In the aftermath of the COVID-19 pandemic, many advanced economies experienced a peak in labour shortages (Kiss et al. 2022, Causa et al. 2022, Soldani et al. 2022). While recent labour market adjustments have eased some of this tightness, many countries face historically high labour shortages in a longer-term perspective (Figure 1, Panel A). On average, job vacancy rates were higher in 2023 and 2024 relative to 2015 across most broadly defined industries, and especially in accommodation and food, ICT and professional services, transportation, construction, and health and social services (Figure 1, Panel B).
Figure 1 Labour shortages have eased but remain historically high
A) Vacancy-to-unemployed ratios
B) Job vacancy rates across industries, OECD average
Notes: Panel A: The peak since the COVID-19 period is 2020Q1 - 2024Q2. Seasonally adjusted data are used except for Canada due to the data unavailability. For Italy, the number of vacancies is calculated using the job vacancy rate and the number of employed workers. Level in 2016Q1 for Italy due to data availability.
Panel B: The job vacancy rate is obtained by dividing the number of job vacancies by the sum of the number of occupied jobs and the number of job vacancies. Data on job vacancy rates are computed on a quarterly basis and are seasonally adjusted whenever possible. The cross-country average covers the following countries: AUS, BEL, CAN, CHE, CZE, DEU, DNK, ESP, EST, FRA, FIN, GBR, HUN, ITA, JPN, KOR, LTU, LUX, LVA, NLD, NOR, POL, PRT, SVK, SVN, SWE, and USA. See Causa et al. (2025) for more details and data sources.
The persistence of these shortages can hinder the functioning of labour markets and productivity growth and possibly spur inflationary pressures. This column focuses on the jobs that firms have difficulties filling and that workers may be unwilling to enter or stay in due to poor job quality in terms of pay and non-pay-aspects, including job insecurity, inflexible hours arrangements, strenuous working conditions, and physical and mental health risks.
The drivers of the historically high labour shortages and the lack of a contemporaneous rise in wages remain a puzzle. In countries like Austria, Germany, the UK, and the US, labour shortages may be linked, at least in part, to the fact that aggregate labour demand (defined as the sum of open job positions and employed workers) has been growing at a faster pace than labour supply (the size of the labour force), despite the puzzle of relatively high non-employment and under-employment rates (Bryson et al. 2022). Yet this is not the case in all countries: France, Italy, Japan, and Korea are experiencing historically high labour shortages despite a relatively stable gap between aggregate labour supply and demand (Figure 2).
Figure 2 The rise in labour shortages cannot be fully explained by faster growth in labour demand than labour supply
Notes: Labour demand refers to the sum of employment and open vacancies, all data reported in millions. See Causa et al. (2025) for more details and data sources.
Among possible drivers, economists have underlined the role of skill shortages and possible labour market mismatches in the context of major structural transformations, especially the digital and green transitions, which affect production processes and therefore the nature of job-related tasks (Dorville et al. forthcoming; Causa et al. 2024).
Another factor recently put forward in the literature is labour hoarding: in a context of tight labour markets, ageing labour forces, and recruitment obstacles, firms may be encouraged to hoard labour, that is, to retain workers more than necessary, especially where framework conditions make it relatively costly to adjust the number of employed workers. Recent evidence shows that firms have been increasingly engaging in labour hoarding since the COVID-19 period (Causa et al. 2025, Arce et al. 2023, Botelho 2024, Gayer et al. 2024). This can be partly traced to pandemic-related policy support measures which, in some countries, successfully prevented job separations and labour market disruptions. While this evidence is far from causal, it suggests the existence of a link between labour market tightness and hoarding, possibly reflecting the effect of policies and institutions associated with hiring and separations.
Another driver, which is often overlooked, is the relatively low attractiveness of many of the jobs affected by high shortages (Causa et al. 2025). This pertains to poor job quality, in terms of pay and non-pay conditions, reducing individuals’ incentives to enter or stay in these jobs – especially contact-intensive jobs in areas such as health and personal care, hospitality, and transportation. Some of the occupations and sectors that exhibit shortages are characterised by stagnating real wages and poor job quality, high incidence of shift work and temporary contracts, and higher-than-average exposure to mental and physical risks. Such characteristics can deter workers from entering or remaining employed, especially in healthcare, transportation and storage, accommodation and food, and construction.
These high-shortage areas are characterised by over-representation of women and international migrants (Figure 3). Such workers typically have relatively low bargaining power, for instance due to precarious contractual conditions associated with non-standard work (temporary, on-demand, seasonal contracts, informality). Yet, across most European countries, where population ageing implies a trend decline in the working-age population, it is precisely these categories of workers, especially migrants in the last decade, that have contributed the most to labour force increases.
Figure 3 Women and international migrants are overrepresented in some of the sectors affected by high labour shortages
Notes: 2023 data. The numbers under parenthesis represent women/international migrants’ employment shares across all industries. International migrants are defined as foreign-born workers, based on official data from the 2024 OECD International Migration Outlook. In each panel, the shares of women and of migrant workers in the entire economy are normalised to 100%: for example, on average, across the EU, the share of women in health-related occupations is about 1.7 times higher (170%) than their average share across all sectors of the economy. See Causa et al. (2025) for details on the data sources.
We start by looking at wage-related aspects of job quality. Stylised facts on real-wage developments since 2019 Q2 across low-, middle- and high-pay industries facing labour shortages give us mixed insights (Causa et al. 2025). On the one hand, real wages in accommodation and food have generally increased across OECD countries, both in absolute terms and relative to wages in low-pay industries. There are significant differences across countries, with major rises for example in Germany, Greece, and Hungary and losses in Czechia, Italy, and Sweden. On the other hand, real wage gains in sectors like construction and transportation and storage, as in other middle-pay sectors, have been very limited, with deteriorations in Czechia and substantive improvements limited to only a few countries, like Lithuania. Similarly, real wages in health and social work activities have declined in real terms in a number of OECD economies, like Italy and Sweden, and increased more than or in line with high-pay industries in some Central European and Baltic countries like Hungary and Poland.
Next, examining selected non-wage aspects of job quality delivers an unambiguous gloomy picture for European countries (Figure 4). This is the case for shift work, which disproportionately affects female-dominated jobs. This is also the case for exposure to mental health risks, which affects a worrying proportion of employed individuals in general and overwhelmingly in the care sector, where, with population ageing, jobs are increasingly required. This suggests that, beyond pay, factors related to job insecurity, poor working conditions and exposure to health risks are likely to be important factors behind the low attractiveness of a large number of high-vacancy-rate jobs.
Figure 4 High-shortage jobs tend to offer poor working conditions
A) Incidence of temporary contracts, shift work, and mental health risks
B) Shift work across selected occupations (%), gender composition, EU average
C) Exposure to mental health risks by factor, selected occupations, EU average (% of employed)
Notes: Data refer to a simple average of 2021 and 2022 values. Panel B. Share of workers’ self-reported exposure to mental wellbeing risk factors. The sample consists of working individuals. See Causa et al. (2025) for more details and data sources.
Given these stylised facts, alleviating labour shortages calls for a combination of policies acting on several fronts, the balance of which will depend on country-specific context and societal preferences. One area of intervention is improving the efficiency of labour market allocations by promoting equality of opportunities for women, older workers, and international migrants. This encompasses a large variety of reform actions, for example, improving access to quality childcare and balanced parental leave, supporting work-schedule flexibility, lifelong learning, and reskilling, and recognising international qualifications.
The second area of intervention has to do with job quality, on top and beyond job quantity. Job quality can be improved through effective dialogue among social partners, for instance, in industries characterised by precarious jobs, poor social protection, strenuous working conditions, and inflexible working hours – which tend to disproportionately affect migrants and women.
Last but not least, territorial and place-based policies are also needed to address labour shortages, for instance, to mitigate regional disparities in labour shortages by reducing barriers to workers’ mobility across regions and jobs. This includes policies to support geographical mobility, for instance, in housing, but also place-based policies to alleviate localised labour shortages by enhancing the attractiveness of ‘remote’ regions disconnected from metropolitan areas (Luu et al. 2021).
References
Arce, O, A Consolo, A Dias da Silva, and M Mohr (2023), “More jobs but fewer working hours”, ECB blog, 7 June.
Botelho, V (2024), “Higher profit margins have helped firms hoard labour”, ECB Economic Bulletin, Issue 4/2024.
Bryson, A, J Spurling, and D Blanchflower (2022), “Labour markets are not as tight as you think”, VoxEU.org.
Causa, O, M Abendschein, N Luu, E Soldani, and C Soriolo (2022), “The post-COVID-19 rise in labour shortages”, OECD Economics Department Working Papers, Paris: OECD Publishing.
Causa, O, M Nguyen, and E Soldani (2024), “Lost in the green transition? Measurement and stylized facts”, OECD Economics Department Working Papers, Paris: OECD Publishing.
Causa, O, E Soldani, M Nguyen, and T Tanaka (2024), “Labour markets transitions in the greening economy: Structural drivers and the role of policies”, OECD Economics Department Working Papers, Paris: OECD Publishing.
Causa, O, E Soldani, M Nguyen, and T Tanaka (2025), “Labour shortages and labour market inequalities: Evidence and policy implications”, Paris: OECD Publishing.
Dorville, Y, F Filippucci, and L Marcolin (forthcoming), “All hands on deck! Do structural megatrends affect labour shortages and mismatch?”, OECD Productivity Working Paper.
Luu, N, O Causa, M C Cavalleri, and M Abendschein (2021), “The laws of attraction: Economic drivers of inter-regional migration, the role of housing, and public policies”, VoxEU.org, 11 December.
Federal Reserve Bank of Minneapolis (2023), “Are job vacancies still as plentiful as they appear? Implications for the ‘soft landing’”.
Gayer, C, A Reuter, A Thum-Thysen, and M Verwey (2024), “Vulnerabilities of the labour market: A new survey-based measure of labour hoarding in the EU”, VoxEU.org, 7 March.
Kiss, Á, M Morandini C, A Turrini, and A Vandeplas (2022), “Slack and tightness: Making sense of post COVID-19 labour market developments in the EU”, Directorate General Economic and Finance, European Commission.
Soldani, E, O Causa, N Luu, and M Abendschein (2022), “The post-COVID rise in labour shortages across OECD countries”, VoxEU.org, 28 November.
