Skill Mismatch and Current Job Market
10 July 2024
In the era of the Internet and open data, it seems there should be no problem learning any skill. But no, there is a global skill mismatch problem, and it is pretty critical.
The global job market is facing a big problem: many workers have skills that do not match employers' needs. This skill mismatch can lead to high unemployment and lower productivity. According to the World Economic Forum's 2023 Future of Jobs Report, 87% of companies worldwide are struggling with skill mismatches.
Between now and 2027, businesses predict that 44% of workers' core skills will be disrupted because technology is moving faster than companies can design and scale up their training programs.
Why does this problem exist, how does it affect the job market, and what actions should be taken to solve it?
Key Takeaways:
- According to the World Economic Forum's 2023 Future of Jobs Report, 87% of companies worldwide are struggling with skill mismatches.
- There's a massive gap between the educational system and actual business needs. Also, this global mismatch is caused due to the rapid technological growth. AI is already replacing customer service, administrative, and assistant roles.
- For companies, skills mismatch negatively affects productivity and competitiveness, affecting their ability to implement new products, services, or technologies.
- Online job boards are in a unique position - not only to provide jobs but also to make educational resources and upskilling programs.
- What is the solution? Investing time and money in reskilling and upskilling.
What is skill mismatch and why should everyone involved in the problem solve it?
Let’s clarify, skill mismatch is a difference between the skills that are sought by employers and the skills that are possessed by individuals. Simply put, it is a mismatch between skills and jobs. This means that education and training are not providing the skills demanded in the job market or that the economy does not create jobs that correspond to the skills of individuals.
On average, reskilling individuals must acquire new skills, representing 1.6 years of education, and leave skills unused, representing 1.5 years of education. Up-skilling is, on average, associated with skill upgrading of 1.9 years and skill redundancy of 0.2 years, according to the working paper by the Center for International Development at Harvard University.
As a result, we have a situation in the job market where there is unemployment and a shortage of qualified specialists, but reskilling requires significant investments in time and money.
Skill Mismatch and Employees
At the individual level, this problem appeared due to several aspects: first, there's a massive gap between the educational system and actual business needs. Education systems often do not align with the current market demands, leading to graduates who are not prepared for the job market.
Secondly, this global mismatch is caused due to the rapid technological growth. AI is already replacing customer service, administrative, and assistant roles. Automation and robotics are replacing many manual jobs.
What is the solution? Investing time and money in reskilling and upskilling. Employees must take responsibility for their professional development so that they can choose their career paths and unlock their full potential.
Skill Mismatch and Employers
For companies, skill mismatch negatively affects productivity and competitiveness, affecting their ability to implement new products, services, or technologies. Moreover, it causes higher staff turnover and sub-optimal work organization. Eventually, mismatch leads to the loss of profits and markets and, accordingly, the economy's weaknesses.
Tech giants like Amazon, Google, and IBM create global strategies and programs to reduce skill mismatch. SMEs also use this practice. Companies develop personal educational programs or collaborate with colleges, schools, and universities to address specific skill gaps identified within the company. I firmly believe this practice should be scaled up and improved further.
Skill Mismatch and Job Technologies
Access to online job market opportunities is limited. About 41% of job seekers find jobs through online platforms, and 14% through social networks. Meanwhile, 3 billion people (mainly in Asia and Africa) lack access to the internet, according to the Boston’s Consulting Group research.
The limits, like the lack of information about job vacancies, could be removed precisely with the help of job technologies like job search engines or job boards by scaling its technology solutions to regions where the lack of information is.
Another point is how job technologies could help solve the issue of skill mismatch. Florian Hasibar, Co-founder at Mytalents.ai comments on this topic: “Online job boards are in a unique position - not only to provide jobs but also to make educational resources and upskilling programs, including micro-credentials, directly accessible. These platforms could recommend the right "micro-credential" courses or certifications that align with advertised positions, benefiting employers and employees by actively addressing the skills shortage.”
Global Perspective
Globally, skill mismatch increases unemployment and reduces productivity and operational costs. If not addressed, these issues can lead to higher unemployment, slower economic growth, and less competitiveness, widening the gap between rich and poor.
The education system should act as a mediator among employers, the government, and individuals, providing potential employees and workers with a complete toolkit for personalized lifelong training and offering new training forms that consider employers’ continually changing requirements. Governments should guarantee everyone equal, open, and customized access to development and employment opportunities.
Governments, schools, and employers need to work together to solve this issue. This includes improving education and training, aligning courses with job market needs, and encouraging lifelong learning. Using technology for personalized education and creating partnerships between the public and private sectors can also help prepare workers for future jobs.
This issue must be emphasized and popularized at all levels and understood and heard by everyone: employees, employers, job businesses, educational institutions, and governments. If we ignore it, it will be impossible to avoid the economic crisis. But everything is in our hands, and everything in the world is subject to correction.
Valentyn Peltek, CEO and Co-Founder at Jobsora
