Imagine the following scenario:
You work with recruitment and want to hire people. You know there’s globally 200 million unemployed people and only in Sweden you also know that approx. 30% of those who already have a job could imagine changing it if the right joboffer appeared. In Sweden, there are also approx. 400,000 unemployed people and 1 million people who are actively looking for new jobs. But unfortunately you will not find anyone that fits…
Difficulties in recruiting despite a high supply of labor is an example of skills mismatch.
Skills mismatch is manifested in several ways; as a recruiter you can’t find a suitable candidate, and as a candidate you take a job where you are formally overqualified or have skills that do not fall under the category “formal qualifications” – i.e. you have skills but cannot formally describe them. When supply and demand exist but do not meet, it is a direct matching problem.
The EU report Insights into skills shortages and skill missmatch reviews data for 49,000 people from 28 EU countries to try to answer the question: Why do we have skills missmatch when both skills (supply) and jobs (demand) are available? According to the report, one of the main reasons is the difficulty in searching for candidates on the right grounds. Formal qualifications such as level of education reduce the pool of otherwise prospectively relevant candidates to a minimum, when we should focus on potential. There is evidence of this when, among other things, formally underqualified employees are asked if they feel qualified enough for the job they have – where the majority believe that they have learned their skills at work.
So they can do the job well, but if they had had to apply for the same job again, they would probably have been screened out early. Focus on formal qualifications also leads to overqualification, where 29% believe that they have had to take jobs that are below their level of education without the opportunity to use their knowledge.
Self-correcting labor market?
The labor market itself is not self-correcting where, for example, the level of education that is not used in one of your first jobs will pay off in the next. Of those who are overqualified, as many as 24-36% claim that they have not been able to use the job as a springboard to the next. I.e. many get stuck without the opportunity to move on.
The focus on formal qualifications, such as the level of education, leads to those without the right level not getting the chance and the others who get the chance feeling overqualified. It will be a vicious spiral where higher education is not high enough and those who actually get the job become dissatisfied and earn less than they could – given that the matching had been correct. The establishment age in Sweden for university graduates is 30.5 years, which is higher than both Denmark and Norway, which partly shows the excessive focus on formal qualifications.
Minimized candidate pool!
If, for example, you are to employ a salesman in B2B, the following could be part of a standard requirements profile: Completed higher education in economics or similar areas and work experience at least 1 year from the private labor market. Let’s say that these are actually requirements and the candidates who meet the criteria go on to selection. We have then made the following restriction in our candidate pool (before the remaining part of the selection):
In the example, we reduce our theoretical candidate pool by 98.4%. If we then add additional requirements, the number of possible candidates will obviously be even fewer.
The war for talent...
Globally, recruiters are finding it harder and harder to find relevant candidates. In 2011, 17% of companies in Sweden reported it as problematic to find candidates, in 2016 this figure had risen to 35% and in 2018 to 49%. It is not in itself completely inconceivable that the reason why it is becoming increasingly difficult to find candidates is precisely because the excessive focus on formal criteria.
The EU report believes that if we were to focus more on potential instead of accumulated work experience and level of education, large parts of this so-called missmatch resolved. The Global Skills Gap is thus a matching problem, an element 22 where the focus on formal qualifications contributes to the narrow candidate pool that you are looking for, which contributes to the difficulty of finding candidates.
JobAgent’s vision is to make potential available. First out is therefore a sharing service where passive and active candidates should be able to make their data searchable and describe their potential in a simple way. We therefore want to change the matching in the labor market by letting easy-to-understand AI do the work for you based on relevant and divisible data.