Skilled labor shortage threatens manufacturing industry’s full recovery: Report

Despite combatting the COVID-19 pandemic, workforce – labor issues have escalated with the manufacturing industry at the brunt of it. A study – “The Resilience of Manufacturing: Strengthening people operations and bridging the talent gap amid crisis” by the Workforce Institute at UKG, found that finding talent with the right skills has been more difficult.

In the pre-COVID times, 38% of the manufacturers faced labor shortage and now in the post-COVID world, the number has increased to 54%. Kylene Zenek, director of the Manufacturing Practice at UKG, highlighted that between January and March 2021, more than two in three manufacturers, that is 68%, let employees go due to poor attendance, and 13% said managers had to adjust labor schedules every day to account for unplanned absences.

“Nearly three in five manufacturers experienced higher-than-average turnover from March 2020 to March 2021, compared with 44% from March 2019 to March 2020. Among multinationals, 71% said turnover was up during the first year of the pandemic vs. 52% of US-only manufacturers,” Zenek said.

Half of the respondents surveyed said they had people call out of scheduled shifts with less than 24-hour’s notice at least several times a month and 1 in 10 said this happened daily, which puts pressure on managers as well as other team members to fill in the gaps and maintain production schedules.

It seems likely that COVID-19 pandemic-related obligations or concerns were a common cause given that frontline employees faced extraordinary personal challenges over the past year, such as enhanced childcare or remote schooling responsibilities, which would have likely impacted their ability to come to work on time or at all. There are cases where some manufacturers with more people-centric cultures and policies offered their frontline team members more flexibility to address personal concerns.

Zenek shared that the recruiting challenged noted in the survey seem to be consistent with data coming from other industry studies. “A third of our respondents said it’s difficult to compete with other manufacturers, and a quarter is having just as much trouble competing with employers outside the industry, which may have something to do with stagnant wages in manufacturing.”

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Competition for skilled talent is “fierce” right now. Although skills shortage in manufacturing has been a pervasive issue for the past several years, the report shows that far more manufacturers today, 54%, than a year ago, 38%, are having a particularly hard timing finding candidates with the right skills to fill critical job openings. At the same time, 54% of manufacturers say that negative industry perceptions are impacting their ability to recruit Millennial and Gen Z talent, which is equally challenging.

Zenek believes manufacturers must make a concerted effort to retain the people they have working for them today and cultivate desired skillsets internally, which many are doing by further developing their existing workforce. The survey found that 63% of manufacturers are taking steps to reskill employees and another 60% are cross training their people.