Global Recovery: Not Every Job Is Coming Back - Bloomberg

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Companies are hiring and unemployment is falling across most advanced economies on hopes that vaccines will eventually contain the Coronavirus. But not every job is coming back.

The pandemic has pushed out older employees and is deepening inequality as lower income workers feel the brunt of the crisis. Economists warn that there’s still a way to go before global employment is back to where it was before the pandemic.

Here’s a snapshot of the jobs recovery in the biggest advanced economies:

U.S.

Source: Bureau of Labor Statistics

A resurgent U.S. job market is creating more opportunities at a faster clip than many economists and employers expected. Nonfarm payrolls rose by 916,000 in March, blowing away economists’ median estimate of a 660,000-job gain. But there are gaps. There are still nearly 2 million fewer U.S. women in the labor force than before Covid. Black women in particular are falling behind other groups in job gains. Bloomberg Economics sees U.S. unemployment dropping below 6% in the current quarter then heading toward 5.1% in the fourth quarter before falling to 4% at the end of 2022.

Japan

Source: Ministry of Health, Labour and Welfare, Japan

Japan’s resilient employment is masking underlying weakness. The proportion of available jobs is still sharply down from pre-pandemic levels, reflecting weak hiring in hotels, restaurants and bars. The unemployed are outnumbered by people furloughed or on leave, and the number leaving the working force altogether is rising. Bloomberg Economics expects Japan’s jobless rate to rise to around 3.0% in the second quarter as renewed virus-containment measures hits the services sector.

Germany

Sources: Bundesbank, Eurostat, Federal Employment Agency, Ifo

German employment has been more resilient than in other European countries due to a greater reliance of the economy on manufacturing even as thousands of businesses remain affected by recently-extended pandemic restrictions. Yet many businesses are strained by nearly six months of lockdowns, and the labor market has a long way to go before a full recovery. Bloomberg Economics expects Germany’s unemployment rate to fall to 4.2% in the fourth quarter and to be at 4% at the end of 2022.

U.K.

Source: Office for National Statistics, HM Revenue & Customs

The U.K. labor market weakened unexpectedly in March as company payrolls fell for the first time in four months and more people dropped out of the workforce. Long-term youth unemployment has been highlighted as a particular concern. Overall employment remains about 800,000 below where it was before the pandemic struck. Bloomberg Economics expects U.K. unemployment to peak at 6% in the fourth quarter before declining to 4.8% in the final quarter of 2022.

France

Source: Dares, Eurostat

While the number of job-seekers in France has declined from an all-time high in the first lockdown, the count remains above pre-crisis levels and around two million people were still on the short-term working scheme in February. A surge in registrations for training suggests French workers are anticipating fundamental shifts in the labor market. Bloomberg Economics expects France’s unemployment rate to rise to 8.3% in the third quarter before declining to 8.0% in the fourth quarter of 2022.

Italy

Source: Istat, Bloomberg calculations based on Istat and Inps data

Note: Furlough rate calculated as approved layout subsidies full time equivalents as percent of total labor force

Italy has lost about 896,000 jobs since the start of the pandemic last February. It was one of the first countries hit by the virus with harsh lockdowns that caused economic output to shrink almost 9% last year. The unemployment rate declined to 10.1% in March from 10.2% a month earlier. Women and the young and the services sector remain the most damaged from pandemic fallout. Bloomberg Economics expects Italy’s unemployment rate to fall to 9.4% in the fourth quarter before declining to 8.9% at the end of 2022.

Canada

Source: Statistics Canada

Canada’s economy has recovered about 90% of nearly 3 million jobs lost during the first wave of the pandemic, versus just over 60% in the U.S. For months, the data have shown a rebound that has surprised even the most optimistic analysts — a resilience that forced the Bank of Canada to be the first major central bank to signal its intent to reduce emergency levels of monetary stimulus. Bloomberg Economics expects the jobless rate to fall to 6.7% in the fourth quarter of 2021 and then to 5.9% in the fourth quarter of 2022.

South Korea

Source: Statistics Korea

South Korea’s jobs market has just started to recover but much of the increase is being driven by temporary and daily workers — employment and labor force participation remain well below pre-Covid levels. Wage growth remains subdued and youth unemployment remains the highest among all age groups while hiring for those aged 60 and above has been the least impacted throughout the pandemic. Bloomberg Economics expects South Korean unemployment to average about 4% this year.

Australia

Source: Australian Bureau of Statistics

Australia is one of the first nations to regain all jobs lost through the pandemic, reflecting a successful early suppression of Covid-19 and a massive fiscal-monetary shot that’s sent the economy roaring back. Participation is at record highs and the unemployment rate is moving quickly in the right direction. But wages growth is sluggish and while underemployment has fallen, there’s plenty of people that want additional hours. Bloomberg Economics expects the decline in Australia’s unemployment rate will slow over the second half of 2021 and doesn’t see the unemployment rate dipping below 5% until 2024.

The Takeaway:

“The beginning of a rapid recovery in the U.S., and furlough schemes keeping workers attached to jobs in Europe, mean the labor market landscape is not as bleak as it could be,” said Tom Orlik, Chief Economist of Bloomberg Economics. “Still, with the pandemic accelerating the ‘Amazon-effect’ shift from small, labor intensive firms to their bigger, tech-savvy rivals, the path back to full employment will be arduous.”

— With assistance by Andrew Atkinson, Theophilos Argitis, William Horobin, Paul Jackson, Jiyeun Lee, Alessandra Migliaccio, Giovanni Salzano, Yuko Takeo, Alexandre Tanzi, Alexandra Veroude, Alexander Weber, Maeva Cousin, Dan Hanson, Andrew Husby, Justin Jimenez, Yuki "Masu" Masujima, James McIntyre, and Carl J. Riccadonna

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