The great labour crunch

Tight labour markets across the global economy will intensify – with implications from wages & inflation to geopolitics & global economic geography

Across advanced economies and beyond, labour markets are tight with unemployment rates at or close to historic lows – 3.8% in the US, 5.9% in the EU (despite the eurozone being on the cusp of recession after this week’s data confirmed a Q3 GDP contraction), and 4.2% in the UK.  A similar picture is seen across small advanced economies.

Employment levels have recovered above their pre-pandemic levels in most advanced economies.  And job vacancy rates remain at high levels, even if they have come off their record highs.  Part of this tightness reflects substantial churn in labour markets through and since the pandemic, as people move between jobs and occupations.  Quit rates soared as people looked for better jobs, particularly moving out of sectors such as retail and hospitality.