27 Jan Why the Talent Market Is Becoming Illiquid

In today’s global economy, many organisations talk about a talent shortage. But calling it a shortage doesn’t fully describe what’s happening. A more accurate way to understand the current labour market is to think of it as illiquid—where the people with the right skills exist, but they are not easily matched with the jobs that need them.

What “Illiquid Talent Market” Means

In finance, liquidity refers to how easily assets can be bought or sold. If you apply this idea to the labour market, a liquid talent market would be one where skills and employers find each other quickly and efficiently. But today’s reality is different:

• Many companies have open positions they cannot fill, even though there are candidates available.
• At the same time, there are qualified people not transitioning into those roles.
  This mismatch causes friction: hiring takes longer, costs more, and yields less predictability.

Evidence of the Talent Friction

Multiple data points show how difficult it has become to match talent to roles internationally:

• In a global survey, about 75% of employers report difficulty filling jobs because they can’t find the right talent, affecting industries across technology, healthcare, logistics and more.
• In many European countries, including Italy, about 70% of small and medium companies struggle to find qualified workers due to skill gaps and demographic shifts.
• Even as more advanced technical roles are created, the skills demanded often don’t align with the skills available, creating a persistent mismatch.

Why the Market Is Illiquid

Several structural factors contribute to this illiquidity:

1. Skills Mismatch
   Emerging technologies and business needs evolve faster than traditional education systems can supply matching skills. This leaves a gap between what employers want and what job seekers can offer.
2. Demographic Changes
   Many economies are experiencing ageing workforces, with fewer younger workers entering in sufficient numbers. This limits the overall mobility of talent.
3. Inefficient Matching Processes
   Traditional recruitment methods, and even some AI screening tools, can create artificial barriers that slow down or distort the alignment between talent and jobs (e.g., keyword-based filtering). This adds “friction” to hiring flows.

What This Means for HR and L&D

If the market is illiquid rather than simply scarce, then traditional approaches to hiring and training need to shift.

Recruitment strategies should focus on reducing friction, not just increasing outreach. This requires a deeper understanding of roles, organisational context, and candidate potential beyond surface-level skills. Intermediaries with a strong market view can play a key role in translating business needs into realistic talent strategies.

Learning and development should prioritise adaptability, enabling people to move across roles as needs evolve. At the same time, talent mobility—both internal and external—becomes a strategic lever, not an operational task. In an illiquid market, guidance and market intelligence matter as much as speed.

Viewing the talent market as illiquid reframes the challenge entirely. The issue is not a lack of talent, but a lack of effective connection between people, roles, and organisations.

In this context, organisations that combine market insight, assessment capability, and long-term perspective can help reduce friction and increase mobility—making talent flows more efficient and sustainable. As work continues to change, the ability to navigate this complexity will increasingly distinguish reactive hiring from strategic talent decisions.

In an increasingly illiquid talent market, is your organisation focused on simply filling roles—or on enabling talent to move where it creates the most value?

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