Moment 22 in The Global Skills Gap

Imagine the following scenario: You work with recruitment and you have to hire people. You know that there are over 200 million unemployed people globally and in Sweden alone, you also know that approx 30% of those who already have a job could think of switching if the right offer turned up. In Sweden, there are also approx 400 000 unemployed and another 1 million people who are actively looking for other jobs. But unfortunately you can’t find anyone who fits …

Difficulties in recruiting despite high supply of labor are an example of skills mismatch. Skills mismatch is manifested in several ways; As a recruiter you do not find the candidates who should be suitable, as a candidate you take a job where you are formally overqualified or have skills that do not fall under the category of ”formal qualifications” – ie. you have skills but cannot formally describe them. When supply and demand are present but not met, it is a direct matching problem.

The EU report Insights into skills shortages and skill mismatch looks at data for 49,000 people from 28 EU countries to try to answer the question: Why do we have skills mismatch when both skills (supply) and jobs (demand) exist? According to the report, one of the main reasons is the difficulty in searching for candidates on the right grounds. Formal qualifications such as the level of education reduce the pool of otherwise prospectively relevant candidates to a minimum, when we should focus on potential. There is more evidence for this when, among other things, people are asked formally under-qualified employees if they feel qualified enough for the job they have – where the majority believe that they have learned their skills at work.

So they can do the job well, but if they had had to look for the same job again, they probably would have been sold off early. In addition, a focus on formal qualifications leads to overqualification where 29% feel that they have had to take jobs that are below their level of education without the opportunity to use their knowledge.

 Average proportion of over-qualified young employees in Europe

Self-correcting labor market?
The labor market itself is not self-correcting, for example, the level of education that is not utilized in one of your first jobs will pay off in the next. Of those who are overqualified, as many as 24-36% claim that they could not use the job as a springboard to the next. That is many get stuck without the opportunity to move on. 

The great focus on formal qualifications, such as the level of education, thus means that they without the right level do not get the chance and the others who get the chance feel overqualified. It becomes a vicious spiral where high education is not high enough and those who actually get the job become dissatisfied and earn less than they could – given that the match had been correct. The establishment age in Sweden for college educators is 30.5 years, which is higher than both Denmark and Norway, which partly reflects the excessive focus on formal qualifications.

Minimized candidate pool!
For example, if you are going to hire a salesman in B2B, the following could be part of a standard requirements profile: Completed college education in economics or similar areas and work experience at least 1 year from private labor market. Let’s say that these are actually requirements and the candidates who meet the criteria go on to selection. We have then made the following restriction in our candidate pool (before the remaining part of the selection):

  • Number of unemployed persons in Sweden (age 20-64): 5,875,000
  • Number of people with a college education at least 3 years: 1,356,000
  • Number of persons with minimum bachelor’s degree in economics: 119,000
  • Number of people with the above and at least 1 year of work experience in related fields (your sample group): 83,000

In the example, we reduce our theoretical candidate pool by 98.4%. If we then add further requirements, the number of possible candidates will of course become even fewer.

The War of Talents ..
Globally, recruiters find it harder and harder to find relevant candidates. In 2011, 17% of companies in Sweden reported it as problematic to find candidates, in 2016 this figure had risen to 35% and in 2018 to 49%. In itself, it is not entirely inconceivable that the reason why it is becoming increasingly difficult to find candidates is precisely because of the excessive focus on formal criteria.

The EU report states that if we were to focus more on potential rather than accumulated work experience and educational level, large parts of this so-called missmatch will be solved. The Global Skills Gap is thus a matching problem, a step 22 where focus on formal qualifications contributes to the narrow candidate pool that you are looking for, which contributes to the difficulty in finding candidates. 

JobAgents vision:
JobAgent’s vision is to develop and make available potential. First, therefore, is a sharing service where passive and active candidates should be able to make their data searchable and describe their potential in an easy way. We therefore want to change the match in the labor market by letting easily understandable AI do the job for you based on relevant and shareable data.

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Björn Elowson

Psychologist, CEO and founder of the HR-Techfirm JobAgent

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