The current employment market experiences a lot of changes worldwide. With a new economic crisis approaching and massive layoffs, there is a lot of uncertainty for professionals and businesses. Whether you are looking for a remote data entry part time job or a full-time position, it might be significantly harder now. All of that has to do with several macroeconomic factors that cause a recession.
In partnership with Jooble, we’ve analyzed the trends and latest events that contribute to economic slowdown to figure out how they can influence unemployment rates globally.
Macroeconomic Factors that Led to the Economic Crisis and Massive Layoffs
A recession is a major decline in various activities in the economy. Usually, they last more than several months and impact production, income, retail trade, and employment. Overall, a recession is always caused by more than one event. It takes a chain of them to cause such disruptions. Those events could be rising inflation, supply chain disruptions, major global crises, etc.
The autumn of 2022 brought major layoffs in tech, which caused a lot of worries. Also, the employment markets in major economies like the US and the UK have slowed down. These are among the strong indicators of a new economic crisis and recession.
The main factors that led to the current situation are:
- Recovery from the COVID-19 pandemic that significantly disrupted supply chains worldwide;
- Inflation rising higher than in previous decades;
- The Russian invasion of Ukraine also disrupted supply chains and production cycles as well as led to a massive wave of refugees;
- The COVID-19 outbreaks in China that slow down its economy, which has a huge global influence;
- Rising food and gas prices that cause the cost-of-living crisis;
- Geopolitical tension and fragmentation impact global trade and transportation (including the tension between the US and China).
All of those factors interconnect and slow down even the strongest economies in the world. As a result, the uncertainty causes businesses and organizations to spend less money. This leads to layoffs and a reduction of real income. Companies are less likely to open new branches or hire new specialists as in such a financial environment it possesses major risks.
The Current Inflation and Uncertainty
According to the International Monetary Fund, the numbers for the end of 2023 were not very optimistic.
The largest economies of the world experience dramatic decreases in GDP. For the US the numbers went down from 5.7 in 2021 to 1.6 in 2022. And the expectation is that in 2023, this number will decrease even more – to 1.
For the UK, the GDP rates are not great either. In 2021, it was 7.1 and in 2022 it fell to 3.6. The forecast for 2023 is even more dramatic – it is expected to slow down to 0.3. Similar processes are happening in the EU area for Italy, Germany, and Spain. Emerging and developing economies are also affected.
Global inflation is also on the rise worldwide, which adds fuel to fire. However, the forecast here is more optimistic – it is expected to decrease from 8.8% globally to 6.5% in 2023 and 4.1% in 2024.
What Does it Mean for Job Seekers?
Overall, the crisis and recession are already affecting people. The cost of living is growing and household purchasing power is going down. This is particularly visible when it comes to specific food products or energy prices.
When inflation is growing, governmental agencies are raising interest rates to slow it down. However, not everything is so negative. Despite the macroeconomic factors and worrying tech layoffs of 2022, the US job market is still rising. And the unemployment rate for October 2022 was 3.7%, which is quite low.
The same goes for the UK labor market – the unemployment rate for November 2022 was also 3.7%, which is one of the lowest rates since 1974. And it is lower than at the beginning of 2021, at the height of the COVID-19 pandemic.
Although there is a lot of discussion about the recession, it has not been confirmed by these factors. Surely, there are negative influences on economic growth globally, but the forecasts are not entirely negative. The employment market changes will probably vary based on geographical location. For example, big cities and metropolitan areas are most likely to be seriously affected.
However, it is important to know that the job market will probably slow down a bit. A lot of professionals choose to stay in their current positions due to financial uncertainty. And many businesses will not risk by widening their in-house teams. There might be some operational cuts and layoffs.
This might cause some difficulties with job search, but as for now, the employment markets are still strong. And for many companies, it means that holding to talent is much more beneficial than looking for a new one, which can give more opportunities and benefits for specialists.
Global economies are affected by the COVID-19 recovery and new outbreaks that slow down China. Another major factor is the Russian invasion of Ukraine, which causes a lot of instability in Europe. Although the GDP numbers are decreasing, it is not all bad in terms of forecasts. The inflation is expected to decrease and major job markets remain strong.