiveness. A 2021 Gartner survey revealed that 64% of organizations see talent shortage as the most significant barrier to adopting emerging technologies, up from 4% in 2020.
In the EU, the job vacancy rate (JVR) was 2.9% in Q1 2022, compared with 2% a year earlier. The situation is the worst in Czechia, where the JVR is 5.3%. A spokesperson for the Czech Ministry of Labour and Social Affairs told Euronews that at the same time, however, there are hundreds of thousands of available jobs in the country. „People who want to work can still find a suitable job in the Czech Republic,” – the spokesperson added. The Czechs, who are somewhat optimistic about the situation, are followed by the Dutch, with 4.9%. Greece has the lowest figure in the EU, 0.8%. Compared to Q1 2021, JVR has increased in all twenty-seven Member States. The largest increases were observed in the Netherlands and Austria.
Due to the pandemic and the war, the number of hospitality workers has dwindled
Tens of thousands are still missing from the hospitality sector after many workers decided to work elsewhere due to the uncertainty caused by the COVID-19 pandemic. Nonetheless, the hospitality industry is expecting a strong season. The labor shortage has led to extremely high wage demands in the sector that most players simply cannot pay. Rising energy, raw material, and ingredient prices make the situation even more difficult.
Most people do not want to return to work in the hospitality sector permanently. Many workers drop in occasionally to help out, but they do not yet feel the industry is stable enough to take on a full-time job. Euronews reports, “major European hotel chains are hiring workers without experience, or even a CV, as executives admit years of underpaying staff has come back to bite them.” Europe’s largest hotel chain, Accor, is running trial initiatives to recruit people who have not previously worked in the industry, CEO Sébastien Bazin told in an interview with Reuters at the Qatar Economic Forum last month.
“We tried in Lyon and Bordeaux 10 days ago, and this weekend, we are having people interviewed with no resume, no prior job experience, and they are hired within 24 hours,” Bazin said.
Even before the COVID-19 pandemic and the war, it was known that the hospitality industry was particularly struggling to find suitable and skilled workers. Wages have always been dismally low as companies were either unable or simply unwilling to pay the wages demanded by the workers. They tried to compensate for low wages with high tips and bonuses. Higher-paid positions were also difficult to fill, as they usually involved a lot of unpaid overtime and almost 24-hour availability. All these factors combined make the industry less attractive to young people, who are needed to fill the vacancies.
Besides hospitality, the aviation industry is the most hit
After the lockdowns are finally over, our big travel plans are at risk again. The European airline industry faces crippling staff shortages, forcing airlines to cancel hundreds of flights ahead of the summer peak season. Lufthansa is canceling around 900 flights in July, meaning 5% of its weekend capacity, and Air France-KLM has been forced to cancel a total of 85 flights in one day due to a strike at Paris Charles de Gaulle airport.
This is a colossal tragedy for an industry that the pandemic has hit particularly hard in the last two years. The turmoil has been exacerbated by strikes in the travel industry, as business executives are reluctant to give higher wages despite the soaring inflation.
Johan Lundgren, CEO of EasyJet PLC, said at an aviation conference in Paris that they must take a serious look at what the summer will bring and how they can cope with it. The CEO added that they need to pull together, and fast actions are necessary.
But not just flight attendants are on strike; photos of overflowing bins and dirty toilets are circulating on the Internet. Pilot shortage leads to flight cancellations, but the lack of cleaners and security guards is an even bigger problem as more and more employees decide to quit their jobs in these positions. Robotization is not a panacea for this issue. For years, security companies and cleaning businesses have boasted about how much they have invested in digital technology and how much they have saved without increasing their workers’ wages. But it is not the near future when robots can replace cleaners and security workers. Even in large airports, humans are still needed to clean seats, empty the rubbish bins, and clean toilets. The current crisis is so serious that there are hundreds of meters long queues for security screening at Amsterdam Airport Schiphol. Some people have missed their flight after waiting for several hours in the queue if it had not been canceled anyway. Meanwhile, photos are circulating on the Internet of pilots unloading the luggage of a KLM plane in London.
Previously, the aviation industry could rely on students during the summer, but wages in other sectors have risen faster. Today, all large security companies launched programs to attract under-represented groups such as women, people with disabilities, and LGBT+ people. In addition, free training and weekend meal vouchers have become the new normal. But it remains to be seen whether these strategies will make a difference in the long term.
The influx of Ukrainian workers may give some hope
The influx of Ukrainian refugees into the European Union could gradually ease labor shortages in the euro area. According to the European Central Bank (ECB), many fleeing the war will likely stay in the EU indefinitely. However, there may be administrative obstacles to admitting refugees.
The ECB published in its Economic Bulletin article that „under all of the assumptions detailed thus far, back-of-an-envelope calculations point to a median increase of between 0.2% and 0.8% in the euro area labor force in the medium term.” This means an increase of between 0.3 and 1.3 million in the size of the eurozone labor force.
Poland welcomes most Ukrainian refugees, but the labor shortage is not getting any better
The Ukrainian refugees’ impact on Poland’s tight labor market has been less than expected. The Polish labor market was already tight before the Russian invasion of Ukraine and before the wage pressure started to increase. More than 3 million Ukrainians fled initially to Poland since the war broke out at the end of February, but estimates suggest that around half of them have already left the country.
Poland certainly needs extra labor. According to Eurostat, Poland’s unemployment rate was less than half the EU average in April. Kamil Sobolewski, chief economist at Pracodawcy RP, the largest Polish employers’ association, told Reporting Democracy that the government’s data published in May showed that approximately 80% of Poles of active age are employed.
His views are backed up by a report published by Oxford Economics on 12 May, which says that the influx of refugees is unlikely to solve the long-standing demographic challenges the Polish economy is facing.
Sobolewski said that „the presence of the Ukrainian refugees is good for the Polish economy from the demand side as these people have needs and they buy goods, or people buy for them.” However, he added, “it does not look like they increase the labor supply.”
Graphics by Roland Molnár | Hype&Hyper