Policy recommendations

• Rising labour shortages reflect structural shifts, including the digital and green transitions, as well as a cyclical component in the wake of the Covid-19 pandemic.
• The policy debate tends to focus on the need for skills and, where they are deemed to be missing, on bringing in those skills through immigration and mobility. Most discussions ignore the role of job quality, even though labour shortages have increased most and are worst in jobs with lower wages and worse conditions.
• Tight labour markets can provide workers with opportunities, to some extent making up for the slow erosion of workers’ bargaining power over time. Indeed, this can lead to higher wages, better conditions and higher equality of wages overall.
• It is now necessary to support workers and sectors in improving conditions. This can be done by embracing higher minimum standards on wages and quality of work. This aspect should not be neglected.