Final answer:
The initial response to a labour shortage is often scheduling overtime hours, as firms aim to manage short-term economic fluctuations without incurring the costs of hiring and training new workers.
Step-by-step explanation:
The initial response to a labour shortage is often scheduling overtime hours. In the context of economic uncertainty, such as the beginning or end of a recession, firms tend to avoid the costs associated with hiring and training new workers. Instead, they prefer to wait until there is a certain improvement in demand. During such times, firms may increase overtime work for existing workers rather than proceeding with layoffs, engaging in retraining, promotions, or transfers which carry more long-term implications. Supporting the labor force may also involve retraining policies to aid structurally unemployed workers, improving job mobility, and redesigning business rules to encourage employment. However, these measures are generally considered when responding to longer-term structural changes in the labor market rather than as an initial response to a temporary labor shortage.