As the world is slowly crawling out of the nearly two-year-long stagnation caused by the pandemic, the labour market doesn’t seem to be recovering so quickly.
In any other job market dynamic in the past, high levels of unemployment generally went head-to-head with high numbers of applicants. This time, however, things are looking differently. As nearly every continent is facing rising unemployment rates, the number of candidates willing to take the jobs remains stagnant.
High unemployment & lack of workforce
This report by Korn Ferry concluded that by 2030 we will be faced with a talent shortage of more than 85 million because of the lack of talent – there will be simply fewer skilled people to do the job. The prediction seems to have started becoming a reality.
As stated by Larry Summers, the former US treasury secretary:” We have a record high level of quits, a record high level of job vacancies and every employer in America is complaining how labour short they are.”
In Europe, things aren’t looking the best either. Based on the Eurostat report, in the second quarter of 2021, an average of over 2% of jobs in the euro area was classified as vacant (with Chechia’s 4.9% top score).
As for Denmark, in the first quarter of 2021, job vacancies peaked at over 39 thousand, nearly six thousand more than at the end of 2020, while the unemployment rate is at 3.6%. This Scandinavian country is a bit of an exception, though. It’s actually one of six European countries that managed to bring its economy back to pre-pandemic levels, and even more so – the unemployment rate is, in fact, lower than it was in 2019. The number, however, is still unfavourably high, and the country is struggling with labour shortages like many others.
Hence the question arises – how is it possible to have so many job vacancies and yet too few people who want to take them?
The debate over unemployment benefits has been more present in the past months than ever. The pandemic led to significant numbers of people being laid off permanently or put on hold, depriving families of the means to live without warning. That led pretty much every country in the world to increase unemployment benefits or provide citizens with stimuli packages.
Although essential and needed in the moment of crisis, can unemployment benefits create a candidate shortage for employers? According to an analysis conducted by Ernie Tedeschi, an economist at Evercore ISI, in more than half of US states, the average worker collects more money from benefits than they would if they stayed at the job.
Scandinavian countries, such as Denmark, have long been a desired destination to settle in. For many, one of the reasons is excellent social benefits – including those for the unemployed.
Two types of people can be eligible for unemployment benefits – members of an unemployment insurance fund (A-kasse in Danish) and those who have just graduated from university.
As far as the amount of money one can get from the unemployment benefit is concerned, it varies depending on which group one falls in. It can be anything from 6.441 to 19.322 danish kroner (not including tax).
Now, let’s compare it to the salary one could get in Denmark. Although Denmark doesn’t have a strictly defined minimum wage, it can be estimated at around 18.600 danish kroner (or 2.500 euros). That means that in the best-case scenario, the unemployed person taking benefits could be, in fact, making more money while not working, similarly to the US example mentioned before.
Even for graduates, things look brighter in Denmark. If you’ve just received your diploma and didn’t get a job immediately after, you’re also eligible for unemployment benefits – either 13,815 or 15,844 danish kroner. Again, comparing those numbers to the estimated minimum salary, the alternative looks very comfortable and inviting.
So much so that based on the data from Statista, over 100 thousand people were beneficiaries of unemployment benefits in Denmark in 2020, as compared to slightly over 70 thousand the year before, hence showing a 30% increase.
As for new graduates, in 2020, there was 21.8% of full-time unemployed graduates, according to the AE Council’s study referenced in this post.
Now, while the danish benefits make life considerably more manageable, they pose an additional (and hard to detect) obstacle to employers – fake applications.
A new type of candidate?
We’ve already heard about talent shortage and candidate shortage, which are both significant issues to tackle for all employers. But what if I told you that your recruiters might need to be on the lookout for a new type of candidate? The one that’s not really interested in working for you… regardless of applying for the job.
Receiving unemployment benefits in Denmark (but not exclusively) requires fulfilling several criteria, and especially one of them can be problematic to you as a business owner or a recruiter. As a receiver of the benefits, one must register at the jobcentre and actively look for a job. The word ‘actively’ is vital here because it means that you are obliged to send out a specific number of resumés monthly to prove that you’re indeed looking for employment.
As we’ve all looked for a job at some point in our lives, we all know too well that the intensity of our job hunt depends on many factors. The flow of job listings that fit our experience may not be steady. Maybe the jobs available don’t align with our dreams. Perhaps we’re not even that desperate to start working to begin with. All of that and suddenly the idea of sending out ten resumés every week does seem complicated, doesn’t it?
You get a resumé, and you get a resumé…
Everybody gets a resumé. That’s what can happen if you’re obliged to send out a high number of CVs – even if you’re not necessarily interested in the position.
A man from Australia did an experiment trying to find out how long it would take him to send out 40 resumés a month (the required number one must send to get Australian unemployment benefits). The result? It took him 9 minutes to automatically apply for jobs on a well-known Aussie job portal.
The possibility of fulfilling this requirement so effortlessly – although great for the candidate – has a plethora of negative consequences for your company.
Interview with a ghost
You’re on a hunt for talent; candidates are scarce. You receive a resumé from an applicant who looks good enough of a match. Your recruiters spent time going through the resumé, phone screening, invited them for an interview.
And then you realise that even though the credentials look good, the person simply isn’t really there. They’re not interested in the job – they’re there just because they must. But the time and other resources spent on the recruitment process for that one person are already gone.
Based on the calculations, the cost of the hiring process of one applicant can be as high as $100. Now imagine if you get more ghost-applicants like this. How much can it cost you from a yearly perspective?
Now, losing $100 per fake applicant is terrible, but what is worse is if you actually go through and hire the person who didn’t apply to your company for the right reasons to begin with.
As we mentioned previously, the costs of one bad hire can amount to $15,000. Add to that the costs for yet another round of recruitment after you realise they were more of a miss than a hit – and the costs start being more and more visible.
Bad hires and employee turnover have many dire consequences for your business. You lose time, money, and the morale of your team plummets. Knight, Becan & Flynn conducted a study examining the impact of turnover on clinical staff. The results were short of surprising but definitely not optimistic. They note, among other things, that turnover disrupts the organisation’s efficiency, compromises co-worker support, and may even cause the remaining employees to leave.
All of that causes your employer branding to take hits. And how many of those hits can you afford taking?
Choosing the right candidate through screening and interviews is hard enough, as 74% of recruiters admit to making a bad hire. On top of that, it’s virtually a challenging task to accurately predict if your applicant is a ghost – anyone can send a resumé, and maybe your company simply happened to be one of the 40 recipients from our example above.
What can you, therefore, do to weed out those candidates?
Remove the resumé completely
Quick and simple may be suitable for applicants, but not necessarily for your business. If the type of documents you require when applying makes it easier for fake applicants to sneak into your company, then it’s time to change how you recruit.
Copying or editing the same resumé takes no time at all. What does take time, however, is solving a case.
Instead of asking your candidates to send a CV and/or a cover letter, we propose you present them with a case specifically designed to test the exact skills the applicant would use in the job. For example, if you’re looking for a translator, they’d need to translate something of similar content to what they’d actually do at work.
I myself solved a case once to apply for a position. After endless copy-and-paste applications, solving a case sounded like a breath of fresh air and a challenge (and I’m not the only one to think so!). It tested precisely the skills I would need in the future and, most importantly, proved I was committed to applying. Instead of taking me two minutes, solving the case from start to finish took me…. two hours.
Of course, depending on the case’s complexity based on the position and tasks, solving it could take less or more, but it’ll never be as simple and quick as sending the same set of application files.
In the end, you can get the taste of one’s performance and see if their skills match what you’re looking for. It’s also an opportunity for the candidate to check if they would like the tasks they would be dealing with.
The predictive validity for this type of screening, as talked in detail here, is also much better than relying on resumés – 0.54 out of 1 – bad hires suddenly seem more distant, don’t they?
Step up your recruitment game
Spending your resources on applicants who never wanted to apply in the first place is the last thing you need for your business. Economic instability, talent shortage, candidate shortage – all that forces us to look for more sustainable ways of recruitment.
As the world advances, resumés are becoming obsolete. We are finding better ways of testing candidates that are beneficial to both parties. And so far, case-based screening seems to win the cake! Rid yourself of fake applicants, predict with success, and avoid bad hires by removing the resumés and testing the candidates the right way.