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Goldman Sachs is acting to stave off a rebellion among burnt-out junior staff in the US — by offering its first-year analysts more money. As a fix for a deep-seated problem with workplace culture, it makes about as much sense as the way the UK is tackling a hiring crunch in the haulage sector: HGV drivers, whose hours are already almost as punishing as those of highly paid bankers, will be allowed to work even longer.
Meanwhile, France is one of many European countries where hospitality businesses are struggling to hire seasonal workers, because even those willing to raise pay, cut hours or scrap the more onerous tasks cannot offer job security, with Covid cases still fluctuating and new lockdowns possible.
Across the developed world, businesses are complaining of labour shortages as they seek to ramp up activity. But many seem to be attempting short-term fixes to old problems, for example, by offering signing bonuses designed to tempt experienced workers away from rivals, rather than to draw new recruits into unpopular sectors.
This short-term approach may work, up to a point. Whether you see them as a drag on the recovery, or a much-needed boost to workers’ bargaining power, talk of widespread, lasting labour shortages is overstated. If businesses can muddle through the next few months, there are good reasons to believe they will find it easier to hire by the autumn.
A lot of the problem is that it simply takes time for the huge number of people displaced by the pandemic to find their way into new jobs as entire sectors reopen in a matter of weeks. In the US, where data show there are some 9.5m people unemployed and 9.2m job vacancies, Federal Reserve chair Jay Powell talks of a “speed limit” on hiring. But he also maintains that more people will return to work as fears of infection subside, schools reopen and benefits expire, saying: “Generally speaking, Americans want to work, and they’ll find their way.”
In the eurozone, unemployment has remained relatively low, but economists think the pool of jobseekers will grow as short-term work schemes wind down. In the UK, furlough is ending and the self-isolation rules are being eased.
But there are some problems that could prove more persistent. One is a mismatch between the workers and the jobs available. Someone who has lost work in a city centre department store cannot instantly fill an out-of-town job in logistics or IT. Jobs could remain unfilled even with unemployment well above pre-crisis levels.
Another is the fall in international migration. This is especially acute in the UK, where the pandemic has compounded the effects of Brexit on sectors such as food processing and haulage that had relied on EU nationals. But it is an issue across Europe: analysts at Deutsche Bank say that in Germany, even if inward migration recovers, the past year’s hiatus means a lack of labourers and skilled workers “should remain a defining issue of the current decade”.
There is also a more fundamental shift. The past 18 months has led many people to reassess their working lives. Chefs and bar staff may no longer be willing to work gruelling, antisocial hours without job security; parents want to pick up children from school; junior bankers resist all-night PowerPoint marathons. Meanwhile, wage subsidies and higher benefits have helped people to hold out for work they want. In Powell’s words, they are “shopping carefully for their next job”.
In this environment, sectors with chronic recruitment problems that predate the crisis will need to do far more to improve working conditions and career structures. High-pressure professional firms will have to change the way they operate to make jobs compatible with personal life. A pay rise no doubt helps. But as even Goldman Sachs has grasped, it is not just about the money.