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Goldman Sachs is acting to stave off a rebellion among exhausted junior staff in the United States – by offering more money to its freshman analysts. As a solution to a problem deeply rooted in the culture of the workplace, it makes about as much sense as how the UK is tackling a hiring crisis in the transport sector:, will allowed to work even longer.
Meanwhile, France is one of many European countries where hotel companies struggle to hire seasonal workers, as even those willing to raise wages, cut hours, or cut the most onerous jobs cannot offer job security, with Covid cases always fluctuating and new lockdowns possible.
Companies across the developed world are complaining of labor shortages as they seek to expand their business. But many appear to be attempting short-term solutions to old problems, for example, offering signing bonuses designed to distance experienced workers from their rivals, rather than luring new hires into unpopular industries.
This short-term approach can work, to a point. Whether you see them as a drag on the recovery or a much-needed boost to workers’ bargaining power, discussions of widespread and long-lasting labor shortages are overblown. If companies can manage in the coming months, there is good reason to believe that they will have an easier time hiring by the fall.
Much of the problem is that it simply takes time for the large number of people displaced by the pandemic to find new jobs as entire sectors reopen in a matter of weeks. In the United States, where data shows there are some 9.5 million people unemployed and 9.2 million vacant, Federal Reserve Chairman Jay Powell talks about a “speed limit ” at hiring. But he also maintains that more people will return to work as fears of infection subside, schools reopen and benefits expire, saying: “Americans generally want to work and they will find their way. ”
In the euro area, unemployment has remained relatively low, but economists believe the pool of job seekers will increase with the end of short-term work programs. In the UK, leave ends and self-isolation rules are relaxed.
But some problems could prove to be more persistent. One is the mismatch between workers and available jobs. Someone who has lost their job in a downtown department store cannot instantly fill an out of town position in logistics or IT. Jobs could remain vacant even with unemployment rates well above pre-crisis levels.
Another is the fall in international migration. This is particularly acute in the UK, where the pandemic worsened the effects of Brexit on sectors such as food processing and transport which depended on EU nationals. But it’s a problem across Europe: Deutsche Bank analysts say that in Germany, even as in-migration picks up, last year’s hiatus means a shortage of manpower and of skilled workers “should remain a defining problem of the current decade”.
There is also a more fundamental change. The past 18 months have caused many people to re-evaluate their professional lives. Chefs and bar staff may no longer be willing to work grueling and antisocial hours without job security; parents want to pick up children from school; junior bankers could hold out on PowerPoint marathons all night. Meanwhile, wage subsidies and higher benefits helped people stick with the job they wanted. In Powell’s words, they “carefully buy their next job.”
In this environment, sectors facing chronic pre-crisis recruitment problems will have to do much more to improve working conditions and career structures. Professional companies under pressure will have to change the way they operate to make jobs compatible with personal life. A salary increase definitely helps. But as even Goldman Sachs has figured out, it’s not just about the money.