Central bank officials should beware of labor shortages

Two Michelin star restaurant in London Le Gavroche temporarily Stop serving lunch. Management blamed the problem on finding enough qualified employees, partly because of the impact of restrictions on immigration after Brexit. The restaurant is not alone. British companies reported the fastest hiring rate in 23 years in May. According to a survey by the Federation of Recruitment and Employment.

On the other side of the Atlantic, the company does the same Work hard to find workersNearly half of the small businesses that responded to the National Federation of Independent Businesses’ monthly employment report said they had vacancies that could not be filled—the highest percentage in nearly half a century.Employment data released on Friday showed Wage growth is accelerating.

Shortly after what appeared to be the worst economic crisis in centuries, labor shortages were a good problem. Without vaccines and unprecedented government support, the world may face massive unemployment.Economists will worry about continued deflation rather than “overheat”In many countries, wages have hardly recovered to their pre-financial crisis levels in 2008; this faster rebound will be a considerable achievement.

Nevertheless, investors and policy makers need to pay close attention to the development of the labor market. Withdrawing policy support prematurely may destroy their good jobs, but continued labor shortages and higher wage growth may lead to higher inflation and ultimately higher interest rates.

There is no need to worry yet. Some of these shortages will be temporary. In the same way as last year’s blockade caused the unemployment rate to rise sharply, companies immediately closed their doors and reopened, resulting in a sudden surge in labor demand. Companies and employees need time to find each other.

The shortage may also reflect the lingering impact of coronavirus support; in many states in the United States Temporary increase in unemployment benefits Means that they are higher than prevailing wages. In Europe, vacation plans mean that some workers are also less eager to find a new job. However, these plans will soon end.

The mismatch between workers and available jobs is more worrying and may last longer. The total number of employed people is still below the level of the economic blockade, but this process has changed the labor market. The department that is expanding and hiring is not necessarily the department that caused workers to be laid off. Many people who left the hotel industry later found jobs in supermarkets or worked as delivery drivers.

The U.S. government also wants to transfer the bargaining power to workers to increase the relative power of labor relative to capital. Ensuring the scarcity of workers relative to jobs is a clear policy goal aimed at bringing higher wages and better conditions to workers, and encouraging companies to invest in labor-saving technologies and training. Some people pushing for stricter British immigration controls may have similar motivations.

Faster productivity growth means that rising wage expenditures will not necessarily be passed on to consumers through inflation.There is also encouraging evidence here: spending on Technology investment in the UK Higher than before the epidemic. Working from home and other digital jobs can help increase productivity growth.

This is unlikely to help Le Gavroche’s lunch service. At present, they are like the governor of the central bank and will have to wait.

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