Major economies are facing a labor crunch and this means corporations need to adjust their automation strategies in order to grow their businesses.
Labor Shortage – A Worldwide Problem
The U.S. Department of Labor states that the national unemployment rate has dropped to 4.1% over the past two years. Globally, unemployment rates are 7.1%, with Singapore at 2.2%, Japan at 2.8%, China at 4%, and the United Kingdom at 4.2%. Low unemployment generally benefits countries, but it also causes labor shortages. But there is a silver lining for both sides of the economic equation – increased need for automation to supplement unavailable human workers, and increased wages for workers of all skill levels.
Is There Really a Labor Shortage?
In a recent Forbes article, Steve Banker of ARC Advisory Group discusses a conversation with a North American logistics provider. A few years ago, they had 10 applicants per warehouse job; now, they have just one. They even hire ex-convicts despite concerns about theft due to the scarcity of workers.
The New York Times headline ““Lack of Workers, Not Jobs, Weighs on the Nation’s Economy,” confirms a labor shortage. Small businesses across various industries struggle to find workers, limiting their growth potential.
Mark Zandi, chief economist at Moody’s Analytics, agrees that a labor shortage, not unemployment, will restrain economic growth in the coming decades. Business associations have reported increasing difficulty in hiring qualified workers due to various factors.
It’s Across Healthcare, Hospitality and all Sectors
Business associations for all sectors have said it’s increasingly difficult to find and hire qualified workers. The Conference Board, a leading global economic research organization, released a “Help Wanted” report in 2017 which documents emerging labor shortages in a wide range of industries across many regions of the country. The report predicts an astonishing 15-year labor shortage.
Gad Levanon, The Conference Board’s chief economist for North America, said the situation results from a confluence of demographic and economic factors, including:
- Retiring Baby Boomers, especially in the skilled trades, manufacturing and health care.
- Falling labor productivity
- Business conditions, such as slow corporate revenue growth, high labor costs and a rising quits rate
The labor shortage isn’t limited to the U.S.; it’s a global issue. Singapore, Japan, China, and Europe all face similar challenges, impacting their economies.
Higher Wages and Increased Automation Are Silver Linings
Automation and higher wages are the silver linings of this labor shortage. When labor is scarce, companies turn to automation to fill the gaps and increase productivity. This trend is evident globally, from large firms to mid-size enterprises.
Organizations who Adapt Will Thrive
Investing in automation now is crucial for businesses facing the labor shortage. It improves efficiency, reduces costs, and ensures competitiveness in a challenging market. Wages are also rising as companies compete for skilled workers. Higher pay is becoming necessary to attract and retain talent, benefiting workers across various sectors.
The current economic climate favors investments in automation solutions that enhance operational efficiency and reduce dependency on scarce labor resources.
