Too Much Talent, Too Few Jobs
Do you know people with bachelor’s degrees or higher who drive Ubers, work at lower-level jobs or struggle to find good jobs?
If so, you are not alone.
Every CEO and recruiter claims a talent shortage, yet we have the most highly educated talent supply ever.
In reality, companies want only those who already have specific skills in narrow areas and often only those who attended certain schools.
This imbalance is causing a challenge for governments, organizations, and particularly recruiters who find themselves trying to find people who fit narrow definitions or filter the huge numbers of educated applicants who apply for fewer jobs with lower requirements and lower salaries.
The Scope of the Problem
The imbalance is huge and growing. According to the Organization for Economic Co-operation and Development (OECD), the percentage of adults with tertiary education (more than high school) has steadily increased over the past decades. In 2020, an average of 39% of 25–34-year-olds across OECD countries had a tertiary degree, up from 35% in 2010.
However, this increase in educational attainment hasn’t been matched by a corresponding increase in high-skill job opportunities. A study by the Federal Reserve Bank of New York found that in 2020, about 41% of recent college graduates were underemployed, working in jobs that typically do not require a college degree.
Causes of the Imbalance
Several factors contribute to this growing disparity between the supply of highly educated workers and the demand for their skills:
- Rapid Expansion of Higher Education: The number of people attending tertiary educational institutions has increased dramatically. UNESCO data shows that enrollment in tertiary education worldwide increased from 19% in 2000 to 38% in 2018. People are aware of this, and there has been a pushback on acquiring tertiary education because it does not lead to a good job or higher pay. This is why many colleges and universities have closed or laid off professors.
- Skill Mismatches: Despite the increase in education levels, there is a mismatch between the skills taught in school and those required by the job market. A 2020 McKinsey Global Survey found that 87% of executives were experiencing skill gaps in the workforce or expected them within a few years. Firms are unwilling to spend the time or money to train people who do not have the required skills. This has led to competition between firms for fewer already skilled workers.
- Technological Disruption: Rapid technological advancements are changing the nature of work faster than education systems can adapt. The World Economic Forum’s Future of Jobs Report 2020 estimates that by 2025, 85 million jobs may be displaced by a shift in the division of labor between humans and machines. Artificial intelligence is augmenting many jobs, leading to fewer people doing more. In an increasing number of professions, AI is taking over completely.
- Globalization: The ability to outsource work globally has increased competition for high-skill jobs in developed economies. This allows firms to hire cheaper labor than they can at home. Many firms like Tesla and Oracle have moved their operations to areas with lower-wage employees.
Implications for Recruiters
This oversupply of talent presents both challenges and opportunities for recruiters:
- Increased Competition for Top Positions: With fewer people with the narrow skill sets firms want, recruiters face two dilemmas: learning how to screen out the vast number of applicants for each position who do not meet the requirements and finding and competing for the few who do.
- Rise of Overqualification: Recruiters increasingly face the challenge of candidates being overqualified for lower-level positions, which can lead to job dissatisfaction and higher turnover rates. Credential inflation is real and means lower salaries for people with credentials that a few years ago brought a premium.
- Emphasis on Soft Skills: With an abundance of technical skills in the market, soft skills like adaptability, creativity, and emotional intelligence become key differentiators.
Case Studies and Data
The impact of this talent oversupply varies across different regions and industries. For instance:
- In China, the number of university graduates has nearly doubled in the past decade, reaching 8.74 million in 2020. However, a survey by recruitment platform Zhaopin found that only 52.1% of 2020 graduates had found jobs as of September 2020, down from 75.7% the previous year.
- The situation varies by country in Europe. In Spain, for example, 37.6% of young people (25-34) had completed tertiary education as of 2019, yet the youth unemployment rate was 30.5%.
Strategies for Addressing the Imbalance
To address this growing imbalance, various stakeholders need to take action:
- Educational Institutions:
- Align curricula more closely with industry needs
- Emphasize practical skills and internships
- Provide better career guidance and preparation
- Governments:
- Implement policies to stimulate job creation in high-skill sectors
- Invest in reskilling and upskilling programs
- Encourage entrepreneurship and innovation
- Employers:
- Invest in training and development programs
- Create clear career progression pathways
- Consider alternative work arrangements like job sharing or flexible hours
- Recruiters:
- Develop more sophisticated matching algorithms to identify the best fit
- Focus on potential and adaptability rather than just current skills
- Work with employers to create roles that fully utilize candidates’ skills
The Future Outlook
While the current situation presents challenges, it also offers opportunities for innovation in the job market. The gig economy, remote work, and the rise of entrepreneurship are creating new avenues for highly educated workers to utilize their talents.
A report by Upwork predicts that by 2027, the majority of the U.S. workforce will be freelancers. This shift could provide more opportunities for highly educated workers to leverage their skills across multiple projects or clients.
Moreover, as industries continue to evolve, new job categories are emerging. The World Economic Forum estimates that 97 million new roles may emerge by 2025 across the care economy, green economy, and new technology-driven sectors.
Conclusion
The oversupply of highly educated and talented workers presents a complex challenge for societies and economies, particularly for recruiters.
We need greater collaboration between educational institutions, governments, employers, and recruiters. By bridging the gap between education and employment, we can create a more dynamic and equitable job market that fully leverages the potential of our highly educated workforce.
The role of recruiters in this evolving landscape is more crucial than ever. We must match candidates to current job openings, play a strategic role in influencing organizations to increase training and development opportunities for more educated people and work with hiring managers to redefine jobs and their requirements.
