Tips for Managing the Labour Shortage The labour shortages are spread across a variety of sectors, occupations, and skill levels — and are expected to increase.

As a small-business owner, you've no doubt heard about the ongoing labour shortage across Europe, which is largely blamed on an ageing population. The European Commission recently issued its 2023 Employment and Social Developments in Europe Report, revealing that while the EU economy has grown in the past year and unemployment rates are at an all-time low, women and persons with disabilities are still represented poorly within the labour market, youth unemployment is still at problematic rates, and there is a widespread labour shortage overall.

Here's what you can do to combat this within your own business.

Understand the issue.

The labour shortages are spread across a variety of sectors, occupations, and skill levels — and are expected to increase. The reasons are varied, but the ageing population and the creation of new job types are among them.

In 2022, sectors such as construction, healthcare, STEM, and information and communications technology were most affected, so if your business lies within those, you should pay special attention.

Invest in training.

One of the Commission's recommendations involves ramping up training efforts. Invest in trainings for your workers that will give them a competitive edge as technology and job requirements evolve. Skills development is a career-long process that benefits individual employees and companies overall.

When budgeting for your business, allocate funding to skills training. The EU budget and NextGenerationEU provide €64.8 billion for skills measures through the Recovery and Resilience Facility, and the European Social Fund Plus. Look into the EU's Pact for Skills, which partners industry professionals and training providers and has thus far, according to the Commission, benefitted 2 million individuals.

Broaden hiring and HR practices.

Women, persons with disabilities, youth, older people, migrants, and those with lower amounts of education fare poorly when it comes to representation in the market, but could be a key to tackling labour shortages overall, says the Commission. Broaden your hiring practices by considering, for instance, whether a certain job description could be retooled somewhat to make it accessible to someone with less formal education. Further, review the Commission's Youth Employment Support package and consider job types within your organisation which could be carried out by younger workers.

Further, be mindful of work-life balance and the expected standards for paternity, parental, and carers' leave, as well as employees' allocations for holidays. Providing adequate benefits, such as the ability to spend time with a new child or take sick leave, removes some of the structural barriers workers face when entering the market. A temporary leave by a satisfied employee is preferable to not filling a role at all.

Adjust wages.

Although it may seem counterproductive to budget more for wages during a time when you have fewer workers and resources are stretched thin, this will be a key to reducing the gap within your company. The Commission recommends improving working conditions, pay, and financial incentives for work to attract and retain talent. University of Essex researcher Wouter Zwysen has suggested that we are facing "not so much a shortage of skills as a shortage of pay."

Talented hard workers will simply be easier to attract if they are paid their worth, labour shortage or no.