Labour shortages
Reasons for labour shortages
- Geographical shortages. An area with a booming economy, but poor housing can experience labour shortages quicker than the rest of the economy. In the UK, London has strong employment demand but suffers from high rent costs which make London relatively unattractive to workers, causing labour shortages.
- High skilled jobs. Occupations which require particular skills/qualifications have only a limited pool of workers who can apply. For example, an occupation like doctors/nursing requires a lengthy training period. If there is a shortage, there will be a considerable time lag in training new workers.
- Unattractive jobs. In the service sector or agriculture, there are some jobs which are hard to fill because of non-monetary costs and negative social perceptions about the job. For example, fruit picking – is long hours, repetitive work and exposed to the elements. In a developed economy with high expectations, farmers can struggle to fill these low-paid jobs, which are seen as undesirable.
- Social prestige. Job professions are not just about wages, but the prestige attached. In the UK, there has been a push to increase rates of students studying at university. For many schools and parents, vocational jobs, such as plumbing, electrician and technician are seen as relatively unattractive. The retail sector has a perception it is just a ‘temporary’ job and many want to avoid a career in this sector.
- Fixed pay. Public sector jobs have pay determined by the government and not market forces. For political reasons, the government may implement a prolonged pay freeze – even in public sector occupations where shortages are beginning to show. This is often a problem for an occupation like teaching, which is high-skilled but relatively low paid compared to private sector alternatives.
- Economy at full employment. Labour shortages will be more likely in vulnerable sectors when the macroeconomy is close to full employment
