Chris Gray sees better than the widespread unemployment that is plaguing businesses in developed countries.
As the UK’s chief executive in Manpower, the census agency, he sees British companies raising wages, paying for education, retirement requirements – especially doing everything “to get arms and legs to do the job”, as he puts it.
In addition, Gray does not anticipate that unemployment will be reduced next week as the UK finishes the low-paying jobs it suffered during the Covid-19 epidemic – even though about 1m workers still lost government money. “It can’t move,” he said.
A similar issue is playing out in the US and the euro, where funding mechanisms are running out without any indication of incoming workers. The resulting unemployment crisis has shocked companies, adding to the scourge of epidemics chain problems, reduced growth, and in some cases, increased wages, which economists fear could lead to higher prices.
At present a decrease in income and compulsory remuneration is evident in the US. But they are also “a serious risk to the euro”, warned Daniel Kral, an economist at Oxford Economics.
Few expect this to happen. Restaurants and bars in the US, Greece, Israel, Britain and France complained that it would not be able to hire people earlier this year, when many workers were still at home and paid by the government.
But all US states are now abandoning profitable means, and businesses say a lack of staff still using them. In low-income areas such as construction, hospitality and food, unemployment is a major problem.
The same is true of the euro zone, where countries are beginning to reduce the scope of small-scale operational approaches such as France’s partielle.
“Basically, I don’t think so [the end of support schemes] it will be enough ”for labor markets to collapse in the eurozone, says Carsten Brzeski, an economist at ING.
Economists point to a number of factors that make it difficult for people to find work, although there are many who work hard.
One is that the mix of services provided has changed during the epidemic. Many people who find employment can become unemployed in areas where demand is growing rapidly, such as IT and logistics.
“Compulsory hospitality workers cannot drive,” said Claus Vistesen of Pantheon Macroeconomics.
Another problem is that many workers seem to have stopped working during the epidemic.
As of July, only 5% of euro workers were on temporary jobs, compared to a quarter of the peak of the epidemic. “There are not many people left” on charities, says Jessica Hinds of Capital Economics.
Hinds said the main thing is that people who have left workers have decided to return. By the first quarter of 2021, euro workers were 2.6m down from the previous epidemic, while US workers still had less than 2m.
The third reason, according to economists, is that Covid-19 exacerbated labor market problems before the epidemic.
In the UK, Brexit has reduced the number of migrant workers. Germany has an elderly population. In Spain and France, where digital unemployment has persisted for years, some taxes and inadequate education still create barriers to employment even when workers are in short supply.
François Villeroy de Galhau, governor of the Banque de France, has called it a “major economic crisis”. “There are no quicker and more important changes than adding staff,” he said this month.
An important question is whether the decline in employment leads to interest rates which encourage inflation. This depends on the outcome of various measures that the US and Europe provided to workers and companies through the epidemic.
The U.S. paid compensation directly to workers, in case they were fired. Although unemployment in the US has risen sharply since the 1930s The Great Depression, this has left companies free to restructure – which would allow the economy to rebuild strongly.
The EU and the UK took a different approach, and offered funding to companies to retain their employees, thinking that this would allow businesses to restart as soon as the closure ends.
Both approaches cost billions of governments. Today, however, unemployment in the US is “no different” from in Europe, says Adam Posen of the Peterson Institute of Economics.
As Larry Summers, a former U.S. secretary of finance, told the Financial Times last week: “We have a large number of people who have resigned, are overworked and all employers in the United States are complaining about unemployment.”
Excessive price pressures could lead to higher inflation in the US over the long term, OECD was warned last week. The Bank of England also believes that UK wages are rising faster than the epidemic “before the establishment of the labor market”.
However, some economists consider rising wages to be a viable option. In the eurozone, where inflation is less of a concern than in the US or UK, Oxford Economics’ Kral said a shortage of workers could force governments to promote education for those who have been unable to work for a long time and move to another country.
Higher pay in the euro zone also helps southern countries compete, he said, overcoming a temporary problem in the bloc.
Ignacio de la Torre, an economist at Arcano Partners, also believes that a quick pay rise could help keep businesses afloat. While it can hurt the company’s profits, it can increase consumer confidence and waste money.
“Over the past 40, 50 years the capital market has benefited tremendously,” he said. “We are in history right now… Work is gaining momentum.”