Economists say “mass layoffs” and inflation can push each other higher


News analysis

The term “great resignation,” which describes the record number of a person who quits a job during a pandemic recovery, has recently gained some traction.

According to the rate September, the number of people voluntarily leaving their jobs as a percentage of total employment hits in the United States, ending all-time high World Economic Forum (WEF). Adam Slater, lead economist at Oxford Economics, said in a note to customers on December 1st that this could exacerbate the inflation problem.

Slater suggests that high inflation can affect the minds of workers and create something like a vicious circle that leads to higher inflation.Canada’s annual inflation rate 4.7% of October, Nearly the highest in almost 20 years. It was even higher in the United States, 6.2 percent, That same month.

“The sharp recent rise in inflation has prompted workers to become more sensitive to inflation trends (after a long period of insensitivity) and to look for high-paying jobs, which is even higher inflation. We may provide feedback to you, “he wrote.

According to Slater, those who resign are most notable not only in the United States but also in the United Kingdom.

“This surge may reflect a tight labor market and perhaps a reaction to rising inflation. Potential feedback from high-priced wages and the considerable uncertainty in their development. It represents the area of ​​upside risk for our baseline inflation expectations, “Slater points out.

There are both optimistic and pessimistic views on rising smoking cessation rates.Optimistically, a healthy employment market usually has a fair amount of work cancel.. Pessimistically, Slater points out: As such, smoking cessation rates appear to be an important indicator for investors and policy makers to pay attention to. “

Another story in Canada

In Canada, a similar indicator to turnover is the percentage of people who change jobs. Few people changed jobs from early to mid-2020 after the pandemic, but now it’s back to a more typical level.

“We haven’t seen this great mass resignation for any kind of reason,” said Leah Knoll, Senior Director of Labor Strategy and Comprehensive Growth at the Canadian Chamber of Commerce. I told the Epoch Times.

Nord said there are many differences between the Canadian and US labor markets and it is difficult to determine the impact on smoking cessation rates.

Node pointed out as a hint that Canadians may be more cautious. Statistics Canada“It was noted and reported that the number of self-employed workers working in November continued to decline further behind the pre-COVID level for the five months from June to October.

She said this trend may be due to people seeking to stabilize and improve income, as there is still a lot of uncertainty in the labor market.

“So people may be left behind. They may be looking for. But before they make that leap, they want safety … how this goes. In the sense that I don’t know if it will be [pandemic] I will continue. Even when you think it’s clear, it has a spillover effect, “says Nord.

For record U.S. turnover rates, more workers may simply burn out compared to Canadian workers, for example, while Canada’s recovery benefits end in October, U.S. government support programs are still in place. She commented that it was running.

“South of the border, we resigned to health concerns and childcare / elder care challenges due to not having the same experience in Canada, I understand that and many are.”

Wage rise

Leaving a job to start another high-paying job seems to be paying off in Canada.

From November 2021 to November 2019 in every industry, average wages are for them at work faster for within just three months compared to employees who were in their position due to a long period of time. Rose Statistics Canada..

At the beginning of September, Canadian employers had more than one million jobs. Wages for controlling changes in employment composition by occupation and term have increased by 5.2% over the last two years.

“Job vacancies continue to rise and wage growth is recovering,” the Bank of Canada said. December 8 Interest rate announcement..Central banks are closely monitoring wages, “make sure power is pushing up prices that should not be embedded in continuous inflation.”

Bank of Canada Business outlook survey Released on October 18, for the third quarter of 2021, companies report that they saw a high layoff and said they had finished speeding among staff compared to the previous pandemic level. bottom.

“It suggests that changing worker preferences may be affecting the availability of the workforce,” BoC said. The rise in severance rates is consistent with many Canadians reporting their willingness to quit their jobs voluntarily. “

“All signs point due north from here for wages,” said BMO Chief Economist. Doug Porter In a note to customers on December 3, Canada added that Canada was behind in a serious labor shortage than the United States.

Slater pointed out that smoking cessation rates in the United States and wage growth tend to be linked. The US turnover reached a record 3% in September, but US hourly wage growth is currently up to 5%. Year-on-year..

According to Slater, the tight labor market must clearly be a factor in the increase in resignations.

“Workers have to do other work to go,” he said.

The pandemic has given many white-collar workers greater flexibility, like working at home, which was rare before the pandemic. Some forms of remote, virtual, or hybrid work appear to be the norm in the future. Many have saved a lot of money during the pandemic, thanks to a generous government support program.

WEF says service industries such as retail, hospitality and food services continue to have the highest number of retirees in any sector, with the highest resignation rates among mid-career employees, especially in technology and health care. Said.

Compared to employers, employees appear to be dominant and have many choices.

Rahul Vaidyanath


Rahul Vaidyanath is a journalist with the Epoch Times of Canada. His areas of expertise include economics, financial markets, China, national defense and security. He has worked at the Bank of Canada, Canada Mortgage and Housing Corp., and investment banks in Toronto, New York and Los Angeles.