Labor shortages plague advanced economies, although many countries are still unemployed

After the coronavirus lockdown and the reopening of businesses, labor shortages in advanced economies have become increasingly apparent, and this development threatens to increase the company’s wage costs.

Economic data shows that the pressure is most pronounced in the United States. Jennifer McKeown of Capital Economics, a consulting firm, said that “the U.S. business survey already has clear evidence of labor shortages,” and job vacancies have surged and employees have worked longer hours than in the past.

In Europe, the unemployment rate started to fall, in London and Berlin, Same as American cities, Bars and restaurants have been working hard to fill vacancies-raising the question of whether salaries need to be increased to attract employees.

But with the U.S. economy Still missing about 10 million jobs Judging from the pre-pandemic trend, by the end of the first quarter, France and Germany alone had 5 million workers on leave. In theory, employers should be able to attract a group of talents who want to return to work.

In the U.S, Some politicians and economists It argues that generous unemployment benefits, health issues and childcare issues may keep people out of the workforce.

In the UK, employers say they have found that many EU citizens have left, and some remain vigilant about the relative safety of leaving for leave until the threat of further blockade is lifted.

Even in the Eurozone, where the economy is in the early stages of reopening, the latest business survey shows that it is becoming increasingly difficult to recruit.

It is not clear whether this is starting to push up salaries. In the United States, the quarterly employment cost index showed the largest increase in wages in 14 years in the first quarter of 2021, but it lags behind field events and may fluctuate. In the Eurozone and the UK, low-wage workers are still unemployed, and working hours are reduced due to vacations and short-term work plans, resulting in distorted overall indicators of wage growth.

“If the apparent labor shortage in recent data is not resolved, then [US] Wage growth will soar. The demand for labor has skyrocketed,” said Ian Shepherdson of the Pantheon Institute of Macroeconomics, a consulting firm.

However, he added that certain pressures may prove to be temporary, especially after schools have reopened and unemployment benefits have become less generous.

“No one can be sure whether these people have left the workforce. Therefore, no one knows whether they will return,” he said.

Heidi Shierholz, director of policy at the Economic Policy Institute, believes that hospitality and leisure wages in the United States are only returning to pre-pandemic trends and are unlikely to cause greater pressure because they are still far lower. Pay in other departments.

“There is very little evidence that the popular labor market in the leisure and hospitality industry is about to set the rest of the economy on fire… She wrote in the book: Recent blog.

A line chart of the unemployment rate (%) shows that the unemployment rate is declining, but it is still much higher than the pre-pandemic trend

Other economists believe that wage pressures exist in the United States, but in other regions, especially in the euro zone, they should prove to be weaker and more short-lived.

According to Berenberg economist Holger Schmieding, this is partly due to differences in the wage bargaining system. He pointed out that wage growth in continental European countries tends to slowly adapt to fluctuations in economic growth. In continental European countries, many workers are covered by sectoral pay agreements.

In some countries/regions, wages are calculated based on the inflation index of the previous year, which means that the increase in 2021 will be small.

Schmiding said that in Germany, the sectoral compensation agreement concluded “under the shadow of the economic recession” will last for two years, so even if the industry rebounds strongly, it will not appear in wages for a period of time. next year. “

In addition, employers in the UK and the Eurozone may need more labor. Economic idleness is everywhere, but McGovern believes that in the United States, many workers who leave the labor market choose to retire permanently. In the United Kingdom and the Eurozone, when wage subsidies expire and re-enter the job market, at least some employees on leave will be fired.

Line chart of population percentage, showing a sharp increase in economic inactivity during the pandemic

ABN Amro economist Nick Kounis said, “There are many hidden dangers [eurozone] unemployment. Therefore, once some of the turbulence caused by the pandemic subsides. . .We may face a very familiar scene: the inflation rate is lower than [European Central Bank’s] The “price stability target” ratio is lower than but close to 2%.

In the final analysis, the wage outlook for advanced economies will depend on the strength of their recovery-and the extent to which stimulating governments and central banks continue to deploy in the coming months.

Schmiding warned that, especially for the euro zone, wage growth will only follow when the euro zone achieves full employment-he estimates that it will take one and a half to two years.

In contrast, he said: “The US is in a state of fiscal overspending. The US economy will operate earlier than the Eurozone.”

Source link