The summer of records - Trends-Tendances on PC

Will jobs survive the energy crisis? – Trends-Trends on PC

During the covid crisis, the labor market generally behaved rather well. After a loss of 50,000 net jobs during the first half of 2020 (which is very low compared to the loss of activity during this period), 200,000 salaried jobs were created during the two years that followed ( until mid-2022, latest employment data available). This is enough to make a government of the 2000s who had set such a goal during its entire legislature pale. This is indeed a particularly high rate of growth since it corresponds to 25,000 net jobs created each quarter, i.e. around 10,000 more than what the Belgian economy creates in terms of jobs at a growth rate…

During the covid crisis, the labor market generally behaved rather well. After a loss of 50,000 net jobs during the first half of 2020 (which is very low compared to the loss of activity during this period), 200,000 salaried jobs were created during the two years that followed ( until mid-2022, latest employment data available). This is enough to make a government of the 2000s who had set such a goal during its entire legislature pale. This is indeed a particularly high rate of growth since it corresponds to 25,000 net jobs created each quarter, ie approximately 10,000 more than the Belgian economy creates in terms of jobs at cruising speed. Therefore, if in the middle of this year, real economic activity (GDP) is only 1.8% above its level at the end of 2019, salaried employment already exceeds it by more than 3%. It should be added that over the same period, there are 42,000 more self-employed workers. In short, the labor market seems to be posting unprecedented performances: economic growth seems to be more job-intensive than it has been in the past. A priori, a solid job is a good omen to cushion the current shocks. Even though job pitfalls are a reality, finding a job improves a household’s income, which is welcome in the current circumstances. However, let us beware of excessive optimism in this area, for two reasons. On the one hand, if the figures quoted here are in full-time equivalents, the number of hours actually worked may vary according to temporary unemployment (the job still exists but the hours worked drop) or sick leave. However, the total volume of hours worked is, in mid-2022, only 1.3% higher than its level at the end of 2019. This figure is in line with the evolution of the activity but well below employment development. To explain it, we know, for example, that temporary unemployment is still used more than before, but that other phenomena can intervene. In other words, more jobs are needed for the same number of hours worked. Is such an evolution sustainable in the longer term? On the other hand, while employment is more of a lagging indicator of the economic cycle, certain labor market indicators are precursors. This is the case for activity in the temporary work sector. However, activity in the sector, which had digested the covid crisis at the end of 2021, has continued to decline since the start of this year, reflecting a potential future slowdown in employment. We also observe that the number of unemployed job seekers is no longer decreasing. In conclusion, the labor market is currently giving very mixed signals: total employment is doing quite well and surveys show that companies are still eager to hire. But conversely, productivity measured per worker is slowing down. Finally, the leading indicators of the labor market increasingly point to a slowdown in this market, while activity risks being severely affected by the energy crisis. One thing is clear, the ability of the labor market to get through the current shock will largely depend on the duration of a possible recession: if employment is maintained, household consumption is better able to resist, supporting the economic activity. Otherwise, a fall in household income risks prolonging the negative effects of the energy bill on the economy. The next few months will be crucial.

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