Labour Economics: Navigating the Labour Market
Explore the labour market in a covid world through a graduate's lenses
Covid-19 has been described as an agent of chaos for the labour market: whilst this is true, as evidenced by the several businesses that have closed their offices permanently since the lockdowns were implemented, I will argue for the opportunities that exist for the graduate in the labour market as a result. First, I will explore the type of unemployment transpiring in the labour market and what opportunities exist now, or will exist in the future, for the graduate. This will be followed by a discussion of workplace flexibility arrangements that will be available for students to accommodate the changing business world as a result of coronavirus.
Is Covid a Catalyst for Change in the Labour Market?
It seems that lately, you can’t turn on the TV news or read a newspaper without hearing about businesses that have had to permanently close their doors through no fault of their own, be it a restaurant that served its last meal in March or a homeware store that sold its last piece of furniture. This has upended people’s lives and had a detrimental effect on their livelihood and well-being. The list of businesses that have gone into administration is long, including (but not limited to) Harveys Furniture, Bertram Books, Monsoon, Aldo, and Go Outdoor amongst others. As mentioned, these businesses have gone into administration through no fault of their own; this has led to Cyclical unemployment, also known as Demand Deficient unemployment. This is the type of unemployment that stems from cycles of economic upturn and downturn. Global and national economics came to a standstill during the pandemic; John Maynard Keynes and his school of Keynesian economics would posit that any level of unemployment beyond the natural rate is likely as a result of insufficient demand for goods in the overall economy.
If we are to follow the laws of the economic trade cycle, the current economic downturn should be followed by economic recovery and a boom. How quick the economic recovery will be is dependent on several other factors, but we can already see the gears in motion with governments trying to influence their economies by injecting spending into the economy at large and in industries including the airline industry as part of the recovery process. It then makes sense that in future, we should see the economy booming. You don’t have to take my word for it. The Office for Budget Responsibility (OBR) came up with three scenarios for the Gross Domestic Product for the next 5 years, adjusted for Covid.
Following the sharp contraction in 2020, the economy is forecast to grow again up to the year 2025, ceteris paribus. By mid-2022, all scenarios point to a better than pre-pandemic economic growth. It would then make sense that with the economy blossoming, consumers will start feeling confident to spend once more, and businesses will need to hire employees to meet the increased demand. This forms the basis for the argument that the graduate entering the labour market from 2021 onwards should have a good number of opportunities.
Industries and Graduate Degrees set for Post-Covid Boom
Whilst some of the changes to the labour market are temporary, there are some changes in the business landscape that are here to stay. Below, I will look at the industries and the corresponding graduate degrees that will most likely see a boom in the post-Covid world. These industries are expected to see an increase in labour demand from businesses (increase in demand for a product or service will lead to an increase in the demand for that labour).
- E-commerce – Marketing/Digital Marketing, Electronics and IoT, Advertising, Data Analytics, Media, Communications and Social media
- Logistics – Supply Chain Management, Logistics & SCM, Public Service Management, Business Management, Maritime Business and Logistics
- Eco-Friendly Technologies – Eco-Technology in Industrial Processes Engineering and Environmental Technology
- Pharmaceutical Manufacturing – Advances in Drug Therapy, Pharmaceutical Chemistry, Cell and Molecular Biology and Pharmaceutical Sciences
- Remote Learning
- Telehealth – Nursing, Osteopathic Medicine, Psychology, IT and Business
- Legal Services – Law
The findings by PWc - which state that some of the least affected industries during the pandemic were scientific, finance, insurance and education - also give an indication that in future, as some companies go digital, they will be looking at what these industries all have in common (i.e. technology plays a role).
There is a misconception that if technology is introduced, workers will become obsolete. As far back as 1800, when a large number of workers were employed in agriculture, this was feared. When labour-saving technology was introduced, rather than displacing workers, the opposite was true as new roles were created in producing machines. As alluded to, technology is far from being a catalyst for unemployment; it simply shifts the types of jobs available within the economy.
The Malleable Workplace and Graduate: Workplace Arrangements Flexibility
Now, I will examine the workplace flexibility opportunities and arrangements that prohibit the pandemic from presenting untraversable negative impacts on the labour market/economy. One of the main reasons why unemployment exists is because of menu/search costs and asymmetry information. Much of the whole labour force is unaware of the jobs most suitable to their qualifications and, as a result, end up missing great opportunities. In the new age, the labour force is more computer-literate and businesses now advertise their job roles using a wide array of avenues online. This, coupled with the flexible working arrangement of labour mobility, means that graduates still have plenty of opportunities to enhance their careers.
All the big tech companies, such as Google, Facebook and Microsoft, set working from home as standard; for some companies, this is a permanent change post-Covid. Another example is Cath Kidston, which went into administration due to Covid, but they were able to secure a deal to buy back their online operations.
Some of the factors affecting workplace flexibility include:
Mobility of Labour
Of the three main labour mobilities, geographical mobility is the most relevant for a graduate who might be looking for a job in a work from home firm. So, imagine you want that job in London but can’t afford to move to London, then there will be plenty of opportunities for you including virtual apprenticeships that have increased during the coronavirus lockdowns (hopefully the pay will be just as good).
Ability to Hire and Fire
From the firm’s perspective, a flexible labour market is one that allows them greater freedom to hire workers when demand increases and to fire them when demand falls. Has this ever been more relevant than now?
In the UK, way before the pandemic, all employees have the legal right to request flexible working and this goes beyond just carers and parents. Coronavirus has now woven working-time flexibility into the fabrics of work-life for most people – a trend which is likely to still be in place in the near future.
Number of Temporary and Part Time Work
The idea of temporary work is scary for those who need job security. However, the ability of firms to offer both part-time and temporary work are drivers of the demand for labour from businesses. It may be the case that you don’t want to be working full-time soon after you graduate; perhaps you would like to travel, for example, or have other commitments that call for temporary/part-time. We can hope that this is a type of flexibility that most employers have embraced in light of the pandemic.
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