WASHINGTON, DC – In an age of skyrocketing unemployment, it may seem reasonable to assume that companies do not have to worry about finding workers. But a recent McKinsey survey of more than 2,800 employers worldwide has underscored just how flawed that perception is. Four out of ten employers said that they cannot find workers to fill entry-level positions in their firms, with more than one-third of respondents saying that their businesses are suffering from a lack of appropriate skills in the labor market.
Meanwhile, young people worldwide are struggling to find jobs. While the eurozone crisis helps to explain why more than half of young people in Greece and Spain are unemployed, rapidly growing economies like South Africa and Nigeria are experiencing similar rates of youth joblessness. In the Middle East and North Africa, one in three young people are unemployed. And, in the United States, roughly half of bachelor’s degree-holders under the age of 25 were jobless or underemployed upon graduation last year.
All of this points to the costly skills mismatch at play in today’s economy. In the US alone, the opportunity cost of failing to improve education would amount to $1.7 trillion by 2030. Similarly, by bridging its growing skills gap, China could augment its GDP by $250 billion by 2020. So why isn’t more being done to ensure that young people acquire the skills they need?
The problem is rooted in divergent perceptions among the various players in the labor market. More than 70% of the educational institutions surveyed by McKinsey believe that their graduates are ready for the job market; more than half of employers and young people disagree. Closing this gap requires that educators and employers work together more closely. Employers should communicate their requirements to educators; educators need to give their graduates the tools that will enable them to meet these requirements. The problem is missed connections, so the solution is to make more of them.