I have never been a hiring manager, but I have been a developer asked to evaluate candidates in interviews for multiple companies, and I've seen my own employer turn away qualified candidates. I've also been an employee at companies who institute hiring policies their own current employees would not pass, and then claim new candidates are unqualified based on those policies. Neither of these are particularly unusual.

I've also been a person applying to jobs, where I know I'm fully qualified (usually because I already do the same thing in the same way for a competitor) and where I'm told "we think your a good culture fit, but we're worried about your technical abilities". I can't know exactly why they said that, but when I've showed working code they say their happy with, but I know I struggled on their brainteaser questions, it feels safe to infer.

So, I've seen qualified candidates turned away because they were "unqualified" (but they really weren't), from both sides of the table. I'm not claiming there is a huge surplus of engineering out there, but there is no real shortage either. There are enough engineers, just not enough employers willing to hire them.