Thursday, December 7, 2023
  • Login
CEO North America
  • Home
  • News
    • Business
    • Entrepreneur
    • Industry
    • Innovation
    • Management & Leadership
  • CEO Interviews
  • Opinion
  • Technology
  • Environment
  • CEO Life
    • Art & Culture
    • Food
    • Health
    • Travel
No Result
View All Result
  • Home
  • News
    • Business
    • Entrepreneur
    • Industry
    • Innovation
    • Management & Leadership
  • CEO Interviews
  • Opinion
  • Technology
  • Environment
  • CEO Life
    • Art & Culture
    • Food
    • Health
    • Travel
No Result
View All Result
CEO North America
No Result
View All Result

CEO North America > Opinion > Tight Jobs Market Is a Boon for Workers But Could Add To Inflation Risks

Tight Jobs Market Is a Boon for Workers But Could Add To Inflation Risks

in Opinion
Tight jobs market is a boon for workers but could add to inflation risks
Share on LinkedinShare on WhatsApp

Labor shortages have pushed up wage growth, benefitting low-wage workers but adding to inflation risks. Bringing more workers back into the labor force would ease these pressures while making the recovery more inclusive.

By late 2021, there were 50 percent to 80 percent more unfilled jobs in Australia, Canada, the United Kingdom and the United States than there were prior to the pandemic. Open vacancies were at or above their 2019 levels in other advanced economies too, and have risen steadily across all sectors, including those that are more contact-intensive, such as hospitality and transportation. Increases in vacancies have been largest for low-skilled jobs.

The sharp rise in unfilled vacancies partly reflects how strong the economic recovery in advanced economies had been until the start of the Ukraine crisis, with firms recruiting en masse to cope with booming demand.

But, as a new IMF Study shows, this is just one part of the story.

Why aren’t vacancies being filled?

Vacancies have been hard to fill for several reasons, some of which were outlined in a previous blog. One is health concerns related to the pandemic. Because of these, some older and lower-skilled workers previously employed in contact-intensive industries remain outside of the labor force, shrinking the pool of available job seekers.

In the median advanced country, low-skilled workers account for over two-thirds of the gap between aggregate employment and its pre-pandemic trend. Older workers, as a group, contribute about one-third of this employment gap. In some countries, such as Canada and the United Kingdom, the decline in immigration also seems to have amplified labor shortages among low-skill jobs.

Another reason why vacant jobs have been hard to fill is that COVID-19 may well have changed workers’ job preferences. In the United States, resignations have risen beyond what their historical relationship with vacancies would imply, suggesting that workers are not just seizing opportunities in a hot labor market but also searching for better working conditions. In the United Kingdom, resignations have risen the most for low-wage jobs that are contact-intensive, physically strenuous or offer little flexibility, such as in transport and storage, wholesale and retail trade, or hotels and restaurants.

Impact on wage growth and inflation

Labor market tightness (as measured by the ratio of vacancies to the number of unemployed workers) has pushed up wage growth across the board. But the impact on wage growth in low-wage sectors has been over twice as large, at least in the United States and United Kingdom. This is because wages are over twice as responsive to tightness in low-pay industries, which have also seen larger increases in tightness than other industries. We estimate that the annual growth rate of nominal wages in low-pay industries increased by 4 to 6 percentage points between mid-2020 and late 2021 because of rising labor market tightness, helping reduce wage inequality in some countries. However, on average, these pay gains have not yet resulted in additional spending power due to higher price inflation.

The overall impact of increased tightness on wage inflation has been more moderate so far, at least 1.5 percentage points in both countries. This is partly because of the small overall share of low-pay industries (and jobs) in total labor costs.

Insofar as labor market tightness persists, it is likely to keep overall nominal wage growth strong going forward. The impact on inflation is expected to be manageable unless workers start to demand higher compensation in response to recent price hikes and/or inflation expectations rise. Central banks should continue to signal their strong commitment to avoid any such price-wage spirals.

Policies can help bring workers back

Curbing COVID-19 outbreaks would enable older and low-wage workers to reenter the labor force, thereby easing labor market pressures and inflation risks. Keeping schools and daycares open will also be important for women with young children to fully get back to work.

Well-designed active labor market policies could also speed up job matching, including through short-term training programs that help workers build the skills required for new fast-growing digital-intensive occupations, such as technology and e-commerce, or more traditional jobs that have experienced acute shortages, such as truck drivers or care workers. To accommodate shifting worker’s preferences, labor laws and regulations also need to facilitate telework. And where the decline in immigration amplifies labor shortages, its resumption could further “grease the wheels” of the labor market.

Tighter labor markets in several advanced economies have been good news so far. They have increased pay, especially for low-wage workers, with a manageable impact on price inflation (the surge has predominantly been driven by other factors). But some workers who left during the pandemic have yet to return, while others have lingering concerns about their current jobs and new expectations, restricting labor supply. By doing more to help these workers, governments can make the labor market recovery more inclusive while curbing inflation risks.

Tags: inflationjobs marketlabor supply

Related Posts

Tv bundles aim to retake streaming’s crown
Opinion

TV bundles aim to retake streaming’s crown

Ghost kitchens turn into phantom of former trend
Opinion

Ghost kitchens turn into phantom of former trend

Beyoncé’s concert film revives the box office
Opinion

Beyoncé’s concert film revives the box office

Target aims for non-alcoholic cocktail market ahead of the holiday season
Opinion

Target aims for non-alcoholic cocktail market ahead of the holiday season

Netflix to offer grand theft auto titles on mobile
Opinion

Netflix to offer Grand Theft Auto titles on mobile

Kraft taps into new market with vegan mac and cheese
Opinion

Kraft taps into new market with vegan mac and cheese

Sports illustrated pulls back controversial ai articles
Opinion

Sports Illustrated pulls back controversial AI articles

Disney’s latest animated features fails to make a box office impact
Opinion

Disney’s latest animated features fails to make a box office impact

Small businesses look to take hold of holiday shopping fever
Opinion

Small businesses look to take hold of holiday shopping fever

Messi’s world cup jerseys could fetch $10 million at auction
Opinion

Messi’s World Cup jerseys could fetch $10 million at auction

No Result
View All Result

Recent Posts

  • Paris to build ‘urban forest’ amid city infrastructure
  • Google reveals advanced AI model, Gemini
  • TV bundles aim to retake streaming’s crown
  • US mortgage refinance demand surges 14%
  • US consumers purchased one million EVs in 2023

Recent Comments

  • CEO North America, August - September 2023 - CEO North America on Interviews – CEO North America, October – November 2022
  • CEO North America, August - September 2023 - CEO North America on CEO North America, December 2022 – January 2023
  • CEO North America, August - September 2023 - CEO North America on Why Tech Companies Are Moving to Texas and Florida
  • CEO North America, August - September 2023 - CEO North America on CEO North America, February 2023 – March 2023
  • Lab-Grown Milk Has Huge Potential to Disrupt Dairy – Simply Commodities on The dairy industry is in trouble

Archives

Categories

  • Art & Culture
  • Business
  • CEO Interviews
  • CEO Life
  • Editor´s Choice
  • Entrepreneur
  • Environment
  • Food
  • Health
  • Highlights
  • Industry
  • Innovation
  • Issues
  • Management & Leadership
  • News
  • Opinion
  • PrimeZone
  • Printed Version
  • Technology
  • Travel
  • Uncategorized

Meta

  • Log in
  • Entries feed
  • Comments feed
  • WordPress.org

  • CONTACT
  • GENERAL ENQUIRIES
  • ADVERTISING
  • MEDIA KIT
  • DIRECTORY
  • TERMS AND CONDITIONS

Editorials –
stuart.james@ceo-na.com

Advertising –
advertising@ceo-na.com

NEW YORK

110 Wall St.,
3rd Floor
New York, NY.
10005
USA
+1 212 432 5800

HOUSTON

1201 Fannin St.
Suite 262
Houston, TX
77002
USA

  • News
  • CEO Interviews
  • Opinion
  • Technology
  • Environment
  • CEO Life

  • CONTACT
  • GENERAL ENQUIRIES
  • ADVERTISING
  • MEDIA KIT
  • DIRECTORY
  • TERMS AND CONDITIONS

Editorials –
stuart.james@ceo-na.com

Advertising –
advertising@ceo-na.com

NEW YORK

110 Wall St.,
3rd Floor
New York, NY.
10005
USA
+1 212 432 5800

HOUSTON

1201 Fannin St.
Suite 262
Houston, TX
77002
USA

CEO North America © 2022 - Sitemap

No Result
View All Result
  • Home
  • News
    • Business
    • Entrepreneur
    • Industry
    • Innovation
    • Management & Leadership
  • CEO Interviews
  • Opinion
  • Technology
  • Environment
  • CEO Life
    • Art & Culture
    • Food
    • Health
    • Travel

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In