These are very strange economic times. The economy has experienced very low growth for over 10 years, but unemployment has stayed very low and employers have consistently indicated that they have struggled to find people with the right skills.
The reasons are complex but centre around a falling number of working-age people.
This is bad news for employers and the economy more generally as it is constraining growth, which is desperately needed to boost tax revenues to pay for investment in public services.
However, the corollary of this should also be true, if employers are struggling to fill vacancies, this should be good news for young people in their search for employment.
Yet the transition from education to employment is not as smooth as one might imagine because, unfortunately, too often the skills and attributes of applicants do not meet employers’ requirements.
There have been many reports recently suggesting that young people (the so-called Generation Z) have very different attitudes to work to previous generations, including the desire for greater work-life balance, and this in turn is causing managers of my generation no end of problems.
I must say that is not my experience, but before we jump to premature conclusions on Gen Zs, it is important to recognise that todays’ recruitment market is much more demanding than yester year.
In years gone by, a good qualification from either a university or ‘the tech’ and a competent showing at interview was sufficient to secure a good job, for life.
Things have changed very significantly in recent years, a good qualification is still a pre-requisite but that is just the start.
Graduates now often face multi-stage recruitment processes including psychometric testing, online assessments, all-day assessment centres and then, for the lucky few who make it that far, an interview.
Securing a good job is a highly competitive and demanding process.
Therefore, both employers and prospective employees face significant labour market challenges.
Ten years ago many employers would complain about low numbers of applicants with the right skills, now the problem is simply one of low numbers of applicants.
The loss of free movement following Brexit is often cited as the culprit, but other western European nations are experiencing similar challenges post-COVID.
Many eastern Europeans went home at the start of the pandemic and found their home economies more vibrant than when they left some ten plus years earlier and so they have decided to stay.
Changing demographics and smaller families has resulted in insufficient numbers of young people leaving school, college and university to replace those retiring.
Finding solutions other than continued reliance on immigration is essential because this new demographic trend is established.
There are currently 355,000 school age children in Northern Ireland, but by 2040 that is forecast to fall to 285,000.
That is a 20% reduction in one school lifetime and has very significant implications for the school estate as well as employers in the years ahead.
As an economist I am often asked if artificial intelligence is going to take all our jobs.
However, I look at the current tightness of the labour market and falling demographics and believe that is the wrong question.
It is more appropriate to ask if AI is going to come quickly enough.
For employers, the new economic reality will drive the need to increase investment in technology and automation.
In previous generations, manufacturers replaced labour with machines to stay internationally competitive, in turn creating high levels of unemployment.
However, this current revolution will be different, employers in all sectors will need to adopt new digital technologies to take the jobs for which there are no applicants.
This creates significant opportunities for young people and the prospect of mass youth unemployment seems reduced, but it also creates new challenges.
A more technology-enabled workplace also requires a higher skilled labour pool.
Higher level academic and technical qualifications remain critical, but employers increasingly require young people to have a wide range of broader employability skills and characteristics.
These include abilities relating to teamworking, communication, problem solving, initiative, critical thinking, commercial awareness and perhaps most importantly the right attitude.
These are difficult skills to learn in the classroom and are more likely to be developed in the workplace.
Therefore, young people and their parents should not underestimate the importance of the retail or hospitality job alongside study but also recognise the value of placements and internships while studying for a degree.
This is the perfect learning environment for the young person to prepare them for professional life and also gives the employer a potential future recruitment pipeline.
Developing the skills for the future labour market is therefore a collaborative effort between employers, government and education institutions.
Like so many of the complex problems society and the economy faces, partnership working between different sectors is essential.
Gareth Hetherington is director of Ulster University Economic Policy Centre