Every good thing comes to an end. In January this year, what looks like a millennium ago, unemployment was at its lowest stage in 50 years following 110 plus consecutive months of job gains; unemployment amongst minority groups was the bottommost on record; and incomes of those under 35 increased 13% over the last year.
And then it all came falling down. The pandemic destroyed the labor market. The unemployment rate reached around 15% in April as over 22 million jobs were gone, the highest level since the Great Depression. Lockdowns impacted the service sector the most many lost their jobs.
This blog by Mr. Atul Mahajan, Director of Trendsetters Facilities and Technical Services Pvt Ltd (TFTS) which is India’s top labor outsourcing company reveals the following things.
Morale Boosting Signs
In spite of the disaster that 2020 has been, signs are morale-boosting that the economy and the labor industry are poised for a recovery. Buyer confidence in the economy is increasing more than expected. Several million new business applications were filed during the third quarter, double the number in 2019. Over the same duration, the economy grew the fastest rate ever recorded. Employers continue to add jobs, though the rate is slowing, pushing the unemployment rate down.
With new vaccines beginning to be distributed, the long nightmare seems to be finally ending. Predictions for 2021 are that the economy will grow nearly 3.7% and perhaps as possibly as 6%, high by historical standards. Also, the unemployment rate is forecasted to drop to below 5% by year-end.
The Form of Things to Come
Recovery in the labor industry will be slow to begin. Economists predict slow growth in the first quarter, but the rollout of Covid vaccines could cause hiring to accelerate during the second quarter.
Growth will be unequal, based on region and industry. Industries dependent on the travel and hospitality industry, in particular, have suffered the most job losses and will take the maximum time to recover.
Industries that stand to get the most jobs includes warehousing and transportation due to a surge in e-commerce. While health care will continue to dominate job growth, due to the trends that have been forming for decades, including an aging population that will keep forcing a need for large numbers of healthcare workers of all sorts.
Jobs related to hospitality and travel similarly will surge as the industry rebounds. Over a quarter of all jobs lost since February are in bars and restaurants. The restaurant industry’s return to pandemic employment levels will take more time, but the industry is supposed to begin growing again in the wake of vaccines suppressing the virus and the relaxation in social distancing restrictions.
Things to Look For
An increase in the participation rate may indicate that more people are coming back into the labor force because they are assuming more job opportunities. While the unemployment rate has been steadily falling.
And while predictions for the labor industry are depended on facts and trends known today but that can simply change, here are two reasons that will possibly impact what happens next in the labor market.
Immunity against the Virus. How many people will reject a vaccine when provide? Some survey indicates that only about certain percentage plan to get vaccinated.
Paving A way for Competitive Pay Scale for Jobs. This could make manufacturing more competitive. The resultant surge in exports could boost both the economy and manufacturing-related employment.
2020 has been a very difficult year, but most indicators suggest that 2021 will bring good tidings at least in certain sectors.
