More jobs than unemployed the new normal

Access roads to Schiphol that will be closed to prevent more people from coming to the airport. Schiphol is struggling with major staff shortages. The Dutch Railways that are cutting back on the timetable, because there is insufficient staff. A traffic jam in rush hour, because an important tunnel has to be closed due to staff shortages.

Sometime last year, Statistics Netherlands (CBS) reported that there were more vacancies than unemployed. That was big news. In the Good Morning Netherlands program I said a day later that this will happen more and more often and in the end it will no longer be news but everyday reality. More and more reports of labor shortages in various sectors indicate that something that was talked about 10 to 15 years ago in terms of 'it was coming' has now arrived. I'm talking about aging. One of the characteristics of this is that the working population is beginning to decline and labor is therefore becoming increasingly scarce.

Corona pandemic has accelerated everything
That will change the economy and society as a whole. Already there are signs of a generation of workers who know that their employer needs them more than they need him. That means more demands, not only in terms of pay but also in terms of division of work, such as working hours, working from home where possible, et cetera. Yes, the corona pandemic with its forced work from home changed the job market forever. Is there still an employer that can work from home that completely returns to five days a week in the office for all? However, that would also have been the case - even without the pandemic - due to the aging population. The corona pandemic has accelerated things considerably and shows that companies and the economy continue to run, even if we work from home.

For the economy, the above means that growth must increasingly come from the increase in productivity, because that other source - increase in the labor force - is a drying source. Productivity will increase if we as a country invest more in education and research and entrepreneurship is given more scope. It is therefore very important that the government facilitates (re)training.

Unemployment remains very low
There are currently more than 130 vacancies for every 100 job seekers, Statistics Netherlands reported earlier this week. That is the new reality. This does not mean that unemployment will disappear in the future. There is always a mismatch between supply and demand, ie the unemployed do not have the experience and skills that employers demand. But unemployment will remain very low.

That said, there is also something that can be done in the meantime. There are still many people who are not registered as unemployed, but who are in fact (partly) unemployed. Think of people who don't have a job, would like one, but can't start right away. Formally they are not unemployed, but actually available of course. Also think of many who have a part-time job, but want to work full-time. This group is large enough to largely solve the labor shortage in the Netherlands. But then it is important that working (more) becomes financially rewarding and additional training more accessible, something in which the government can play an important role. But not to forget: that is a solution for the labor shortage in a somewhat shorter term. In the medium term, all the balls should be on increasing productivity. That must be economic plan A. There is no plan B.

Edin Mujagic

Edin Mujagić is an economist and manager at Beleggingsfonds Hoofbosch. He focuses on global central banks, and in his blogs he writes mainly about developments in interest rates and inflation. He has also written several books.

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