US predicted long unemployment, despite the hundreds of thousands of new jobs and a record number of vacancies. This is the best result for almost a year, but even at such rates, employment will not catch up to the additional development level by the beginning of 2022, followed from the study of The Economist.
Before the pandemic, the rich countries experienced an incredible boom of employment. In 2019, the proportion of people working or looking for people over 15 years old was higher than ever since the late 1990s, even despite the accelerating aging of the population. The employment rate in working age (from 16 to 64 years) was a record high in most of the rich countries. The unemployment rate in the United States was 4.22 percent in 1999, and in 2020 – 3.67 percent. In the EU, this figure was equal to 12 percent in 1999, then 6.6 percent in 2020. At the moment, employment in rich countries, on average, three percent below is an additional daily maximum, that is, 18 million people are not employed now.
Nevertheless, economists consider unlikely that governments will be able to close the employment shortage simply by creating jobs, as the United States did. To solve the problem, you need to understand why the supply of labor has decreased.
One of the reasons is to reduce the number of migrants – this is about the fifth of the workforce deficit in the United States. Fear of the virus could also disrupt the proposal: even in countries with a high level of vaccination, people are afraid to become infected, because of which they do not want to go to work. In addition, a decline in the supply of the labor market may be a consequence of social security policies. The payment of generous benefits of the young unemployed negatively affected their need for work. According to the analysis of The Economist, households in rich countries have accumulated additional funds in the amount of the tenth of the annual consumer spending.
Economists also believe that the supply of labor fell due to changes in the labor relations. A pandemic forced people to rethink their values. Now many will value family leisure more than before. However, it is difficult to measure how much this change is. You can judge in the UK: there was a survey in which people noted that they want to work less hours, even if their salary decreases.