Purposeful Work, Tax Cuts, And Canadian Woes
Hello and welcome back to the Recruitonomics Newsletter! This week, we’re breaking down three distinct stories on Recruitonomics, starting in the north with the Canadian labor market’s woes, then across the pond to tax cuts in the United Kingdom, and finally landing on the universal idea of finding purpose in your work. Let’s dive in!
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This Week on Recruitonomics:?
Canadian Economy Unsteady Heading Into 2024
The outlook for Canada’s labor market and broader macroeconomy is worsening: unemployment continues to rise, inflation remains above what the Bank of Canada can stomach, and employment prospects dwindle for both native-born Canadians and immigrants. Canada’s labor market added 25,000 new jobs last month, while the unemployment rate increased for a second month in a row to 5.8%. This is now 0.8 percentage points above the historical low in April this year, indicating prospects for job seekers are getting more competitive. The total size of the population (age 15+) also grew by 78,000, more than triple employment growth. As we head into 2024, the Bank of Canada faces a delicate interest rate decision in which they must balance the possibilities of a fragile labor market or enduringly high inflation.??
Read the full article here.
What does this mean for recruiters??
The labor market in Canada is in a delicate state. The standout industries of construction and manufacturing do bring positive news for recruiters in those industries, but the situation for industries dependent on consumer spending is bleaker. The Bank of Canada will have to make some tough decisions in 2024. Economists are now forecasting rate cuts in Q2 of next year, hopefully indicating that inflation will fall accordingly to the desired target and the labor market will not head into recession territory.??
Tory Tax Cuts: Money Illusion is Doing Some Heavy Lifting??
In Chancellor Jeremy Hunt’s Autumn Statement last week, he announced 110 growth measures to help the United Kingdom’s troubled economy, many of which will be relatively inconsequential. Some, however, will impact both workers and employers in stride. The government introduced several tax cuts, some of the largest in modern history. The National Insurance tax cuts will impact the self-employed and employees. Additionally, the statement announced the intent to permanently allow “full expensing” for businesses, meaning companies can deduct the full cost of new machinery and plant equipment from their profits. It allows them to write off 100% of their cost of investment. These policies will have a modest positive effect on economic growth and labor supply in the coming years. That being said, the government is also relying heavily on money illusion – people’s bias to think in nominal rather than real terms. Given the massive increase in inflation and wages, the tax burden of many workers has surged significantly despite the cut to the National Insurance tax. In fact, taxes in the U.K. are at their highest since the end of World War II.???
Read the full article here.
What does this mean for recruiters?
While employers will be happy to see that their workers saw their net pay improve thanks to tax cuts, companies should not think that this is the end of the cost-of-living crisis. Due to the stealth tax, workers’ tax burden has increased in recent years.?
Finding Meaning and Purpose in Today’s Work Landscape
Organizational purpose can create a profound sense of belonging, cultivate a trustworthy environment, and enhance an employee’s well-being. Finding a meaningful career feels special and will boost retention: of those who never think about changing their job, 62% consider their job as meaningful. In comparison, of those who think about changing their job a few times per week, only 27% consider their job as meaningful. But what is the difference between organization purpose and meaningful work? Meaningful work is contingent on an individual’s perception of their personal work situation, which is why those in education and healthcare perceive their work as very meaningful, while marketing or communication employees do not. Organizational purpose, meanwhile, transcends individual circumstances and represents the evaluation on an organizational level. In theory, if organizational purpose is important enough to an individual, every task can be perceived as meaningful.?
Read the full article here.
What does this mean for recruiters?
Employers should be mindful of the heightened importance of organizational purpose when individual tasks lack meaningfulness. Engaging employees will require understanding and communicating your purpose.
Coming Up From Recruitonomics:
Join us on Friday, December 8th at 10:00 AM ET for our next Appcast Brief! As always, this LinkedIn Live will break down the latest data in the November jobs report, as well as the latest developments in the recruiting and employer brand spaces. Join Labor Economists Andrew Flowers and Julius Probst, PhD, and Head of EVP and Employer Brand Matt Gilbert next Friday!?
Recently on Recruitonomics:
The United Kingdom’s economy has several issues, including a dysfunctional housing market, low productivity growth, and surging interest rates. Of course, some of the issues are interrelated – the dysfunctional housing market feeds into low productivity, as it shuts high-skill workers out of productive cities. However, the low level of productivity can be tied particularly to the United Kingdom’s underutilization of the country’s highly educated workforce. Most regions in the U.K. have a relatively high share of college graduates but far too many of these graduates are working in non-graduate jobs. Except for London, the U.K. economy is simply not creating enough high-skilled jobs across the country, even as the supply of these high-skilled workers has increased in recent decades.?
Read the full article here.
The rapid increase of interest rates in the United States throughout the last year brought on a slew of recession forecasts. With such high borrowing rates, the economy must slow to a halt, right? That’s what many thought, including Bloomberg, which places the odds of a recession occurring in 2023 at 100%! Of course, there’s been no such recession in 2023. Employment has remained strong, personal income has held up (even in inflation-adjusted terms), and consumption continues to be strong. The forecasters were foolish to predict a downturn with such certainty, but that level of interest rate increase was nearly a guarantee! How has the economy held up against such a dramatic rate hike cycle? Several reasons, really, including COVID-era fiscal support continue to feed through in the form of increased household income, the support of excess savings, and an acceleration in productivity growth. Read more here to learn how exactly the U.S. avoided a recession this year – and why that’s likely to continue in 2024.?
Read the full article here.
What Recruitonomics is Reading:
The phrase of the year was soft landing – the Fed’s supposed goal of bringing down inflation without causing a recession. The soft landing scenario is often talked of as elusive, hard to achieve, and historically rare. As the story goes, when the Fed begins to tighten, a recession is soon to follow: In just one case (1995) was the Fed truly able to softly bring inflation down without hurting the economy. Otherwise, disaster has struck. However, Alan S. Blinder recently took a more critical eye to the Federal Reserve’s tightening cycles since 1965. What he finds is that soft landings are far more common than originally believed – and when they don’t work out, it usually is not the fault of the Federal Reserve, but rather a stroke of bad luck: A war or an unforeseen price shock, for example. Achieving a soft landing is just as much a result of delicate skill as it is of extraordinary luck, but it is not as elusive as it has been made out to be. A soft landing in 2024 would be the sixth out of eleventh tightening cycle since 1965 that ended soft – or at least softish – according to Blinder.?
?More Data & Insights:
Thank you for reading! Stay tuned for next week's Recruitonomics Newsletter and check out Recruitonomics.com for more data-driven insights.