Skill equilibrium and skill shortage
A widely discussed issue at present is on the unavailability of skilled personnel. Most industries suffer from shortage of skilled labour.
Construction, garments and factories within the free trade zones are said to be mostly affected from this skill shortage. Labour market statistics show that the youth unemployment rate is around 20 percent.
Still, youth are not attracted to these jobs and the reason often quoted is their attitude. At present, there is a dialogue on getting down workers from foreign countries, our neighbouring countries in particular. Certain companies have already commenced employing imported labour.
The skill shortage is also referred as skill gap, which is the difference between demand for skilled workers and the supply of skilled persons. This has a quality dimension as well.
Industry demands skills for employment and the vocational training providers are mandated to train and supply employment-oriented skilled workers. Vocational training institutes are often criticized for failing to produce skilled craftsmen to meet the skill needs of the industry.
Numerous socio-economic factors influence the creation of skill shortage and these factors are interrelated and their analyses are very complicated.
As explained in the website: https://warwick.ac.uk/fac/soc/ier/publications/2003/wilson_et_al_2003_low_skills.pdf, the Warwick University has introduced a concept called ‘Skill Equilibrium’ to give a simple explanation to skill shortage.
Skill equilibrium has low and high sides and their dimensions are listed in Table 1.
When these dimensions of equilibrium are not maintained, skill shortages and surpluses will be created as shown in Diagram 1.
In the 1970s and 80s, there were no significant skill shortages in any industry sector. During this period, it was a case of low skill equilibrium. Since then, industries have expanded. New technologies have been introduced.
Industries demand higher skill levels as well as higher numbers of skilled people to be competitive. But the other dimension of equilibrium has not been duly addressed. The equilibrium has not been maintained where the supply has not been increased to match with the demand.
Even youth are not attracted to follow vocational training in areas where there is no equilibrium, which means where salaries and working conditions are not matching with their skill levels and expectations.
There is a similar article published with the title ‘There’s no such thing as a skill gap’, in the website https://www.ge.com/ reports/theres-no-thing-skills-gap/ and it has the following sentence: “When employers say there’s a skill gap, what they’re often really saying is that they can’t find workers willing to work for the pay they’re willing to pay.”
These concepts are applicable to individual companies as well. Even though industries in general experience skill shortages, some companies do not face that problem because they maintain all dimensions of skill equilibrium.