Will a Skills Gap Impact Your Industry in 2020?
Posted by Des Sinkevich on December 18, 2019
Is the skills gap real? Whether you believe it’s a business boogeyman that lurks in the dark imaginations of overworked hiring managers, or you see it as a problem for your LinkedIn connections, you might agree on this one thing: it won’t affect your industry. After all, roles at your company are in demand and you have more applicants than positions to fill. For now.
In reality, it’s not some big, ominous thing. Rather, the skills gap is simply the gap between what employers want or need their employees to be able to do, and what they can actually do.
No matter what industry you’re in, there are a few things that will universally impact employment, training, and the make-up of the American workforce through the next decade. Your confidence when it comes to hiring and retention is not guaranteed just because your company is part of an in-demand, booming industry.
Understanding the underlying causes of skills gaps, as well as preparing for the future of work, can set you up to be a forerunner in training and employee development while ensuring you have the people you need to meet your business goals in the new decade.
What factors contribute to the skills gap?
In order to effectively address a potential skills gap in your industry, understanding what factors influence it is vital. While the genesis of the current skills crisis is often linked back to the years following the Great Recession, the reasons contributing to its continued effect on work and employment are more complicated than an extended period of economic recovery. Baby boomers approaching retirement, historically low unemployment rates, massive technological strides, and a more progressive attitude towards “job hopping” all have played a part.
Some factors will carry more weight than others. The biggest looming threat, some believe, is investment and advancement in automation which could replace millions of middle-skilled workers over time. But realistically, robots won’t replace workers at the pace tech-fearmongers would have you believe. The impact of advancing technology could potentially create demand for workers who are skilled in understanding and operating new processes.
The impact of automation won’t be that workers can’t find employment because of machines – it will be that employers may struggle to find employees with the necessary skills to fill changing roles.
In an industry like manufacturing, which is already feeling the worker deficit, companies are seeing impact on their profits and ability to take on new opportunities. In the first quarter of this year, 25% of manufacturers say they’ve had to turn down business opportunities because of a lack of workers. By 2030, experts say there could be a worker deficit of about 7.9 million people in manufacturing alone.
Adding to the lack of tech training that fuels the skills gap, it’s projected that 10,000 Baby Boomers will turn 65 and retire each day over the next 20 years making filling vacant roles feel like an endless task. The Millennial and Generation-Z workers replacing them will either be under-prepared for the work, lack the degrees or certifications the employer is requiring, or feel no shame about leaving the company after a short period to start down a new, just as rewarding career path.
In fact, more than ever, “job hopping” – moving from company to company after a short period of time – is viewed as a smart career move. Instead of maintaining the status quo Monday through Friday because it looks bad to have more than a few companies on your resume, younger workers have forced employers to change how they perceive carving a career path. Now, rather than an indication that the applicant is a feckless and inconsistent employee, a varied resume signals ambition, flexibility, and a more developed deck of skills that can be applied to numerous roles. But if your company doesn’t provide the upskilling and benefits that appeal to such applicants, essential jobs will remain vacant until the hiring managers decide they need to accept less qualified applications.
Toss into the mix the lowest American unemployment rate since 1969 - it peaked at 3.5% in September - finding and recruiting strong job candidates is more difficult than ever.
How to determine if a skills gap will impact your industry in 2020.
Manufacturing, healthcare, and other middle-skilled dependent industries have already felt the effects of the skills gap and have begun making moves to address it. But these aren’t the only industries that will feel the pressure of a changing world of work.
The first step is recognizing that even the most cutting-edge corporations are vulnerable. While technological advances can be forecasted and trends in employment can be mapped out by experts, some variables can be harder to assess ahead of time. That doesn’t mean it’s impossible to determine whether you’ll feel the impact of the skills gap in coming years. There are several areas your company can look at to predict a potential skills gap while also preparing different strategies to address it. Ask yourself:
- What is the digital literacy of your workforce? It’s safe to say that as technology advances, more and more roles will require a basic level of digital literacy - even in industries that haven’t historically experienced growth in the use of automation. But though critical to a stable workforce, European Commission figures say that about 43% of European workers don’t have even basic digital skills. In the United States, the numbers are comparative and made worse by the fact that, as of 2016, 48% of jobs required at least a medium level of digital competency. The lack of these competencies will have to be made up for by employers through extensive upskilling over time. If companies don’t take the initiative to do so, underskilled employees will find themselves overwhelmed with standard tasks, contributing to a higher turnover rate and increasing the amount of open positions an industry will need to fill.
- What is the median age of your workers?If your employees tend toward boomer age, your industry could be affected by the 10K or more who will retire each day. On the other hand, if you have more employees who define themselves as millennials, you have workers that are confident with their digital skills but have no reservations about leaving a position that doesn’t offer opportunities for growth. Either way, knowing who your workers are and what they need to thrive - as well as being able to prepare for several positions to become available at once - can help your company prepare to weather shifts in employment trends.
- How flexible is your overall industry regarding the preferred education level and experience of applicants? Degree inflation plays a large role in creating skills gaps, making it even more difficult to find prospective employees who are “qualified” for the position you want to fill. If your company or industry demands college-level credentials or education for roles that don’t require that knowledge, they’re practicing degree inflation. Similarly, if your company requires five years of on the job experience for applicants to an entry-level role, you’ll struggle to find applicants. While there are many jobs that do require a degree or particular credentials, there are many that don’t. The more flexible your industry is regarding preferred education and experience, the more likely you are to weather a skills gap.
After considering these three questions, even on a surface level, you have a fair idea of whether or not you could be facing a hiring crisis in the next few years. Ignoring the warning signs or thinking that it can’t happen to your industry is short-sighted. Skills gaps aren’t just affecting middle-skilled positions. IT, finance, and more will find themselves feeling the pressure. One thing each has in common? Believing that the gap won’t affect their specific field and failing to prepare and adjust to a new world of work.
So if this can happen to anyone, how can you prepare to address a potential skills gap in your industry, generally, and your company specifically?
Upskill your current workforce and offer in-depth training to new hires.
There’s an aphorism, “if it ain’t broke, don’t fix it,” that makes us believe that as long as things are working just fine, there’s no reason to make a change. This is not only dangerous to growth, but also has the potential to ignore the underlying causes behind a skills gap, further perpetuating the harmful ramifications it can have on the economy. Even if it ain’t broke yet, taking purposeful measures to prevent it breaking at all is necessary to continued success.
Developing relevant upskilling and training programs that not only show new hires the ropes but also provide opportunities for internal career growth to long-term employees is essential. From career readiness courses to role-specific programs, Penn Foster’s online upskilling playlists can be configured to fit your needs and ensure you head into the next decade prepared to weather - and even counter - a growing skills gap.