Labour shortages and labour market inequalities: Evidence and policy implications

Labour shortages have reached historically high levels over the past decade. While recent labour market adjustments have eased some of this tightness, several sectors continue to struggle with significant shortages. This persistent issue can hinder productivity growth, exacerbate supply chain bottlenecks, and ultimately contribute to inflationary pressures. Against this background, this paper examines labour shortages from a distributional perspective, focusing on the wage, non-wage and sociodemographic dimensions of affected jobs. A key driver of these shortages, among others, is poor job quality, deterring workers from entering or remaining in these roles. Sectors experiencing persistently high shortages, across all countries studied, include healthcare, transportation and storage, accommodation and food, and construction, where women and migrants are overrepresented. Despite these shortages, widespread real wage improvements in these sectors have been largely absent, though some country-specific variations exist. Regarding non-wage job quality dimensions, sectors and occupations with higher shortages tend to exhibit a higher incidence of shift work. Likewise, workers in these sectors experience greater exposure to both mental and physical health risks. Based on cross-country analysis, supplemented by country-specific studies, the paper proposes areas of policy interventions. These include supporting efficient labour market reallocation, prioritising job quality improvements over simply increasing job quantity, and mitigating regional disparities in shortages.