Labour shortages in Italy: determinants, firm' responses and employment prospects

Italy, like other developed countries, has seen a sharp increase in labour shortages in recent years, but little is known about the underlying causes, patterns and implications. This paper investigates various determinants of recruitment difficulties, including increased labour demand during an expansionary business cycle, changes in the skills required, demographic trends, and evolving worker preferences. The analysis reveals significant heterogeneity in labour scarcity, with the most severe shortages occurring in northern Italy, in the sectors of construction, manufacturing, and ICT, and among STEM professionals and technicians. The severity of labour shortages varies according to firm-level characteristics, with greater challenges for companies active in labour-intensive or fast-growing sectors; remote work appears to mitigate this issue. Employers are addressing shortages with strategies such as monetary incentives, offering flexible working conditions, career development opportunities and increased job security. Finally, we analyse the impact of labour shortages on workers' career trajectories, revealing that workers in hard-to-fill occupations tend to have better employment prospects, more stable contracts and greater regional mobility.