Worker shortages in some advanced economies are pushing up wages, benefiting low-pay labour and helping reduce income inequality in some countries, but they could also fuel risks of higher inflation, the International Monetary Fund said.
Bringing more workers back into the labour force through policies that speed up job-matching would ease these inflationary pressures. It would also make the recovery more inclusive — particularly among disadvantaged groups such as low-skilled labour, older workers and women with young children, the fund said in a blog post on Thursday.
“Tighter labour markets [as measured by the ratio of vacancies to the number of unemployed workers] in several advanced economies have been good news so far. They have increased pay, especially for low-wage workers, with a manageable impact on price inflation. But some workers who left during the pandemic have yet to return, while others have lingering concerns about their current jobs and new expectations, restricting labour supply,” the blog post said.
“By doing more to help these workers, governments can make the labour market recovery more inclusive while curbing inflation risks.”
Two years after the start of the Covid-19 pandemic, labour markets in some advanced economies are yet to recover.
The latest IMF World Economic Outlook projections show that while the continuing labour market recovery should remain solid, employment would remain below pre-pandemic levels by the end of 2022 in about a third of advanced economies.
Yet, even in some of these economies, there are labour shortages as indicated by a sharp rise in unfilled job vacancies and vacancy-to-unemployment ratios, alongside a recent acceleration in wage growth, the IMF said.
“This surprising co-existence of plentiful vacancies with incomplete labour market recoveries can be found in countries such as the US and the UK, whose government policies and employment trajectories varied widely during the pandemic,” the fund said.
In its latest report, the fund says the sharp rise in unfilled vacancies partly reflects how strong the economic recovery in advanced economies had been until the start of the Ukraine crisis, with firms recruiting in large numbers to cope with booming demand.
However, vacancies have been hard to fill partly due to Covid-related health concerns that have left some older and lower-skilled workers previously employed in high-contact industries outside of the labour force, shrinking the pool of available jobseekers, the IMF said.
In addition, the decline in immigration to countries such as Canada has amplified worker shortages in low-skilled jobs.
Another reason why vacant jobs have been hard to fill is that Covid-19 “may well have changed workers’ job preferences” as they seek better working conditions, the IMF said.
This scenario has also pushed up salaries across the board.
The annual growth rate of nominal wages because of rising labour market tightness, especially in low-pay industries, has helped to reduce wage inequality in some countries.
However, on average, these pay gains have not yet led to additional spending power due to higher price inflation.
“In so far as labour market tightness persists, it is likely to keep overall nominal wage growth strong going forward,” the fund said. “The impact on inflation is expected to be manageable unless workers start to demand higher compensation in response to recent price hikes and/or inflation expectations rise.”
Central banks should continue to signal their strong commitment to avoid price-wage spirals, it added.
Policies to help to bring more workers back to the labour market include measures to curb Covid-19 outbreaks, which would allow older and low-wage workers to re-enter the market, therefore easing pressures and inflation risks, the IMF said.
Keeping schools and daycare centres open will also be important for women with young children to fully get back to work.
Also helpful are short-term training programmes that help workers build the skills required for new fast-growing digital-intensive occupations, such as technology and e-commerce, as well as for more traditional jobs that have experienced acute shortages, such as lorry drivers or care workers.
“To accommodate shifting worker’s preferences, labour laws and regulations also need to facilitate telework,” the fund said, noting the waves of resignations among workers in search of better opportunities.
“Where the decline in immigration amplifies labour shortages, its resumption could further 'grease the wheels' of the labour market,” it said.
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UAE currency: the story behind the money in your pockets
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COMPANY PROFILE
Name: Rain Management
Year started: 2017
Based: Bahrain
Employees: 100-120
Amount raised: $2.5m from BitMex Ventures and Blockwater. Another $6m raised from MEVP, Coinbase, Vision Ventures, CMT, Jimco and DIFC Fintech Fund
The years Ramadan fell in May
Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
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PROFILE OF HALAN
Started: November 2017
Founders: Mounir Nakhla, Ahmed Mohsen and Mohamed Aboulnaga
Based: Cairo, Egypt
Sector: transport and logistics
Size: 150 employees
Investment: approximately $8 million
Investors include: Singapore’s Battery Road Digital Holdings, Egypt’s Algebra Ventures, Uber co-founder and former CTO Oscar Salazar
KILLING OF QASSEM SULEIMANI
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
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Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
