How do you redefine unemployment in an era where the talent shortage is widening, and the Great Resignation is still in full swing?
The labor market has been nothing but tumultuous in the last few years. The pandemic, the Russian invasion of Ukraine, accelerating inflation, and supply chain woes have left a dent in workforce development.
Talks of a looming recession have also been rampant in many financial markets. Worse, big tech companies have implemented significant layoffs and hiring freezes in the latter part of 2022.
The Tech Hiring Freeze
Tensions in the tech sector rose when several big tech companies announced massive layoffs – perhaps one of the biggest scares regarding employment security. These companies included familiar brands such as Google, Apple, Meta, Twitter, Microsoft, and many others. Twitter laid off 30 percent of its workers, while Meta streamlined its labor force by 13 percent.
Apart from the layoffs, these companies also announced hiring freezes. Apple continued hiring for its research and product development team but ceased the entry of any new hires in its other departments.
These layoffs and hiring freezes shook many economists and analysts and clipped whatever optimism was left in the labor market last year. Of course, this also dampened employment security among many workers while these former employees also added to the unemployment rate of the US workforce.
Nevertheless, a study from Gartner opined that while these layoffs and hiring freezes contribute to a rise in the unemployment rate, they do not reflect, in any way, the actual state of the tech industry. Labor market information and accurate labor statistics in the tech sector need to be revisited to get a more authentic picture.
The Gartner study emphasized the phenomenon that most prominent tech companies implemented layoffs and hiring freezes not because of a bearish tech sector but more for sustainability. 80 percent of tech CEOs will be investing heavily in product development in 2023, as it did in 2022.
Simply put, many of us understand unemployment as a phenomenon when a member of the labor force does not have gainful employment. Furthermore, to effectively measure unemployment, we must look closely at the current labor force.
The labor force, in turn, refers to people who want to and are qualified to work. It typically comprises individuals at least 16 years of age who are currently employed or have been searching for employment in the last four weeks.
You are employed if you have a full-time or part-time job, are self-employed or are gainfully employed in a family business. In addition, you are still employed even if you are on sick, holiday, or maternity leave.
Other members of the labor force who do not fall into the mentioned categories are considered part of the unemployment rate of a state or a country in general.
This is where it gets more complicated.
Since the unemployment rate is a percentage of the total labor force, what do you make of the case of Carrie?
Carrie was formerly employed in one of the big tech companies based in an emerging tech hub in North Carolina. Unfortunately, she was laid off in the middle of last year and immediately started looking for another job. She has engaged in various workforce services, responded to job posts over the internet and other online services, and attended job fairs in search of a new employer.
Unfortunately, she has grown frustrated and discouraged in looking for a new job because none of her active job offers seem to match what Carrie has been looking for.
Now, in measuring unemployment, it can be seen here that though Carrie is part of North Carolina’s unemployment rate, it does not necessarily mean that she is unemployed because there are simply no available jobs for her. Carrie is unemployed because her work search requirement does not match the available jobs. Any potential employer still needs to meet their priorities and preferences.
There is a real insight when one looks at Carrie’s situation. She is a typical representation of a lingering era in the labor market. This is why despite the layoffs and hiring freezes made by big tech companies, there are still two job vacancies per unemployed individual.
The truth is that many eligible workers would remain unemployed for a significant amount of time until they find an employer willing to give them what they want.
This candidate-driven labor market is something that every employer, hiring manager, and job seeker should genuinely understand so that they know how to respond to the demands and eccentricities of today’s ever-changing labor market.
Unemployment in the Midst of a Talent Shortage: What Gives?
The economic security absent when one is unemployed cannot be remedied by temporary solutions such as unemployment compensation and benefits, insurance, or any form of unemployment assistance. While these may be convenient at the onset, you need to understand that these are just palliatives to a problem that should have a long-term solution.
One perennial issue worth looking into is the unprecedented job mismatch between the sheer number of open jobs waiting to be filled and the qualifications of people looking to fill these jobs.
This large gap has trumpeted a loud need to hire workers based on skills and not just college degrees. Moreover, many employers and hiring managers have started to hire based on skills, qualifications, and interests instead of just looking at academic credentials and years of work experience.
The shift to skills-based hiring also casts light on tech workers, especially in the United States, who went with the Great Resignation hoping to alter their career trajectory completely. These workers possess transferable skills that would be useful for any employer considering hiring them for a new role.
Moreover, it is also worth noting that today’s world of work is characterized by two all-encompassing keywords – remote and digital. With particular emphasis again on the United States, this remote and digital world makes good use of workers with a high propensity for learning and upskilling.
Gone are the days when universities and colleges used to be the gatekeepers of knowledge and skill. Today, your work search will only be productive if you can show what you can do and not just what you have already done.
Most importantly, a highly skilled but currently unemployed worker may only see the light of day when hiring managers become willing to reorient their hiring strategies to make way for this emerging era of skills-based hiring. This is one of the most crucial ways of ending unemployment, mitigating the skills gaps, and achieving lasting employment security.
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