The Worldwide Labour Shortage is Getting Serious

The Labour Shortage is one of the main vulnerabilities of the supply chains right now. How will the workforce of the future look like?

The workforce shortages affecting the British manufacturing, construction, retail or hospitality industries are still here. In fact, they could last for up to two years, according to CBI.

At first, it was the drivers’ shortage (and it still is). But the skilled E.U. workers are missed in many other areas of the supply chains. Forklift drivers, fruit and flower pickers, butchers, warehouse operatives, cleaners, chefs, scaffolders, meat process operatives, carpenters, welders, electricians, factory workers on the assembly line – all these are very sought-after positions in the U.K. at the moment. Except that the ones who are desperately searching are now the employers.

The British Government’s job retention scheme would bring no quick fix, with officials allegedly telling businesses to employ British workers instead of waiting on E.U. workers to fill the same positions again. 

There is a strange atmosphere of expectation in the air. Businesses are looking for quick, short-term fixes and waiting on the Government to provide the aid for the long-term.

The Usual Suspects for the Actual Labour Shortage

The scapegoat is a deadly mixture of Brexit and a worldwide pandemic. The effects are too many to count. Ironically, vacancies are higher in almost any sector than before the pandemic, and the unemployment rate fringes on historic lows.

Some restaurants in Britain need to close between lunchtime and the evening. The restaurant suppliers are also taking longer to deliver because there’s a drivers’ shortage in town.

The CBI also reports on manufacturers delaying work and orders because they lack the necessary skilled workforce and can’t estimate when they can hire qualified workers in the future.

These struggles in the manufacturing, hospitality, or construction sectors will butterfly enormous ripples down the supply chain and into the consumers’ pockets.

It is Not Only in Britain

Manufacturers around the world are dealing with a Domino of shortages. From cars to furniture or computers, the logistics crisis is smouldering and spreading.

One furniture manufacturer cannot continue production due to a shortage of wood. In the other part of the world, a wood supplier is grappling with a shortage of drivers to deliver the wood. Nevertheless, the consumers’ demands are growing as the economy is allegedly reopening after Covid.

No one can predict when the expected demand-supply flows will go back to normal. Delivery and shipping costs have skyrocketed. Transportation costs between China and Europe are now nearly seven times higher than in the same period last year.

In the United States, the delivery times have doubled. “A screw or a small component from Asia can take three months” to arrive now.

In Germany, auto production is 30% below the “pre-Covid era”.

It is a perfect set of problems, one might say.

The Supply Chains’ Main Vulnerability

As we see it, the supply chains’ main vulnerability at the moment is the workforce shortage. This further reflects in inflated prices, lack of visibility in the supply chain, lack of predictability and resilience. Businesses simply don’t know when they can find the people they need for proper functioning. And this is a burdensome bottleneck for manufacturers of finished goods.

No one loves a supply bottleneck, especially when no one can trace it back to its source because of poor visibility throughout the supply chain.

According to a Deloitte report, U.S. manufacturers need to fill 4 million jobs by 2030, to avoid a negative economic impact of $1 trillion.

Because, yes, not filling the job openings can massively impact manufacturers:

• production levels cannot be maintained to customer demand
•  slow response to new market opportunities
•  slow product development and innovation rates
•   harder to implement new technologies

In short, not having the right people can impede the growth of your manufacturing company.

Managing the Different Talent Pipelines

Production-related jobs such as technicians, electricians, machinists, and other trade-related roles usually require a local talent pipeline. Frankly, these people are not paid well enough to justify reallocating. So, if you open a new manufacturing point in another country, you cannot take your welders with you.

So, the first challenge is to find the right local people. The second challenge is to train the locals, speak their own language, and help them become part of your company.

Even some of the management jobs need to be filled with local people. These are the people that are going to manage your manufacturing processes and train the production-related workforce. So, another challenge here.

And the third type of employees/collaborators you need to recruit from the local pipeline is represented by “the representatives”, the “eyes-on-sight agents”. These people will need to report back to you on all the local operations and provide the required level of visibility you need to build resilience in your supply chain.

The future of the supply chain workforce is quite fuzzy at the moment. It’s true; we’re trying to navigate a pandemic, and other geopolitcal severe changes, such as Brexit. Attracting, retaining and upskilling the perfect workforce seems highly unlikely at the moment.

Maybe the governments need to step in, and companies need to tackle their diversity policies a bit better; go local, Glocal. Ask us how.