why is there a labor shortage in manufacturing?

With economies starting to recover and consumer spending inching closer to pre-pandemic levels, manufacturing companies around the world are taking steps to return to full production levels. However, the current supply chain disruptions as well as the global labor shortage are major factors hindering this recovery.

The reality is that the manufacturing industry was already facing a massive labor shortage well before the pandemic hit. In fact, a study from 2018 predicted that more than 8 million global manufacturing  jobs could go unfilled by 2030 . The pandemic did, however, make it more challenging for companies to attract and retain the talent they need to meet production demands.

To overcome this immense challenge, it’s important to identify the causes behind this labor shortage. Here’s a look at some of the factors driving the labor shortage in manufacturing.

why is there a labor shortage in manufacturing?

There is no easy answer when it comes to explaining why there is a labor shortage in the manufacturing sector. Instead, it’s a combination of issues, some of which were brought on by the pandemic and some that had been plaguing the industry for years.

Here’s a look at some potential reasons for today’s labor shortage in manufacturing:

1.    side effects of COVID-19

It would be impossible to discuss today’s ongoing labor shortage without understanding the role COVID-19 plays. Workers across industries faced unprecedented challenges that severely shifted how these workers view their role in the workforce. While the pandemic caused a lot of different side effects that may be impacting the current shortage of manufacturing workers, here’s a list of the top challenges.

• lack of stability

Global supply chain disruptions have significantly impacted production at manufacturing plants around the world. For example, supply chain disruptions involving semiconductors have greatly impacted the auto and electronics industries. Studies show that the semiconductor shortage forced Ford to produce 672,000 fewer light duty vehicles globally in Q1 2021 alone. Additionally, the European Automobile Manufacturer’s Association reported that this shortage would result in the production of 500,000 fewer vehicles in 2021.

Naturally, a reduction in production resulted in the demand for fewer workers. This factor left some in the manufacturing industry worrying about the stability of their jobs if supply chain disruptions continue to hinder production.

Unfortunately, the Russia-Ukraine War is likely to only intensify these issues. First, manufacturers are seeing a spike in both gas prices and cost of supplies. Secondly, an ongoing war is likely to increase supply-chain disruptions. The combination of these issues may push manufacturers to make tough spending decisions that could impact worker’s hours and salaries.

• mental health support

During the pandemic, workers in the manufacturing industries faced a wide range of challenges. Some faced frequent shutdowns and temporary layoffs, while others found themselves working long hours due to staffing shortages and consumer demands. At home, workers also faced unprecedented challenges, including school closings and caring for elderly loved ones. These issues are so widespread that one study showed an 86% spike in burnout among workers in the manufacturing industry during 2020.

This stress at both home and work has increased the level of mental health issues, such as anxiety and depression, among workers around the world. In some cases, these mental health issues are preventing workers from returning to the workplace. For example, 34% of manufacturing companies in the U.K. report seeing an employee leave because their mental wellbeing wasn’t cared for.

Employers can take great steps to help these workers overcome this challenge by providing additional mental health supportive services, including wellness checkups, online counseling services, and more liberal leave policies.

• workplace safety concerns

COVID-19 has brought a new level of safety concerns to the workplace. Even though many manufacturing plants didn’t fully close, or even close at all, during the pandemic and others have been open for a while now, it doesn’t mean that workers still don’t have concerns about safety in the workplace. The onset of several variants over the last two years has only helped to fuel these concerns.

Typically, manufacturing jobs require employees to work together inside, in close quarters. While physical distancing may not be possible once the plant is back to full production levels, employers can still ensure there are plenty of safety measures in place, such as handwashing stations, filtration systems and quarantines.

Ensuring that all governments safety protocols and health professional recommendations are in place may be enough to entice some of these employees back to the workforce. However, don’t make the mistake of putting these safety measures in place, yet fail to effectively communicate these protocols with the workers. Without strong communication, not only is it likely that these protocols won’t be followed, but you also risk losing concerned workers who are unsure of the company’s stance on safety.

• desire for flexibility

A major challenge facing the manufacturing industry is its limited ability to offer remote work options. The pandemic has taught many workers the importance of maintaining a healthy work-life balance. In fact, according to our latest Randstad Employer Brand Research report, employees rank work-life balance as the second leading motivator for changing jobs.

While remote work may not be possible for many manufacturers, there are still things your company can do to provide more flexibility. For example, additional paid time off may give employees the extra days they need to deal with personal issues. Using other strategies, such as shift swapping, voluntary vs. mandatory overtime, compressed schedules and part-time work options, can help to expand your talent pool and improve hiring results.

2.    low wages

The ongoing labor shortage has also sparked a candidate-driven job market. Many of today’s workers are demanding higher wages. Afterall, salary is often the strongest motivator for changing jobs. In fact, according to our employer brand research, 62% of workers around the world rank salaries as the number one factor to join or leave a company. 

The demand for higher wages together with the growing inflation concerns is pushing some manufacturers to increase wages. According to the National Association of Manufacturers, US-based manufacturers plan to increase wages by 3.5% in 2022.

It’s important for manufacturers to reassess their salary offerings to determine how they compare with industry standards. If necessary, your company may need to adjust its salary offerings to meet this demand.

3.    negative perception of industry

The manufacturing industry has had an image problem well before the global pandemic hit. In fact, in the United States, while the vast majority believe manufacturing is important, one in three parents admitted that they would not encourage their children to pursue a manufacturing job. Why such a negative perception? Well, there are a few reasons.

First, many people believe manufacturing jobs are technologically undeveloped and require hard work, long hours with low wages. While some of these beliefs may be true, manufacturing companies are failing to highlight the value of providing quality goods to consumers. Today’s workers, especially the younger generations, want to feel like their work has meaning. Manufacturers must be better at highlighting the benefits their products bring to society as well as the dynamic and tech-driven environment of the modern plant floor.

There’s also a misconception that career growth within the manufacturing industry is basically non-existent. If manufacturers want to attract younger generations, they must highlight their employee training and development programs so current and prospective workers understand how they can grow with the company. For example, Schneider Electric created the Schneider Electric University to train employees at various levels within the company. The company also maintains Energy University, which is a free online platform where employees can choose from more than 200 knowledge-based courses.

4.    lack of diversity

Lack of diversity in the workforce has plagued the manufacturing industry for years, especially regarding gender equality. While the industry has made great strides to improve diversity in the workplace, studies show that globally women make up less than 30% of the entire manufacturing workforce . More efforts must be made to entice women to join the industry. For example, manufacturers need to assess their job offerings and adjust their workplaces so they’re able to build a diverse workforce.

Some organizations have been taking steps to improve the image of the manufacturing industry. For example, the National Association of Manufacturers in the United States has implemented a $14 million marketing campaign, referred to as Creators Wanted, in an attempt to strengthen diversity in the workplace and attract more prospective candidates.

5.    aging workers

While the aging workforce is affecting employers across industries, the manufacturing sector is particularly affected. For example:

• 20% of UK workers in the manufacturing industry are aged 55 or over
• 30% of the manufacturing workforce in South Korea is aged 50 or over
• one in four manufacturing workers in the United States are aged 55 or over
• 22% of Canadian workers in the industrial sector are aged 55 or over

COVID-19 only helped to exacerbate this problem, since some older workers decided to leave the workforce early due to safety concerns. Not only do these early retirements mean that manufacturing employers now have to replace these vacant roles, but they also lost the skills and knowledge these experienced workers possessed.

It’s important for employers to develop a mentorship or apprenticeship program to allow their older workers to transfer their skills and knowledge to the younger generations. It’s also important to have a replacement strategy in place to help fill these open positions.

6.    higher demand for tech-related skills

Another major challenge facing the manufacturing industry is the implementation of advanced technology in the workplace. It’s true that the use of this technology, such as robotics and 3D printing, has enabled manufacturers to automate many tasks that workers used to complete manually. While this transformation to automation has eliminated millions of jobs in the manufacturing industry, it also opened the doors to a variety of new jobs.

Unfortunately, these new jobs require a new skill set that many manufacturing workers simply don’t have. This factor has left businesses stuck trying to acquire these skills. This problem is so widespread that an estimated 10 million manufacturing jobs across the globe remain vacant due to the skills gap.  To help combat this problem, many employers are investing in reskilling and upskilling their current workers to secure the specific skills the company needs.

what skills are in most demand?

The current labor shortage is so extensive that manufacturers are hiring for nearly every position. However, there are a few job roles that are in very high demand today, such as: machine operators, assembly line workers, welders, electricians and CNC mechanics and engineers.

The skills that will be in most demand in the near future include the ability to collaborate across manufacturing disciplines and to interact with customers and partners in ways that today’s workforce often do not. In a study from Deloitte, manufacturing executives stated the top five skill sets that will increase significantly in the coming years due to the influx of automation and advanced technologies are:

• technology/computer skills
• digital skills
• programming skills for robots/ automation
• working with tools and technology
• and critical thinking skills

The labor shortage is a great challenge for manufacturing businesses, but understanding the causes behind it can help your company overcome it. Gain more insights into the causes behind today’s labor shortage by downloading 7 stats that help explain the global talent shortage.