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Müşerref Küçükbayrak

Müşerref Küçükbayrak is an Economist at the CBRT.

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The existence of vacant jobs is an indicator of an important growth potential for economies. However, challenges in filling vacancies may restrain this potential.  In Turkey, one in five firms with more than two employees indicates they have difficulty filling vacant jobs (Turkish Employment Agency, 2017). This blog post examines characteristics of these firms by using the Labor Market Surveys of the Turkish Employment Agency.

According to the 2018 Talent Shortage Survey, 45% of firms worldwide indicate having difficulty finding the talent they need. In other words, Turkey is not alone with this problem. On the other hand, there are significant discrepancies among countries. While this ratio is above 80% in Japan and Romania, it is below 20% in China, Ireland and the UK. In Turkey, two thirds of the firms that took part in the Survey indicate difficulty in hiring (ManPowerGroup, 2018).

Let us look at Labor Market Surveys for an in-depth insight into the firms that have difficulty hiring. Qualifications required to fill open jobs differ across sectors, as one would expect. Looking at the number of hard-to-fill vacancies for firms covered by the Labor Market Surveys1, the manufacturing sector seems to be the one that reports the most difficulty hiring, followed by the wholesale and retail trade, construction, and accommodation and food services sectors. Besides, we can say that firms involved in professional and scientific activities have more difficulty hiring compared to the country average (Table 1).

Table 2 shows hard-to-fill jobs by occupation. A countrywide analysis reveals that firms face difficulty filling the following occupational roles:

i) craft and related trades workers
ii) plant and machine operators
iii) technicians and associate professionals

It is noteworthy that all the first five sectors that have difficulty hiring find it hard to recruit talents in craft and related trades workers (Table 2). Why, then, is it hard for firms to find the workers they need for these occupations?

Two factors are expected to be influential in firms’ difficulty in hiring:

i) Labor demand outnumbering the supply, and
ii) Job-unemployed mismatch.

When labor supply exceeds the demand, labor shortage occurs. On the other hand, labor surplus existing in the hard-to-fill jobs signals that jobs and the unemployed do not match effectively.

 

Unemployment rates in hard-to-fill jobs suggest that despite the market demand, a significant portion of the holders of these occupations is actively searching for a job (Chart 1). Besides, it is noteworthy that approximately 30% of the unemployed are looking for a job in occupations that are difficult to fill.2 Table 3 shows the reasons for difficulty in finding jobs by occupations. Firms have declared that, above all, they could not find the labor with required skills/qualifications. Lack of sufficient professional experience is also another important factor in failing to fill vacancies (Table 3). All these findings imply that matching-related issues, rather than insufficient supply, matter in filling jobs.

 

Unfilled vacancies do not only cause production losses but may also be a significant obstacle to lowering unemployment. The reason why it is hard for firms to fill them might be the misalignment of skills held by labor with the skills demanded on the market, rather than the inadequate labor supply. Therefore, it is essential to train the labor force with the competencies required in the market through vocational training programs. This can be achieved through policies such as supporting lifelong learning and skill development programs, promoting active labor market programs and strengthening the interaction between vocational training institutions and firms. Productivity growth may further be spurred by strengthened commitment to the recent steps taken in this regard, such as opening thematic vocational and technical training institutions, increasing the private sector share in provision of training services, and allocating more resources to active labor market programs, primarily on-the-job trainings.

[1] Employment in agriculture, public administration, social security, international institutions and organizations and households excluded.

[2] The HLFS and author’s calculation for 2015-2017.

References:

ILO (2012), International Standard Classification of Occupations: Structure, Group Definitions and Correspondence Tables, Geneva.

Turkish Employment Agency (2017), 2017 Labor Force Market Research Turkey Report (in Turkish), Ankara.

ManPowerGroup (2018) Solving the Talent Shortage: Build, Buy, Borrow and Bridge, USA.

OECD (2018), Skills for Jobs, Paris. 

OECD, EU, UNESCO-UIS (2015), ISCED 2011 Operational Manual Guidelines for Classifying International Education Programmes and Related Qualifications

Müşerref Küçükbayrak

Müşerref Küçükbayrak is an Economist at the CBRT.

Note To Editor
For views, suggestions
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* The views expressed here are those of the authors. They do not necessarily reflect the official views of the Central Bank of the Republic of Turkey.