Companies facing skills shortages are suffering from a dysfunctional labour market, a disconnect with the millions of unemployed and even employed people whose skills are not being utilised, according to the McKinsey Global Institute.

But online talent platforms such as job boards and professional networking sites like LinkedIn can help in easing the “dysfunctions” by making the way labour markets function more efficient and transparent. 

According to the Institute’s latest report, ‘A labor market that works: Connecting talent with opportunity in the digital age’, companies adopting online talent platforms could increase output by up to 9% and reduce HR and talent-related costs by as much as 7%.

The report estimates that by 2025, online talent platforms could add US$2.7tr (£1.7tr) or 2% to global GDP and increase employment by 72m full-time-equivalent positions.

The online platforms also create transparency around the demand of skills, enabling young people to make more informed educational choices. 

But to capture this potential, broadband internet access will need to be expanded and labour market regulations will need to be updated, the report says.

And online platforms can only go so far; they cannot create better quality jobs, for example, “but they can make a much-needed difference in how well economies perform one of their most basic tasks: connecting individuals with productive and fulfilling work”. 

The report continues: “Labour markets are ripe for transformation, and it is finally arriving – in the form of digital platforms, the very same technologies that have reshaped the business and consumer environment in areas such as e-commerce.”

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