Sunday, September 25, 2011
GLOBAL LABOR MARKET – Round 2 (New Crash)
One might think that just having a job in times like today would be a blessing – think again. Though globalization has brought jobs to many parts of the developing world and emerging markets, it has not always been well received. In spite of the global financial crisis that has also kept unemployment levels relatively high in most developed countries. There are still plenty of jobs in many sectors. So what is going on?
Today we are living and working in an “employers market”, this condition typically exists when the volume of labor (amount of unemployed) is greatly higher than the volume of jobs. However in today’s economy there are jobs, yet people are not employed. This strange phenomenon is paramount throughout the world today. In many cases, people are simply not interested in these jobs.
Take a look at your neighborhood news paper’s help wanted section or do a search for jobs in any major city online. You will find there are jobs in many industries at all levels. For years now the lack of confidence in the global recovery of the financial markets has kept unemployment relatively high and constant for an extended period of time. This is even evident in the USA where the number of unemployed has hovered near 10% for nearly a year.
During this time, in many parts of the world, salaries have come down. Additionally the overall cost of living has also gone down in spite of some costs going up. Home prices for example have dropped in the States while the costs of groceries and gasoline have seen increases due to inflation. As such employers have adjusted their pay rates for current and future jobs. Keep in mind; most companies don’t see the global economy picking up any time soon.
The challenge of recruiting staff has actually become more difficult. During the last 3 years, the global Recruiting Process Outsourcing industry has flourished. This is due to the increased challenges faced by employers trying to fill vacancies that in the eyes of many unemployed, are taking advantage of lower labor market costs. Additionally, employers have discovered the disadvantages of retaining fixed cost internal recruiters. This has led to significant wage reductions of recruiters in developed countries.
Recruiting and retaining staff today is increasingly difficult not because there is lack of labor but due to the market conditions that have transformed over this unusually long global recovery. We are now facing however yet another round of recovery instability. The USA has nearly defaulted and still not out of the woodshed. Several EU member States are facing the same fears including Greece, Italy, Spain, Portugal, Ireland, Iceland, etc. None of this incidentally is having a positive effect on salaries going up anytime soon.
In some countries employers are paying less to staff than ever before and requiring them to work longer hours. Though this could be seen as abusive labor practices or simply taking advantage of the situation, this may only be the tip of the iceberg as time goes one. There is no question we are living in unusual times while the financial markets of the world get “reset” to follow new rules which will hopefully prevent this in the future. In the meantime, we may find the expression, “at least I have a job” replaced by, “at least I am not being taken advantage of”.
- Gregorio Cardenas-Vazquez, September 19, 2011