Mismatch between labour supply and demand: What it is and how an ATS can bridge it
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Mismatch between labour supply and demand: What it is and how an ATS can bridge it

The word indicates a situation that affects everyone, both those who are working and those who are currently inactive, as well as future generations, companies, HR practitioners and many other actors in the world of work. We are talking about mismatch, a term often used to talk about the gap between labour supply and demand and everything that can be linked to this.

A mismatch that the media sometimes tell in a somewhat superficial way, limiting themselves to piling up numbers or recounting stories of entrepreneurs who offer jobs without even receiving an application or of company managers who, in order to fill their vacancies, are willing to grant first-timers more benefits than they usually do.

These episodes, which fill the pages of newspapers or online publications, are often just the tip of the icerberg of a phenomenon that has a much more complex and also little-known situation at its base.

What is meant by mismatch

In the meantime, it must be said that there is not just one type of mismatch, but that the discrepancy, mismatch, non-alignment – other ways of translating this almost hostile and almost cacophonous word – can be attributable to various factors and affect various aspects of the world of work.

That Italy has a territorial mismatch is nothing new: there has always been talk of a North-South divide in terms of different rates of growth and development.

But the mismatch can also be linked to the sector in which one works: just think of the profound differences in salaries that exist between teachers and engineers (just to give an example), just as the mismatch can concern not only remuneration, but the possibility of access to technological innovations or productive capacity. Just as it can be gender-related: it is a well-known fact that in many fields, for the same position held, women earn less than men or have fewer career opportunities.

We also speak of an educational mismatch when there is a mismatch between the educational qualifications possessed by jobseekers and what is required by a company for certain positions. This type of mismatch is undoubtedly linked to another mismatch called skill mismatch, i.e. between the skills one has and those that are and will be increasingly in demand in the world of work for certain types of professions.

Skill gaps can also be seen from the other side of the coin: when there are people who are overtrained and overqualified to do a certain type of job. Having too many skills as well as not having the right ones is a double problem.

It means that, on the one hand, resources invested in education and training are wasted, and too many courses available are not linked to placement activities and market demands; on the other hand, the communication channels of the world of work are wrong, as are the recruiting techniques and initiatives carried out by HR. And also, cascading, all that concerns social recruiting, the way companies or employment agencies communicate and all that makes it so that, despite the high degree of digitalisation, there are still profound discrepancies between those seeking employment and those offering it.

mismatch domanda offerta di lavoro

Let us try to better understand the psychological motivations behind it and also what companies, HR and anyone working in this field can do to avoid missing out on top talent as well as wasting energy.

Who are the job seekers?

In order to start talking in depth about mismatch between supply and demand, the first focus should undoubtedly be on the protagonists: the people looking for a job. But who are they? Defining them is not easy because obviously the profiles also vary depending on the type of job sought, according to which certain channels may be used instead of others. We can say, however, that in general jobseekers can fall into these four broad categories:

  1. people who have precarious employment and are looking for more in order to improve their position and perhaps stabilise once and for all;
  2. young people who have no experience or are at their first experience and are therefore ‘always looking’;
  3. people who have a high degree of professionalism, and are therefore highly sought after in the market, who are always looking around to see if they can have any career improvements;
  4. those who are not working.

Given the diversity of needs and the way in which different people approach the world of work, in order to get an even clearer picture, one must also consider other aspects that are part of the active search for a job such as the time one spends looking for information, the number of job applications, the number of job offers one accepts, job-to-job movements, the periods in which one becomes unemployed again, how productive the search is. As well as the standard of living of the seeker and the selectivity between different posts. The latter two are characteristics that presuppose an even rather high starting level.

Similarly, jobseekers must also consider how often they search for work (intensity), whether they are inclined to move and extend their search to places other than where they live (extension), whether they look for different jobs or focus only on a certain type (flexibility or lack thereof), and finally the type of method chosen to search for work.

There are those who rely on sending out CVs and those who prefer public competitions and those who go outside the traditional channels, perhaps relying on social media, seeking contact with companies through official channels or resorting to introducing themselves to friends and relatives in order to reach the company in a less formal way.

These are all aspects to be considered in order to fully understand the mismatch phenomenon which, in any case, is also inextricably linked to digitalisation and its consequences.

Digitisation effect?

While, as we know, thanks to the Internet and the fact that distances now vanish in a second, it is possible to live in Catania and take a course taught by Yale University thanks to one of the MOOCs (Massive Operative Online Courses), lessons accessed via the Net, it must also be said that the lack of skills in certain sectors is and remains particularly evident.

Would you believe that there is a shortage of sports professionals in Lombardy? According to research carried out by Indeed, a portal that deals with job search and precisely facilitates the meeting between candidates and companies, 50 per cent of search ads in this field remain unanswered.

Not to mention – and this throughout Italy – all those companies looking for STEM specialists, where the acronym probably known in the HR world, but not so much to others, stands for Science, Technology, Engineering and Mathematics. In Italy, according to research, technological and scientific skills are in short supply despite the high demand. It happens a little bit all over the Boot with peaks in Puglia and Emilia Romagna where the shortage of such technical figures sometimes remains unfulfilled for months.

The employment situation in Italy: What the numbers say

If we look at a different kind of numbers, the situation continues to be not rosy. The latest Istat data for July revealed that unemployment is on the rise: the rate rose from 9.8% last month to 9.9%, as this article highlights. In which, by the way, it is pointed out that it has slightly decreased for one segment of the population, that between 35 and 49 years of age (- 45 thousand), while in general the number of job seekers has increased by 1.1%.

Other numbers still help us to sketch the picture of an Italy in which there are skills required and people who cannot give them: as Il Sole 24Ore points out, reporting the Excelsior bulletin produced by Anpal and UnionCamere, on the company side the situation is anything but comforting.

31% of companies cannot easily find the people they need to carry out 1.2 million contracts, thus leaving the need for technical, scientific and engineering figures unsatisfied. And if almost 10 per cent is the unemployment rate in Italy in general, there is a percentage for young people that is equal to that of companies that cannot find staff, at around 30 per cent.

misamatch domanda e offerta

But is it all a matter of kids studying the wrong subjects, experiencing an educational and skill mismatch? Or maybe they cannot adapt to what the labour market requires?

The question, again according to Il Sole 24 Ore, is much more complex than it might seem, not least because for every unqualified person there is a qualified one on the other side and, again, graduates coming out of science and engineering faculties do not seem to have decreased. The ‘ball’ would also be in the companies’ court.

According to the economic daily newspaper, which interviewed Giovanna Fullim, professor of Sociology of Economic and Labour Processes at the Bicocca University in Milan, the real gap would also consist in the fact that our companies are not suited to exploiting the full potential of the labour supply, which comes in particular from younger people. They offer jobs that are too low for highly qualified personnel and this is because we are a country with more SMEs than large companies and with little desire to innovate.

That in any case there are skills that cannot be found when it comes to technical profiles is a fact, even if it is true, as OECD economist Fabio Manca asserts, that those offered by small and medium-sized enterprises do not necessarily require high degrees of education such as a university degree and subsequent masters.

The psychological motivations of mismatch

The readings of the mismatch and its causes can be very diverse. For example, a psychological motivation can also be given to this mismatch. Consider, for example, an important aspect that goes beyond reality: the perception of reality itself. What do we mean by this? That numbers are often not enough and that their reading and interpretation can be almost pre-packaged, instrumentalised and crystallised.

After all, Istat data accompany us month by month. But they hardly say that yes youth unemployment is high, but that there is a whole percentage of young people who may not be actively looking for work, but in the meantime find opportunities to gain experience, perhaps through what are not the official channels and therefore considered by statistics.

education mismatch

A few more words must then be said about the channels. There is always talk about the best job search sites, but it is often not mentioned that sometimes the advertisements are not very comprehensible, the job description is missing, and they are not comprehensible or appealing to those who really could be of interest to companies. This creates a kind of perceptual barrier to entry.

This can happen because, unlike in large companies, in SMEs there is no dedicated human resources division – a recruiting team for instance – and it is perhaps an administrative employee or the entrepreneur himself who writes and publishes the ad. In many SMEs, then, there is neither employer branding nor talent retention. In the former case, little is done to focus on the company as a brand capable of attracting talent and consequently keeping it.

High standards belong to companies that probably have more than 50-100 employees (and they are certainly not large), but there are many small companies that are family-owned, with at most a dozen employees. If an advertisement is not clear, it generates a mismatch between what is asked and who actually tries to apply or does not try at all. Then there is also word of mouth, which remains a widely used method but not always the best channel for managing the recruitment process.

In a country – Italy – with a large number of SMEs, where people management is the prerogative of large companies, small and medium-sized enterprises need to find new organisational and production models that can really keep pace with the changing world and with young people who have many more specialisations than in the past.

Much attention must therefore be paid to the human factor, to the possibility of incubating ideas from young people and not necessarily from start-ups which, as we know, when they are already established and organised tend more to sell the product and service than the idea itself.

Deploying resources to bring in young people in this way, with their new desire to see the world, with the things they sometimes manage to discover first (just think of the world of coworking that was born thanks to young workers and a flexible mentality that they did not have to acquire but have almost inherent in their DNA) is a double advantage. For young people, of course, because they are included and can enter the world of work, and for companies because it can be an opportunity for rejuvenation and cultural growth.

The skill mismatch phenomenon

It goes without saying that, as we have seen above, of the various mismatches that affect the world of work, one of the most important, which we can even call a phenomenon, is the skills mismatch. Beyond companies that are not too well prepared and that offer lower profiles, this skills mismatch must be put first, especially if one works in Human Resources.

It is useless to focus on new trends, social and web recruiting, etc., if we do not consider that, put succinctly, in Italy there are many workers who occupy positions for which they are not qualified. But, mind you, the mismatch as we said can be of 2 types:

  • over-skilled workers, i.e. more skilled than needed, as 11% of Italians are. Apparently this would not seem to be a problem since, as the Romans used to say, ‘Melius abundare quam deficiere’. And yet it is: feeling overqualified for a job leads in the long run to people becoming frustrated, wanting to change or reaching a point where they have nothing left to give, and any talent retention policy may be, for these people, useless if one does not really consider the situation they are in;
  • under-skilled workers: that is, those who have fewer skills than those required. Here the figure tells us that in Italy they are 6 out of 100, i.e. 6%. And if you think that is little, well, consider that for Germany it is 1.38%.

In the case of under-skilled people, then, this complicates the selection and recruitment process and does not guarantee quality of work, undermining the productivity and competitiveness of companies. This is also the case for those who, as the jargon goes, are over-skilled: a disappointed worker is a person who produces little, makes many mistakes.

It is therefore a phenomenon to be scrutinised from all points of view, also because talent drain is just around the corner: if the positions they can fill are occupied by people who are less qualified and who have job protections (they cannot be demoted), this could lead to them leaving the company and looking for other jobs.

6 reasons why you might lose top talent

Turning the circle to the recruitment and selection sector, what are the 6 reasons/attitudes that could lead to losing top talent, despite active talent acquisition policies? Certainly activities that are not automated and that, in doing so, not only lead to time wastage, but also to poor results.

Let us look at them one by one:

Loading profiles manually

In an ever-changing world, personnel search and selection must be equally agile and fast. The sooner you select a candidate, the sooner you invite him or her for an interview and the sooner he or she can be taken – at least partially – off the market. Furthermore, downloading CVs and profiles from platforms such as LinkedIn, Facebook and then manually saving them on your ATS software or in your CRM is a slow operation that could lead you to lose someone on the way from one place to another.

And what about GDPR? You are downloading and uploading sensitive data to places other than those declared to the candidates when they gave it to you: your computer could be used by someone else, just as emailing CVs to your colleagues for them to take a look at can partially infringe on privacy.

For all this, it may be better to rely on ATS (Applicant Tracking System) software such as In-recruiting: you avoid wasting time… and talent.

Rely exclusively on Excel sheets

Many people do this: they create Excel files with lots of data and then think, via various search commands, that they can find the people they are looking for. But Excel is not a suitable tool for recruiters for so many reasons: it requires a lot of work for manual data entry and a lot of time to update it as well as a dedicated person to take the trouble to do it.

It not only wastes valuable time, but is a serious data security risk: a file saved on the PC or shared with others could circulate everywhere and even for purposes other than HR (e.g. marketing and various communications). Not to mention that one mistake is enough to delete phone numbers, e-mails and other personal information in a matter of seconds.

Reorganising e-mails

It is not much better when you have to manage communication with candidates and perhaps keep track of what you have said to each other and the whole recruiting process. By doing everything manually, you may miss crucial e-mails in which the candidate has told you his interview preferences or salary expectations or even the notice period he has to give the company. Leaving such information by the wayside can happen when this information has to be uploaded manually.

It goes without saying, then, that this is also an activity that requires a great deal of energy and time. And there is also another aspect: if you find yourself having to retrieve this information by asking the candidate himself, not only do you look like a novice recruiter, but you do not make his candidate experience as optimal as it should be. With all that that entails.

Checking job applications

Especially when the application is urgent, you may find yourself constantly checking your inbox to see how many applicants have applied. But managing and checking your inbox on several platforms can be time-consuming and inaccurate. And if you didn’t do it the same way on all of them, you might forget that you posted on one side and not the other. And so many questions from would-be candidates can go unanswered.

As a recruiter, then, you are convinced that you have given that particular piece of information so you may not give any weight to the doubts you have raised. Unanswered questions, manual application checks can mean that you miss out on successful candidates and that there are applications that are ignored or even lost. Again, a time-consuming manual activity that does not yield the desired results may, of all things, prove to be a boomerang.

Publishing on multiple platforms

Connected to what we have said above, publishing on multiple channels (multiposting) and doing it manually, is a work that requires a lot of effort and effort in the later stages. Perhaps a previously particularly important requirement is no longer required – also in the light of skill mismatch – or the start of the job changes or other information changes that you should change in good time. Or, even worse, that the vacancy has been filled and you have forgotten to close the applications or delete the offer on 3 of the 10 platforms used.

What does this entail? It’s easy to guess: there are people who still apply, don’t receive a reply, speak badly about the company and tell of a negative candidate experience. And if they do it on the web and on social media, it’s pretty significant image damage to the company.

Interview planning

Last but not least among manual activities is the management of job interviews. Trying to cross agendas between the candidate and a hiring manager who is always away can be worse than fitting the pieces together in Tetris.

Maybe the candidate says yes to one of your three options and the manager is no longer available or vice versa. And all this doesn’t happen with a simple phone call, but with a dense exchange of e-mails that may go on for days, weeks, until the candidate thinks about giving up or finds something else. This is an activity that is not only demanding but also exhausting, and if it is handled manually, error is always just around the corner.

All these inefficiencies can really lose talent, and that’s beyond the mismatch phenomenon. That is why ATS software can help by intervening automatically where certain tasks can become repetitive and even particularly demanding.

The technical mismatch between candidate and recruiter

In the range of mismatches that mark the world of work there is another one: the one between the expectations of recruiters when dealing with candidates at the beginning of their career and their way of using technology from a professional point of view.

As we know, technology is increasingly being used in the search and selection process and particularly for roles that attract a high number of applicants. And while many recruiters are becoming more and more accustomed to using e.g. video interviews or other tools, on the other hand they may be faced with candidates who are not so… accustomed. And this for many reasons: posting a story on Instagram can be a game, but thinking about the competence that can result from it from a professional point of view can scare young people.

technology gap

Therefore, to avoid losing talent precisely because of this gap, as a recruiter you must not take the young=hypertechnological equation for granted. If you can, provide resources or make suggestions before the interview so that the candidate can then feel comfortable. Explain well why you use the tool and how the selection process takes place.

Also, try to put yourself in his shoes: as we know, the candidate may be a geek in his life, but not understand how this skill can be used in the company. It is up to you to put him at ease and make him understand how this can happen. Perhaps go into detail about the technology requirement so that it is well understood that you need to have people with knowledge of a certain type on board. This will help candidates bridge the gap in their minds between what they have learnt ‘socially’ and what can serve them in career building.

After all, it should always be kept in mind that when we talk about talent in the world of work, we are not necessarily talking about people with unlimited hard skills, but most of the time we are talking about the right candidate in the right place; very often, therefore, assessing a candidate’s soft skills very well is a key aspect in creating a winning match-up between supply and demand.

Traditional ATS and smart ATS

In conclusion, while many of the aspects examined concerning the mismatch between demand and supply of labour can be attributed to factors exogenous to the recruiting processes, many others can easily be improved. ATSs (Applicant Tracking Systems), as we have seen, are designed to manage every stage of the recruitment process.

It has to be said, however, that traditional ATSs have some limitations, for instance in profiling the demand and especially in matching job supply and demand to find the ideal candidates. This can lead to the need to repeat selections or to skill mismatch due to errors in assessment. This is not the case with smart ATSs, which go a step further by using web crawling and text mining techniques to search and analyse requests and offers, as well as algorithms and machine learning to better profile requests and make the best match between the various profiles, also allowing the automatic assessment of a candidate’s soft and hard skills.

An ATS that uses artificial intelligence, let us keep this in mind, does not replace the recruiter, but helps him/her spend less time on demanding activities that do not take him/her far by giving him/her the opportunity to devote himself/herself to others in which his/her full input is crucial.

It is not necessarily the case that intelligent ATSs are the only solution to the mismatch between job demand and supply, but they can certainly give HR managers a significant contribution and create the most fertile ground possible for matching candidates and companies.

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