In June 2015, McKinsey Global Institute released a report entitled A Labor Market That Works: Connecting Talent With Opportunity in the Digital Age. It examines the key problems facing the modern recruitment market, and all stats mentioned in the following text are from this fascinating piece of research.
A 2014 Manpower survey found that of 37,000 employers around the world, “36% said they could not find the talent they needed […] while 30-45% of the working-age population around the world are unemployed or underemployed”.
This disconnect between employers and employees is a major issue causing global labour problems. As it stands, HR teams have very little insight into their hiring campaigns. They may face difficulties in finding the right talent, but with fragmented systems and data they have very little visibility into what the real obstacles are.
McKinsey’s research projects that many of the issues facing the global recruitment market could be revolutionised by online talent platforms, confirming the educated hunch on which Jobspotting was founded.
The following are some of their key projections:
1. Better job matching will be good for the global economy.
McKinsey project that “online talent platforms could raise global GDP by up to $2.7 trillion by 2025 and increase employment by 72 million full-time-equivalent positions.” In practice, this would benefit 540 million people, by “enabling them to find employment, increase the number of hours they work, or find jobs that are a better fit. The largest impact (some $1.3 trillion) comes from increasing labour participation and hours worked.”
Shortening job searches would reduce unemployment, and applied data insights could enable matches that would not otherwise have been possible. This in itself would be worth circa $805 billion. Also, “raising productivity by facilitating better job matches and a shift from informal to formal employment raises global GDP by $625 billion.”
2. Data insights enable companies to make smart hiring decisions.
Insights provided by online talent platforms can help companies transform the way they hire, train and manage staff. Well-informed decisions about human capital will in turn produce better business results. Employers could get an overview of which locations have the kind of talent they need, and target their HR efforts accordingly.
3. Companies will have to work harder to appeal to talent.
In a world where workers have greater mobility and competitors have new tools for poaching the top-performing people (or even entire teams), it is becoming more important than ever for companies to create a compelling value proposition and continued growth opportunities for their employees.
With increased transparency through sites like Glassdoor and Jobspotting, candidates are likely to be more choosy about the kind of work environment they end up in. The potential for job satisfaction, and the company culture and lifestyle may be as important as compensation.
4. Increased knowledge will help people to make better education choices.
Platforms like Jobspotting could improve knowledge about the labour market and signal what skills are needed as economies continue to evolve. As this would inform education decisions, the skills mix of the economy could vastly shift over time. People would know which skills are actually in demand in their country and make their choices in light of this knowledge.
5. Insights will help governments to spend more efficiently.
Raising global GDP and connecting people to the right opportunities is obviously positive. Consider too the indirect benefits that could be encouraged by reducing spending on unemployment benefits, fixing budget misallocations in education programs, and dynamic long-term benefits such as enhanced innovation. When people are in the right jobs, more inspired, interesting work can get done!
If public spending on unemployment programmes is reduced, more can be invested in making education more effective. “By reducing the number of unemployed people and the length of time spent searching for a job, online talent platforms could reduce the demand for unemployment benefits as well as public-sector job-placement, training, and subsidy programs.
They can improve the way these programs function by applying better data, new approaches, and new technologies— as well as reducing the overall need for the government to act as an intermediary between the unemployed and the job market.”
6. People will be less limited by location
“By aggregating data on candidates and job openings across entire countries or regions, they may address some geographic mismatches and enable matches that otherwise would not have been made.
People who have felt trapped in stagnant local economies can gain insight into the opportunities they could realize by moving even a few hundred miles.”
7. Part-time workers will be able make the most of their time.
Meeting the needs of employees that require flexibility, or have needs that require them to work part-time, could increase labour force participation and hours worked among part-time employees. Most people would work more hours if their schedules allowed for it, or were able to find flexible work that suited their time allowances
8. People will waste less time on job search.
Right now, job search is incredibly time-consuming. Looking for work can be a full-time job in itself. With increased capabilities of job search and recommendations engines, and the use of sophisticated algorithms, the hiring process can become much faster, cutting the time people spend searching for jobs.
9. Young people can utilise skills better to get a stronger career start.
“Almost 75 million youth are officially unemployed, but hundreds of millions more are inactive (that is, not involved in education, employment, or training). Without a solid start to propel their careers forward, their economic prospects will be lower over their entire lifetimes.”
With increased knowledge about local and global job markets, young people will be able to make education and employment choices that boost their prospects, and prevent them from being stifled by economic influences.
10. Countries that have consistently high levels of unemployment stand to benefit most.
The largest potential to raise GDP is found in countries with persistently high levels of unemployment and low participation, like South Africa, Greece, and Spain. Online talent platforms in countries like these could reduce the length of unemployment by facilitating quicker matches, and making it easier for people to transition from informal to formal employment.
11. People and companies will be more productive.
By matching the right people to the right jobs, productivity increases along with job satisfaction. As the skills gaps begin to close, and people start to find work that fulfils them, overall productivity of people, companies and the economies will grow rapidly.
12. People will be able to manage their careers more actively.
A recent survey conducted by LinkedIn found that even 37% of those who do have jobs report feeling overqualified for their current roles. With more insights, knowledge and power over their personal brand, job seekers will have more agency in their careers and can target work that best appeals to their taste and skills.
13. Policy-makers will need to create security for flexible workers.
More people are likely to opt for the freelance route, as it offers more freedom and flexibility, and technology allows you to work from anywhere. However, policy-makers need to consider how to make the full range of benefits available, such as health insurance, disability insurance, retirement plans, parental leave etc.
14. Insights will increase visibility of skills needs and evolution of markets
Troves of data are already being collected on how labour markets function. Over time, this can be used to track the kinds of positions being filled, the skills needed in certain locations, and the pathways that take people from education through their careers. This information could provide much more prescient data than traditional labour stats.
“This could create new visibility into skills shortages and requirements, the effectiveness of particular educational institutions and programs, talent migration patterns, and worker productivity.”
15. The need to bridge the digital divide will become more urgent.
With huge percentages of the world’s population still offline, large swathes of people run the risk of being left behind unless this is remedied. As recruitment for all types of work, formal and informal, migrates online there is a much deeper need for global Internet penetration.
The employment climate is currently in an intense state of flux, due to rapid technological advances and transitioning to a knowledge society. The speed of this massive shift has left the recruitment market reeling, and it simply hasn’t yet closed the gaps in information and resources needed to tackle the mismatches in skills and markets.
However, if data insights are properly utilised this could lead to the dissemination of the right information, which could result in optimised spending, better education choices and more flexibility of employment.
We, for one, welcome the digital job search revolution!
Featured image: Facebook density map