Hays Skill Index says global unemployment will fall, but salaries still go nowhere
Worldwide unemployment rates are falling, but, contrary to economists’ predictions, wages continue to stagnate.
This is what emerges from the eighth edition of the Hays Global Skills Index, the annual report published by Hays in collaboration with Oxford Economics, which examines labor markets in 34 economies worldwide, analyzing macro trends all over the world.
The research shows that despite the growing geopolitical uncertainty in global markets, the Overall Index Score (result of the aggregation of seven analytical parameters applied to the markets in question) remained unchanged at 5.4 compared to 2018. The labor market for highly specialized professionals remains basically unchanged compared to last year, but wage stagnation, underemployment and the skills gap in different areas all contribute to variations in the regional indices.
The skills gap indicator rose to 6.7 points this year (6.6 in 2018), the highest value since the publication of the first edition of the Global Skills Index in 2012. This negative trend continues to generate wage gaps between highly skilled and low-skilled workers, especially in the Asia Pacific region. Moreover, the skills most required by companies continue to be scarce, with a consequent decline in labor market participation, especially in North America, and growing under-employment.
The reason? For one thing, rapid technological development can be blamed as one of the main factors contributing to the misalignment of skills and underemployment, as employers increasingly struggle to find suitably qualified professionals. The report stresses that training and updating of the workforce are more fundamental than ever to face the challenges of automation and outsourcing.
The technological evolution also contributes to the widespread stagnation of wages even in the most advanced economies of the world. Research by the International Monetary Fund attributes 50 percent of the decline in participation in the labor market to technological developments. The current deadlock in wages shows that high levels of employment are no longer linked to the increase in wages, but derive from structural changes in the labor market. The measures that limit the mobility of workers tend to reduce competitiveness and, in the long term, are harmful for companies.
Wages and employment remain influenced by the gender gap: In professions dominated by women, in fact, wages are often lower and more subject to the forces of globalization and the phenomenon of automation. On the other hand, the phenomenon of professional segregation can limit women’s opportunities to exploit the benefits of globalization, especially in developing economies.