Unemployment rates have been rising since the first quarter of 2020 and have shown some improvement recently. Could this improvement be an illusion?
In the U.S., the unemployment rate fell drasticallyOpens a new window in August since some organizations have begun to hire new staff again. Temporary hiring for the census may have also impacted the job numbers positively. 1.4 million new jobs have been added, and unemployment fell below 10% for the first time since the pandemic began.
The fact that this improvement has continued for the fourth consecutive month points toward a recovery. Even so, the current unemployment rate remains much higher than it was in February 2020.
Should We Believe the Numbers?
Despite a rise in hiring, the rate at which jobs are growing is slowing down. All organizations, irrespective of their size, are struggling to stay afloat. Experts say that even at the current rate, as per experts, we’re looking at another nine months for the 12 million workers unemployed since February to return to work. Another crucial data point shares the depth of the problem – the “underemployment†rate. Underemployment comprises all those workers who are not looking but want to work or work more. The underemployment rate is over 14% currently.
In June, when economic activity restarted across the U.S., 4.8 million new jobs were added, and the unemployment rate dropped to 11.1%. Even at that stage, experts were cautious about the situation as the second wave of COVID-19 cases hit several states. It was unclear if it was going to be a sustainable trend. With no substantial change in expert views and slowing job growth, reducing unemployment and underemployment levels will take a long time.
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Slow Job Growth – What Can Companies Do?
Job creation is directly linked with demand. If revenue loss and poor sales affect businesses, they will likely lay off employees for a more robust bottom line.
Create tools that can support the current workforce
Returning to work does not seem like a viable option for the rest of 2020 and perhaps even for some part of 2021. Companies who are bringing back furloughed employees or hiring should create the right technology infrastructure for remote work. This can reduce high costs such as those of physical infrastructure and be reinvested in digitalization. By doing this, even when they cannot add new jobs, companies can ensure that existing jobs can be saved.
Cross-exchange talent with other sectors
Some sectors that were hit by job cuts and layoffs, such as hospitality and leisure, have staff already trained in critical skills such as customer service. Such skills can be mapped to other sectors such as technology, healthcare, and retail, which have started hiring so that with some level of additional training, they can be reemployed. Centralized online talent marketplaces are the need of the hour.
Platforms such as SAP® Fieldglass® External Talent Marketplace have been launched recently to help organizations find and hire temporary workers quickly. This marketplace is available in the United States until December 31, 2020, at no charge. Similarly, partnerships like the one announced by Upwork with Business Talent Group (BTG), the marketplace for independent management consultants, interim executives, subject matter experts, and project managers, is another step toward placing temporary employees, who can drive the business ahead.
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When increasing the pace of job growth by adding new jobs seems improbable, the next best option is to ensure no further decrease in employment and more talent redistribution to jumpstart the recovery process. This requires companies who are hiring to use the right talent acquisition tools and strategies, and those who are not hiring to focus on retention.