The shortage of labour is detrimental to companies’ ability to develop their business and is keeping the economy down, writes dibusiness.dk.
The problem has been on the rise for some years and is now so extensive that more than every third company - 36 per cent - has unsuccessfully tried to recruit new employees within the past year, shows a survey of 3,335 companies conducted by the Confederation of Danish Industry (DI).
Deputy director and head of DI’s labour market policy department, Steen Nielsen, believes that the survey is cause for alarm.
“This is a major impediment to the operation and development of Danish companies. Companies risk having to say no to tasks when they are unable to get the employees they need,” Nielsen said.
“It also has the socioeconomic consequence of Denmark missing out on earnings and prosperity. The shortage of labour has a direct and negative effect on the economy,” he added.
Companies themselves also highlight that the lack of employees has major consequences.
In another survey of 464 of DI’s member companies, approximately one third replies that they have had to postpone projects due to unsuccessful attempts to recruit. And around one fourth have lost sales or orders because they have not had employees available.
“The bottom line is directly affected when there is a shortage of workers - and in the slightly longer term, companies risk losing important customers and markets if they are unable to meet customer needs,” said Nielsen.
A number of companies, however, have thus far managed to survive the lack of employees by having other employees work overtime. Two out of three companies in DI’s survey replied that tasks have been handled via overtime work, while a smaller number of companies have chosen to outsource the task to other companies at home and abroad.
Professor of Economics at Copenhagen Business School Niels Westergaard-Nielsen is not surprised that Denmark is in a situation where companies are experiencing a shortage of labour.
“We have shifted from an economic downturn, in which companies could simply hire from among the unemployed, to a situation in which companies who wish to hire must bring in their employees from other positions, meaning there is more competition for labour,” he said, adding that the problem also affects the research community.
“Previously, we received tons of applications for our student jobs, but now there are much fewer.”
Westergaard-Nielsen expects that the shortage of labour can create a pressure for increased wages when companies begin to vie for employees.
“The labour shortage is a problem that must be taken seriously. We need job market reforms now if we are to avoid a situation in the near future in which the shortage is so widespread that we experience wage pressure and poorer growth,” Steen Nielsen said.
It is likely that this competition will become even more intense in coming months. DI’s recently published forecast for the Danish economy predicts that employment will increase by 36,000 in 2017 and a further 25,000 in 2018. Hence, at the end of 2018, the country is in line for the highest private employment rate for salaried employees ever.
Nielsen said that he believes that there is a need for older employees to stay longer in the labour market and to make sure that access to foreign labour remains good.
“The reason why the problems haven’t yet become too much for companies to handle is that more and more employees stay on the labour market for longer and that companies have had access to foreign labour. And these are also the areas in which we must take action in coming years,” he says.
Venstre’s spokesman for business policy Torsten Schack Pedersen said that, for him, DI’s survey underlines that efforts must be made to overcome the shortage of labour.
“We are focusing heavily on how we can create a larger labour supply,” he said.
Much work remains to be done in relation to integrating refugees in the labour market, and that work is required to ensure that companies have good opportunities to recruit foreign labour, according to Pedersen.
Employment spokesperson for the Social Democrats, Leif Lahn Jensen, believes that the solution lies with job centres.
“They have to be even better at getting out to the companies and finding out what is needed. Then, they must find the profile to match. It’s not a question of finding more hands. The hands are there. What we have to ensure is that they’re skilled enough,” Jensen said.