- Labor market data have been giving contradictory signals. Labor markets are consistently doing better than expected. Since June, the US has created 1.7 million more jobs than the market forecast. In Europe, the drop in the number of people on furlough schemes has been faster than expected. Yet at the same time, announcements of job losses are frequent and large.
- The good news is that this was not a normal economic downturn. As consumers emerged from lockdowns with money to spend, firms struggled to meet the increase in demand. It is not really a surprise that employers wanted their staff back at work as quickly as possible.
- At the same time, the pandemic has accelerated structural change in the economy. A period of gentle decline has become a plunge toward insolvency. People have changed how they work and how they consume, and they are not likely to change back. Large-scale job losses are unfortunately only too likely as firms face abrupt structural change.
- Now that firms have caught up with the consumer bounce-back, positive surprises are likely to fade. Instead, economies will have to face up to the structural unemployment of workers left behind by the abrupt arrival of the fourth industrial revolution.