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More than every third company has unsuccessfully attempted to recruit new employees in the past year, a new survey shows. The shortage of labour is detrimental to companies’ ability to develop their business and is keeping the economy down, says the Confederation of Danish Industry. 

It is particularly skilled workers (faglærte) that companies seek for in vain. In total, 36 per cent of the 3,335 companies in DI’s survey have unsuccessfully tried to recruit new employees.

 

Publiceret: 29.06.2017
Af Peter G. H. Madsen mail

The good news is that Danish companies are in full swing. Orders are pouring in, both from home and abroad. The bad news is that in many cases companies cannot get the employees necessary to produce the goods and services in demand.

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,” he says and adds:

“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.”

See also: Kamstrup posts two to five jobs - per week

Leads to lost sales

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 reply 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,” says Steen 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 reply that tasks have thus far been handled via overtime work, while a smaller number of companies have chosen to outsource the task to other companies at home and abroad.

See also: Export threatened by labour shortage

Struggle for labour

Professor of Economics at Copenhagen Business School Niels Westergaard-Nielsen is not surprised that we now find ourselves 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 says, 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.” 

Niels Westergaard-Nielsen expects that the shortage of labour can create a pressure for increased wages when companies begin to vie for employees.

On the one hand, this is bad because it can weaken companies’ competitiveness. Conversely, it can also lead to an increase in productivity, since routine tasks are outsourced abroad or increasingly taken over by machines.

Deputy Director at DI Steen Nielsen does point out, however, that the competition for employees has not yet led to upward pressure on wages. This is one of the explanations why Danish companies are doing well in the international competition for jobs and orders. Meanwhile, there is no guarantee things will continue this way in the future.

“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,” says Steen Nielsen.

Judging from the survey of DI’s member companies, there is already a rather intense competition for labour taking place. Nearly every other surveyed company reports that they experience competition for labour from other Danish companies to a high or very high degree.

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.

See also: Talents cannot be cherry-picked

Stay longer in the labour market

The question is what must be done to avoid that the good state of the market leads to a situation in which the labour shortage forces even more companies to pass when customers are ready to buy.
 
Deputy Director and head of DI’s labour market policy department Steen Nielsen 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 employee 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.

Indeed, there also seems to be political support to address the problems. In any case, Venstre’s spokesman for business policy Torsten Schack Pedersen states 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 says.  Torsten Schack Pedersen points out, among other things, that efforts must be made in relation to adult education and continuing education, that 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.

Employment spokesperson for the Social Democrats, Leif Lahn Jensen, believes that the solution lies in the 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,” he says and adds:

“It’s not a question of finding more hands. The hands are there. What we have to ensure is that they’re skilled enough.” 

See also: How to avoid employing illegal workers

Companies risk having to say no to tasks when they are unable to get the employees they need.
DEPUTY DIRECTOR AND HEAD OF DI’S LABOUR MARKET POLICY DEPARTMENT, STEEN NIELSEN
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PUBLISHED: 6/29/2017 LAST MODIFIED: 6/29/2017