Labour Shortage Insights

Labour Shortage Insights 2022

The world is struggling with a global supply chain crisis that is centred around labour shortage. Labour shortage refers to when there are not enough workers available to participate in the labour market and fill the vacancies that exist, and it is a problem that has gripped not only one or two regions in the world, but many countries like the UK, USA, Australia, and Singapore are all currently struggling to fill labour vacancies.

There are multiple drivers behind the labour shortage in these markets. One of the most prominent ones is Covid-19. As of July 2022, there have been almost 6.37 million Covid related deaths globally (WHO). In addition to the deceased, there are millions of people who are still grappling with the long-term effects of the Covid-19 virus. These include health complications, but also other facts such as immigration disruptions and a change in worker expectations.  

Yet, it is important to remember that Covid-19 is only one of the many reasons that have caused labour shortages in most regions. These reasons contribute towards making growth for 3PLs and the logistics industry in general harder, considering that the logistics industry is one of the worst hit industries and is struggling with a serious shortage of warehouse workers. This shortage is more than likely to impede the efforts of businesses to try and achieve new heights of success. 

On this page, you will find the top labour shortage insights, and these can help you understand the current situation of the logistics market better, so that you can prepare yourself for even the most difficult of challenges. 

Contents

  • Reasons for Labour Shortage Stats
  • Labour Shortage Warehouse Workers
  • Labour Shortage UK Stats
  • Labour Shortage USA Stats
  • The Future of Labour Shortage
  • Conclusion

Reasons for Labour Shortage Stats

There are 4 main reasons behind the labour shortage: Covid-19, low wages, ageing population, and technology skills gap. There’s so much to learn about each of these, and the following insights will help. 

Covid-19 Labour Statistics

  • Covid-19 has resulted in exactly 6.36 million deaths ever since its outbreak (WHO). Needless to say, this caused a shortage of workers in the labour market that can take up labour jobs. Due to Covid-19’s high death rate, there are currently more jobs than people and this causes friction in the logistics and supply chain industries. 
  • The pandemic did not only impact the physical health of millions of people, but also the mental health of many. One half of the 400,000+ employees that stopped being a part of the workforce between February 2020 to November 2021 did so as a result of mental health issues (The UK’s National Office of Statistics). With so many people struggling with their mental health, there are less workers that are willing to take up the burden of logistics and supply chain jobs, considering that they can often be stressful and draining. 
  • The gender gap in hours worked in the first quarter of 2022 was 0.7 percentage points greater than the pre-pandemic findings in 2019 (International Labour Organisation). The gender gap has increased, which may make women more hesitant to join the labour market. If women are given more opportunities to take up jobs in the labour market, the labour shortage would improve, but the post-pandemic landscape that increases the gender gap may not present a lucrative enough opportunity for women. 
  • In the UK, the outbreak of Covid-19 paired with Brexit led immigration rates to fall by 90% in 2020 (Reuters). Considering that immigrants make at least 5% of the global labour force and that 1 in ever 20 workers worldwide is a migrant worker, (CNBC) the disruption caused to immigration rates as well and as the complications that migrant workers have had to deal with as a result of the pandemic has caused a drop in the amount of people in the workforce. 
  • According to a recent study 95% workers are open to changing jobs, whereas 92% are willing to change industries (Monster) – a phenomenon that has largely been dubbed as the “Great Resignation”. Due to burnout as well as the need to accelerate their career growth and make up for time lost because of the pandemic, workers in the pre-pandemic worldwide are much more likely to leave their jobs and get new ones. Many of them demand flexibility and if they don’t get it, they will change their jobs and as found in research, even their industries. 
  • Work from home was the norm that gained traction during the pandemic, and even though the worst of the Covid-19 virus seems to be over now, there are many people who actually prefer to work from home now. 77% (CoSo Cloud) of remote workers say they’re more productive when working from home, whereas 74% workers say that having the option to work remotely would make them less likely to leave a company (Owl Labs). With more people preferring to work from home, logistics jobs and being a part of the labour force which, for the most part, requires you to be on site seems to be much less preferred. 

Low Wage Labour Statistics

  • Money is important to all workers. 62% workers rank wages as the biggest motivator for changing jobs (Randstad Employer Brand Research). This means that to the majority of people, the prospect of earning less money than they would in other jobs is not acceptable – so the fact that the labour market is associated with lower wages proves to be a major deterrent for potential workers. Especially in connection to inflation that has now become a global problem, low wages are the most important factor when it comes to labour shortages and the general hesitance of people to join the labour force. 
  • More than 51.9 million workers that make up more than 31.9% of the US labour force make less than $15 per hour (Oxfam). With salaries that are not very attractive, the premise of being apart of the labour force becomes a lot less favourable for potential employees and they are likely to gravitate towards alternatives that enable them to earn more money.
  • In the UK, around 7% of all workers which means almost 2 million workers are paid at or below the minimum wage as of April 2020 (House of Commons Library). Although this is an improvement from 2015, 7% is still a considerable number which is affected by earning minimum wage, and even below that and hence could be considered as a contributing factor in the recent increase in labour shortages. 
  • Inflation rates have doubled in 37 of 44 advanced economies over the past two years (Pew Research Centre). Although most economies depend on the labour force for many jobs, the state of their economies don’t allow them to increase minimum wages or offer employee benefits that urge the labour force to continue being apart of the industry. For example, US and UK inflation rates have almost quadrupled over the past two years (Pew Research Centre) whereas the inflation rates of countries like Greece and Italy has increased anywhere between 15 to 20 times. 
  • In 2020, 885,000 workers had a wage that fell below the federal minimum. In 2021, about 44.3% of wage and salary workers were paid hourly or below the federal minimum (Statista). That is almost half of the workforce. In today’s economy, surviving on minimum wage let alone below minimum wage wouldn’t be the ideal choice for anyone. That’s why there has been a general hesitance by workers to join the labour market and make a contribution. There are efforts in place to improve this situation, but nothing extensive enough is being done to ensure that the job market is actually lucrative for more people to gravitate towards it. 

Ageing Population Statistics 

  • In the United States, over about 10,000 people reach the retirement threshold by turning 65 years old (AARP). This means that a considerable chunk of the population belongs to the retirement segment, and hence cannot be apart of the labour force – which further contributes to the ongoing labour shortage crisis. 
  • Today, almost 1 in 10 people are over 60 years old all over the world (HelpAge). Not only that, 1 in 5 people will be over 60 by 2050 and it is even predicted that people aged over 60 will outnumber children aged 0-14 by 2050 (HelpAge), which means the proportion of older people in the population is only going to increase over the next few decades. Essentially, what we have is an ageing population, which comes about when there is an increase in the proportion of older people. An ageing population comes with increased costs for the economy, and when paired with slow labour force growth, it can have an adverse impact on the state of it. This is why these statistics are concerning, especially when considered in conjunction with efforts to improve the availability of the labour force. 
  • Asia, the biggest and most populated continent in the world and Europe, which is the third most populated continent in the world are the homes of the world’s oldest populations – meaning that a large proportion of their populations consist of those aged 65 and above. Japan tops the list, with 28.2% of its total population being over 65. Italy is close behind in this regard, with a total percentage of 23% old people. Finland, Portugal, and Greece also make it to the top five, with a percentage that falls just below 22% (PRB).
  • The labour force participation rate for people aged 16 to 24 is projected to decline about 4.3% in the period between 2020 – 2030 in the US. On the other hand, the labour force participation rate for people aged 75 and older is projected to increase by about 2.8 percent during the same period (US Bureau of Labour Statistics). This means that the labour force is likely to be more accommodating towards older people, considering that younger people are likely to move even further away from working in the labour force in upcoming years. 

Technology Skills Gap Statistics

  • 87% of employers all over the world are reported to have admitted that they are struggling with a skills gap issue (McKinsey & Company). More and more businesses are integrating advanced technology in their operations such as warehouse management and order management systems. Although this technology helps to a great extent, not all AI and automation can be used to the best of its potential by the labour force, considering some of these tools are too complicated to work with. The skills gap, therefore, creates a rift between the technology that is important to bring efficiency to work processes and the workers that are important to ensure that the technology is making an improvement to existing processes. 
  • It is predicted that by 2030, the skills gap paired with talent shortage will cause a loss of $8.5 trillion for the USA’s economy (PwC). Ultimately, the labour shortage is not just that – it is also a skills shortage. Not only do companies need workers, they need workers that have the right skills needed to navigate the challenges associated with being a part of the workforce: whether it is digital knowledge or technological skills. 
  • According to 56% of hiring managers, technological interventions like AI and other forms of automation will cause a change in the kind of skills they need workers to have (Salesforce). Again, this means that they need people who are trained and have experience with particular technological interventions, which is not easy to find and hence, may contribute towards labour shortage in general. It also means that the needs of companies that require labour force is constantly evolving, making it considerably hard for people to make the cut going forward. This is further reflected by looking at the 46% of people who admitted to being anxious about the widening skills gap (Degreed). This shows that workers themselves are doubtful of whether they can meet the rising expectations of employers, which may lead to a resistance towards taking up jobs that put them outside their comfort zones. 
  • Only 34% of workers feel like they are adequately supported by their company’s skill development opportunities (McKinsey and Company). This means that there is not much trust in companies when it comes to skill growth and expansion, which leads workers to believe they will not be able to do the job properly. It is only when employees see professional growth in the labour force that they want to put in the effort and take on the responsibilities of working as an active part of it. 
  • 46% of companies have no strategic plan to address the skills gap internally (ICIMS). Essentially, this means that there is not enough effort from the end of these companies to improve the work done by members of the labour force and hence they offer them no major opportunities to grow and expand their skill set. If we want to ensure this aspect does not affect the labour market in the long term, companies must step up their game and start providing people with the training they consider to be useful. This can be done through talent management systems, and will prove to be beneficial to the company’s 

Labour Shortage Warehouse Workers

The warehousing industry has to constantly struggle with labour shortage for various reasons. Here’s what we mean: 

  • 73% of warehouse operators can’t find enough labour (Instawork). This means that well over half of the warehouse world has to bear the brunt of the ongoing labour shortage. 75% of light industrial businesses don’t feel fully prepared for 2022, whereas 60% have been unable to keep pace with the dramatic rise in demands starting from 2021. All of this means that there is a need for them to have more workers available to help them, but with the labour shortage going on, it seems impossible to do so.
  • 58% of warehouse and distribution businesses have witnessed an increase in fulfilment volume in 2021 and onto 2020 (Instawork). This means there are more orders that these businesses have to deal with, but less workforce. Paired with the fact that many of these warehousing businesses don’t have the right technology such as warehouse and order management software means that they are simply not well-equipped enough to tackle the problems they face, especially in light of the labour shortage.
  • In the USA alone, warehouse jobs rose by 13,4000 positions to a total of 1,728,200, which is a large number and definitely a cause of concern for many warehouse operators (Bureau of Labour Statistics). This is mainly because although businesses are aware of the ongoing labour shortage, they fail to address many problems faced by members of warehouse workforce, which is definitely not ideal if you want to make sure that you have enough workers available to help you complete your fulfilment processes. 
  • In 2021, the British warehouse worker shortage led to warehouses having to pay up to 30% more to recruit staff (Reuters). This means that companies that don’t focus on employee retention and have a strategic employee management tactics in place may end up incurring monetary loss by trying to bridge the gap with new employees or even keep hold ones. 

Labour Shortage UK Stats

After the pandemic, the UK has been on an uphill battle to try and help the labour market recover – an effort that has proven to be successful in some areas, but is still a cause of concern in others. These stats will help you understand what we’re talking about.

  • Employment rate in the UK, although improving, is still at least -1.0pps or 122,000 people below pre-pandemic rates. From March – May 2022, the employment rate was up from 75% to 75.9%, which means that there has been improvement (House of Commons Library). However, the fact that the employment rate is still less than it was before the pandemic shows that the UK is still struggling to return to the “normal” state of affairs when it comes to the labour market. The fact that the employment rate is less than it was before the pandemic can also be linked to the fact that there are not enough workers available who want to join the labour force, mainly due to the reasons listed above. 
  • There has been an increase in economically inactive people in the UK as well. In the second quarter of the year 2022, it was found that about 8.75 million people aged 16-64 were economically inactive and the inactivity rate was 21.1. These levels are 302,000 above their pre-pandemic level (House of Commons Library). Again, this means that the adverse impact Covid-19 had on the market has still not reversed and continues to contribute towards economic activity in people of the working-age. Whether it is because of health issues or burnouts, economic inactivity in one very prominent driver of the labour shortage. 
  • On the other hand, the amount of vacancies has now considerably increased over and above the pre-pandemic levels. From April-June 2022, the increase of vacancies reached 1.29 million, which was 498,000 more than pre-pandemic levels (House of Commons Library). So, while employment rate is struggling and economic inactivity is concerningly high in the UK, the need for workers to join the labour force is increasing beyond pre-pandemic levels. UK companies need labour that can be retained, and they are struggling with that. 
  • In the UK, average wages fell in the three month to May 2022. The annual change is that of -3.7% excluding bonuses and -2.0% including bonuses (House of Commons Library). This shows that people are being paid less than they were at the start of the year. Wages are an important part of the job experience for all members of the labour force, which is why salaries that are not fulfilling are the biggest hindrance between people and labour jobs. 

Labour Shortage USA Stats

The USA is struggling with one of the worst labour shortages in its history. These facts and figures will give you a better understanding of what’s going on. 

  • The pandemic proved to be a great hit for the American labour market. In 2022, more than 47 million workers quit their jobs. This situation in America is essentially what gave rise to the term “The Great Resignation,” and has proven to be a great impediment to its labour market health. 
  • Currently in the US, there are over 11 million job openings but only 6 million unemployed workers. This huge gap between supply and demand shows just how bad the situation is. Like the UK, the USA also has more jobs than it has workers, and if things don’t improve soon, the labour market will have to struggle even more to make it in the economy (The US Chamber). 
  • Comparing trends between 2020 and 2022, it can be observed that the labour force participation rate in the later months of 2022’s first quarter sat at about 62.2%, which presents a decrease from the 63.3% in January 2020. The reasons behind this are varied. 33% women believe that they can no longer be an active part of the labour market because they have to stay at home and look after family members, whereas 28% men think that their industry is still suffering which is why no good jobs are available to get into (The US Chamber). Whatever the reason is, the decline in labour force participation is apparent – despite the number of jobs available out there, the amount of people who can realistically fill those vacancies is at a low. 
  • For America, one huge factor that contributes to the labour shortage is an increase in savings. Because of lockdowns, unemployment benefits, and stimulus checks, Americans were able to collectively add USD 4 million to their savings accounts in 2020. This means that about 68% claimants were able to earn more on unemployment than they were at their jobs (The US Chamber). With unemployment working out for them and adding to their bank account, it makes sense that the labour force participation for many Americans has witnessed a decrease and is struggling with a labour shortage. 

The Future of Labour Shortage

What does the future hold when it comes to labour shortage? Let’s have a look. 

  • 85 million jobs could go unfilled due to the skills gap without intervention. Such statistics make it obvious that the issue is very concerning (Korn Ferry). There are simply not enough humans to take the amount of jobs there are all over the world. This has ceased to become simply a commercial issue – if not paid due attention to, labour shortage can quickly turn into a huge problem for countries on a national scale. This is why governments and organisations that help governments are urged to become apart of the discourse; so that enough people can be educated on the cons of a labour shortage and steps can be taken to fix it on a larger scale. 
  • The global unemployment rate in 2020 was 6.57 percent. Although this has improved now and dropped down to 5% in 2022, it is still higher than previous years and hence, concerning (OECD). In countries like the US and UK as well as some other countries in Europe and Asia, this doesn’t mean that there aren’t enough jobs available – in fact, contrarily and as discussed in different stats above, this means that the jobs that exist don’t attract people enough to actually result in employment, which is ultimately what makes the difference. 
  • Yet, not all hope is lost when it comes to talent and labour shortage. Many countries are making the effort to attract more workers into the labour force. This is reflected in minimum wages around the world. For example, in the UK, the National Living Wage that was introduced in the UK for workers aged 25 and over was extended to those aged 23 and over instead. This means that more people can benefit from the national wage, and hence acts as an incentive to bring more people into the labour force. In addition, there has also been an increase in the amount of the wages. Before the pandemic, the national wage was £8.21. During the pandemic, it was raised to £8.72 and after the pandemic in 2021, it was bumped up to £8.91 (NiBusinesInfo). It’s better than before – but maybe still now as attractive to boost up economic activity for many individuals. 
  • According to the education platform Coursera, digital skills are the language of the modern economy (Coursera). 21.7 million Coursera learners are focusing on digital skills in North America, with 19 million of them being located in the USA. In the United Kingdom, there are 2.6 million Coursera learners who focus on digital skills and technology-based education. This effort could translate into a very successful approach to fix the labour shortage. With more and more people being at par with industry standards and knowing to operate technology that is integrated within their particular industries, the skills gap could be greatly minimised and may even result in fixing the labour shortage for a long period of time. 
The Future of Labour Shortage - 85 Million jobs could go unfilled

Remember:

The labour shortage all over the world is a real issue that can cause economies to collapse if not paid attention to. There are more jobs than there are people in most parts of the world, and this is enough chaos for all actors of the economy. Therefore, businesses, especially those that require the human element more than anything such as 3PLs and other companies that have to work with logistics, it is important to invest in resources, methods, and technology that not only simplifies processes but also helps them retain warehouse workers. 

All of the factors discussed in the statistics give rise to the labour shortage, which extends especially to warehouse workers. Yet, warehouse workers are important when it comes to running any logistic services, and hence you must do the most in terms of ensuring that you can hire the right people and keep them on board. 

If you want to ensure that the job experience you offer keeps your warehouse workers happy and prevents you from becoming a victim of the labour shortage, it is important to make sure that you are taking care of them. Being concerned about their mental and physical health is an absolute must, and you should also make sure that you are doing everything in your power to make their jobs easier for them.

With the help of tools such as warehouse management systems and labour management software, the task of hiring individuals and keeping them in their jobs for a long period of time may prove to be beneficial, considering that these tools are especially designed to take the burden off of your employees’ shoulders.