The Gap between Labor and Employment


Labor markets are hard to understand. There always seems to be a disconnect between labor and employment. Individuals often struggle to find employment and build careers that make the best use of their skills. Employers often have difficulties finding talent with the right skills. Posted jobs can go unfilled for months, even while surplus labor is available. Situation gets exacerbated by recession and high unemployment, which could be due to something like the pandemic we are facing. All of this could lead to long-term stagnation in growth and advancement.


So why do we have the disconnect? Some reasons include:

· There are problems matching jobs and workers. The skills that many workers have may not match the opportunities at hand, information gaps may prevent qualified job seekers from ever learning about promising openings, or the right workers may be in the wrong geographies.

· There are workers who have jobs but they are not realizing their full potential. Many college graduates, for example, hold jobs that do not require their degrees. Without real engagement, boredom and frustration set in, and productivity suffers.

· Low and declining labor market fluidity compounds the problem. A more rigid labor market limits the opportunities available to the unemployed and to new entrants to the workforce.


The cost of suboptimal employment in countries like the US could be 2% of GDP, which equates to almost half-a-trillion dollars a year. If in utopian world where all available labor is utilized to its potential, economic output could be maximized and this GDP gain could be realized.


We have online talent platforms now, so why is it that we still have a disconnect between labor and employment? Part of the reason is that matching the two still requires a human element which cannot be replaced by any platform or artificial intelligence system. With shrinking budget for Human Resources in many organizations and a constantly-evolving need for understanding management expectations for roles, we still fall far short of bridging this gap between labor and employment.


It is estimated that 50% of the positive GDP impact could be realized by greater labor participation in an optimal labor employment market. Another 25% of that positive impact could be attributed to reduced unemployment, while the remaining 25% would come from higher productivity. Greater labor participation could not be more important than it is now with the current pandemic driving out a good chunk of the labor force.

In a more digitally connected and knowledge-based economy, companies increasingly create value from ideas, innovation, research, and expertise. Finding the right talent matters and drives results. But organizations often struggle to land the right candidates, draw the best performance out of their workforces, and develop the leadership they need to meet their strategic goals.


Online talent platforms have increased fluidity in the labor market, but it comes at a price. The labor market fluidity enabled by online talent platforms is a positive dynamic for individuals and the broader economy, but companies may face increased costs due to higher turnover and stiffer competition. It becomes more important than ever for companies to create a compelling value proposition for their workforce. And just as they carefully manage their consumer brands, companies now have to be conscious of managing their reputations as employers.


Online talent platforms can facilitate the interaction between labor and employment. Online talent platforms cannot however facilitate the optimal match between labor and employment. Technology will bring these two disparate pieces closer together. The last leg of the journey is for humans to perform. If done right, the benefits are high. There will be higher satisfaction, greater productivity, increased longevity, and therefore reduced costs over the long-term. The value of optimal matching for labor and employment translates to significant economic value for companies and should not be overlooked.

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