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LONDON – Much higher wages on their own probably wouldn’t be enough to remove the turbulence and distortions in global labor markets right now – and for many workers, they may not even be the main demand.

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If future wage growth dictates whether this year’s spikes in inflation persist and soaring demand for scarce skills is a central determinant, then workers, businesses, policymakers and investors need to buckle up. for the coming year.

However, it is not always so neat. Business hiring surveys reveal disproportionate demand for more workers as post-pandemic economies pick up, but they also show that the ability to attract and retain staff is not just based on pay.

An HSBC survey released this week surveyed more than 2,000 business leaders in 10 countries and found that stiff competition for talent is forcing companies to think sideways about how to attract and retain workers.

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Survey showed companies expect headcount to grow 13% year-over-year to meet 20% revenue growth targets, with companies in the United States, Mexico and India leading the way. .

More than 40 percent plan to increase the workforce by more than 20 percent and more than two-thirds are already in hiring or retraining mode.

But while nearly half of companies still see salaries and financial benefits as the main driver for recruiting talent, almost as many now place as much emphasis on flexible working, location and ‘well-being’ policies as key decision makers in a post-pandemic hiring wave. and the rush to keep existing workers.

The survey is not an outlier.

In a report titled “Great Attrition,” management consulting firm McKinsey & Co points out that a record number of employees are resigning or considering doing so, and more than 15 million American workers have left since April of this year.

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The extent of future wage pressure may be the biggest puzzle for investors right now

McKinsey found companies struggled to understand the reasons, and financial incentives alone didn’t seem to make a difference to the workforce now seeking flexibility as well as a greater sense of purpose, belonging and purpose. acknowledgement.

It included a survey of employees in five countries – Australia, Britain, Canada, Singapore and the United States – which found that 40 percent were at least fairly likely to quit within the next 6 months in industries ranging from health and education to leisure and hospitality. and white collar jobs in general.

Surprisingly, more than a third have voluntarily left their job in the past 6 months without having another one.

“Inadequate pay” was clearly cited as a factor, but it was not even in the four “most important” reasons – the top spots were occupied by work-life balance, a better sense of belonging and being valued by managers or the organization.

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Truckers and payroll

While this may seem like a flawed argument to some for companies to avoid paying workers more at this time, these labor market sensitivities – taken to be read – could have profound macroeconomic implications.

It may be a far cry from this week’s US jobs report or the chaotic trucker shortages in Britain, but the extent of future wage pressure may be the greatest enigma for current investors – especially with the sharp increases in energy prices likely to be triggered during the northern winter.

For many, the insistence of central banks that this summer’s 3-5% inflation rates in Europe and the United States are transient and only due to pandemic-related bottlenecks will be put on. strained by the question of whether the allowances and wage settlements over the next 12 months assume these higher inflation rates are here to stay.

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“A sustained rise in inflation from the low rates seen before the pandemic is only likely to occur if wage inflation escalates significantly,” the Organization for Economic Co-operation and Development said last month.

While wage indexation and unionization are not what they were during the last wage-price spirals of the 1970s and 1980s, the importance of year-end wage negotiations – or employee compensation agreements more opaque hiring or retention – remains very sensitive.

The OECD believes that overall wage pressures remain moderate. But he highlighted significant increases in some recently reopened “contact-intensive” industries in the United States, such as recreation and hospitality, as well as what appear to be temporary labor shortages. for small businesses in Europe.

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However, he highlighted image distortions resulting from job retention and leave programs that are in progress or about to expire, as well as the net effects of broader business supports. The true health of the global labor market may not be known until much of next year.

And, for many wealthier workers at least, significant foreclosure savings over the past 18 months may have encouraged early retirement, extended career breaks, or a more thoughtful overhaul of meaningful work and where to live.

But priority workers are now granting pay rises over the new flexibilities of remote work, or even finer points on motivation and inclusion in the workplace, could well influence wage inflation significantly in one. foreseeable future.

© Thomson Reuters 2021

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