What is happening in the labor market in the US and other countries with the post-pandemic recovery deserves to be looked at carefully. About 10 million Americans are looking for work and the unemployment rate in April was 6.1%, a high percentage for this country. However, many companies complain that there are no workers: there are 8.1 million vacant positions, a historical record. A similar phenomenon can be seen in the United Kingdom, Germany, Norway, Singapore and Australia.
The pandemic has caused an unprecedented mess in the labor market. We are witnessing a new distribution of letters and it is convenient to look at some of the elements that shape it. 'The Washington Post' has spoken of "the great reevaluation of work." The US Chamber of Commerce has warned that
the lack of labor affects companies "in all industries, in all states."
On the one hand, there is the impact of the unemployment benefit and the aid approved by the governments. In the US, an extra $ 300 a week unemployment benefit is considered to have deterred many people who previously agreed to work for $ 700 a week. This argument gained strength with the labor data for April, when only 266,000 jobs were created while analysts expected more than a million.
The Republican governors of 25 of the 50 states of the Union heeded this argument that the Democrats described as "ideological" and have begun to waive federal aid that will end on September 6. Mike Parson, Governor of Missouri, said that "continuing with these programs only worsens the workforce problems we currently face."
In May, the US job market performed slightly better and 559,000 jobs were created.
A similar situation is taking place in the UK, although made worse by Brexit. More than 1.3 million foreign nationals have left the country in the last year. The hotel and restaurant sector (horeca) has not managed to keep up with its offer with the rhythm of normalization of life in the United Kingdom. Paradoxical situations are taking place. Tim Martin, founder of the pub chain Wetherspoons and a staunch supporter of Brexit, has asked the government for "some kind of preferential visa system for EU workers" in order to weather the situation.
But the problem is not only in labor demand, but also in supply. Hotels and restaurants is the sector that is noticing the lack of labor the most. There are testimonies, both in the American and British press, of businessmen in the sector who have found their former employees working as restockers in hypermarkets. They receive a similar income, perhaps lower, but nevertheless they have a much less sacrificed schedule. In many cases, businessmen in the horeca sector have fallen asleep at the wage levels prior to the pandemic. 'The Guardian' recently cited the case of Jamie Rogers, a British Masterchef contestant who owns a restaurant, and who has decided to offer a £ 1,000 bonus to every worker who agrees to spend the summer working at her company.
There are countless other factors at play here. From the legitimate fear of getting sick (many of these workers have health risk profiles) to the psychological fact that people seek to do something different with their lives than they did before the pandemic. In some cases public subsidies contribute to delaying return to work and in others they are personal decisions. This phenomenon may be temporary, but it can also be an indicator of a more important change caused by the pandemic in labor relations.
In the last decades, workers' income share of the profit pie has declined. There are many reasons behind this phenomenon: the disappearance of certain well-paid jobs due to the evolution of the productive fabric, the loss of workers' bargaining power, the denaturing of unions (more concerned with defending workers who keep their jobs than those who lose it), the impact of robotization, the relocation of companies to countries with cheaper labor ...
Could these mismatches between supply and demand in the labor market be a sign that there is going to be a fundamental change in the economy? That China's labor force has been declining for 10 years and that has caused wages to rise there is already known. The whole of the West, moreover, has problems of aging and low birth rates. Covid-19 has accelerated other trends such as telecommuting and halted globalization, as well as raising profound questions about life and work. Some think that these forces could restore workers' bargaining power and contribute to higher wages. An increase that would have an immediate impact on inflation.
Reform in Spain
Yolanda Díaz has announced a reform to reduce temporary contracts. People who have held the same position for two years, in a period of 30 months, chaining temporary contracts, will immediately acquire permanent status. Although details are lacking to know, the decision thus implies a loss of flexibility, although if it were accompanied by other measures, such as the introduction of the so-called 'Austrian backpack', it would walk in the direction of the 'single contract' proposed in 2013 by the Manifesto of the 100 economists.