Pre-Recession Economy Goal: Achievable or Unrealistic?

There is a lot of emphasis right now

by governments and businesses on getting the economy and employment numbers back to the way they were pre-recession. But are the pre-recession numbers the most appropriate goal for our current economic environment?

To regain the sought-after pre-recession employment numbers companies have had to learn to cope with new economic realities. For example, employers have learned to make due with less staff for the majority of the recession. Because organisations have had five years to solve the problems that come with understaffing, job creation at this point in economic recovery will probably be in industries related to population demographics and industries involved in economic expansion. Indeed, some of the biggest labour shortages that are seen right now are in nursing, due in part to an aging population, and in skilled trades and IT due to various government stimulus programs focusing on infrastructure.

The need to accommodate different types of workers has also been a change employers have had to embrace. Gen Y and public sector workers are becoming bigger parts of the private sector, forcing broad changes in hiring policies, workplace culture and employer-employee relations. Over the past few years there has been an increase of Gen Y workers filling new positions and replacing retiring Baby Boomers. Like with any new generation of staff, Gen Y workers in general have a different work ethic and different expectations than their co-workers. Although these expectations and ethics may not differ greatly, many employers are feeling the need to modify workplace culture and business practices to suit new perspectives. Additionally, with the current dominant work sector shifting from public to private, changes in workplace culture, policies and hiring practices are also being influenced by the increasing number of former public servants entering the private workforce.

In anticipation of a recovered economy we can see that the labour force is changing, which is in turn changing how employers approach and interact with employees. Although these accommodations were made in anticipation of a return to normalcy, they are becoming the new norm. Even though job creation is slowly increasing, and unemployment rates are inching downwards, the labour force landscape will continue to change. The population will continue to age, forcing Baby Boomers to retire and opening up the market for more Gen Y workers. Labour shortages will also continue, as there will not be as many workers entering the labour force as are retiring from it. As such, employers will continue to work with smaller staff numbers, and will need to continuously come up with new ways to attract and retain employees.

The current focus on pre-recession numbers by the government, media and economists does not reflect the continuing changes in the economic landscape. Indications suggest that the changes we have seen in the economy will be long term, and require thought and attention by companies if they want to survive. Like everything else in life, the economy cannot always stay the same. Changes in the economic landscape are inevitable as the economy, changes in available technology and social landscapes change and influence each other. It is important to recognise new economic and employment trends so that your business practices can keep pace and anticipate future needs.

Ontario and Quebec major forces behind March job growth

In a total shock to economists the Canadian economy produced an unexpected 82,300 jobs in March. Driven by Quebec and Ontario, two provinces which were harder hit by job losses in the past the than other provinces because of their focus on manufacturing. The two provinces were the force of job increases with 82,500 jobs. This pushed the unemployment rate down two points to 7.2 percent, the lowest level in 3 years.

The job gains were focused on full-time employment and was the largest single monthly job gain since September 2008. The positive number was enough to make a lot of economists more enthusiastic about the economic recovery.

The March rate is unlikely to be replicated in the coming months, but economists are predicting steady economic growth at approximately 2% annually as the private sector continues to grow.

52,500 optimistic Canadians re-joined the job market in search for work in March, demonstrating an increasing desire and optimism in finding work, otherwise the drop in the unemployment rate may have been even more drastic.

Business Confidence Increasing - Business Confidence Index reports

 
The new Regus Business Confidence Index (BCI), published this April, shows more positive signs of economic recovery for the near future. Amongst reports of decreasing unemployment rates over the past few months the BCI found that although numbers remain below those reported in 2010, there has been an increase in business optimism in the past six months.

The report attributes the increase in confidence to wide-spread expected increases in revenue growth in the next six months. The rise in confidence means businesses will be willing to spend the increase in revenue; but because confidence levels are still lower than a few years ago the spending will be more cautious. The BCI found that businesses will likely invest in cost-cutting measures that are spread over different areas, diversifying investment while still spending cautiously. While larger businesses might not feel confident enough for large scale hiring, small businesses were found to be more open to increased staffing, which means there will be more job creation in the next few months.

What this report suggests is that an increase in confidence will lead to responsible business spending in the next six months to a year, aiding economic stimulus and contributing to the increasingly positive economy.

Public sector layoffs. Private sector hiring. Is this such a bad thing?

The government continues to have layoffs, hiring freezes, wage freezes and accelerated retirement programs to decrease the amount of workers in their ranks. The news has been filled with this information and has largely alluded that this is negative information, however if you asked private sector employees and managers you would be hard pressed to find many that would agree.

The private sector is ruled by revenue and profits. Hiring and wage increases are dependent on business growth and those are usually in line with customer satisfaction. So why is it that governments continued to grant unions and workers better benefits and wage increases at numbers that shocked the taxpayers and continued to hire when budgets did not allow for hiring.

Governments are now streamlining their departments to be more in line with budgets and as such their is an increase of previous public sector workers in the market for private sector jobs.

The National Association of State Personnel Executives said that 73% of public employees worry about their image to private sector employers. As such, when looking to translate their skills to the private sector they are facing a struggle to convince employers how they will be an asset to their organization.

There tends to be a culture shock for public sector employees when they move to the private sector. There is a very different culture and expectations are sometimes difficult to adjust to. The private sector holds their employees accountable for driving revenues and client satisfaction, whereas in government there is very little to no accountability for most workers in terms of budget.

Government downsizing has been ongoing since early 2009 and since then over 485,000 government jobs have been cut. At present, 50% of local and state governments are under a pay freeze, 42% are under a hiring freeze and 22% have employees who are accelerating retirement. Overall, 70% of governments are smaller than they were in 2008.

What is not as largely reported is that all of those cuts have been recouped in the private sector which continues to grow.

The American JOBS Act and Hiring

The American JOBS Act has received a lot of media attention since it was passed into law on April 5th. Since then, the Act, which increases aid to unemployed workers and job creation projects and targets small businesses as a way to stimulate the economy, has been the source of endless discussions surrounding the future of the economy. For those responsible for hiring and managing staff the JOBS Act has implications for hiring and sources of qualified candidates.

The JOBS Act makes it easier for small businesses to start up and grow through increased funding, relaxed regulations concerning IPO's, and greater freedom for research. Expanded policies to reduce and avoid unemployment include unemployment insurance reform that will ease the transition to re-entering the workforce and regulations that encourage job sharing.

The Act also includes direct action to create jobs through investment in physical and IT infrastructure and the prevention of layoffs of teachers, police officers and firefighters. Additionally, to support these job creation measures the Act introduces tax reduction and increased assistance for veterans looking for work. The implication of the JOBS Act is that there will be more businesses to provide jobs, decreased layoffs and an increase in jobs, as well as an increase in the labor force.

While it is hard to say at this early point in the Act’s adoption whether it will be successful or not, it does have implications for hiring and retention practices. The increase in new businesses suggests an increase in demand for jobs in various fields, such as IT, human resources, and administration, making attracting qualified candidates harder. The Act does not have any legislation relating to the training or education of workers, meaning that currently trained workers will feel the majority of the increase in demand. Retention programs used in conjunction with competitive hiring practices will be important to reach and keep qualified employees.

As it stands, the JOBS Act will increase demand for passive job seekers while broadening the pool of active job seekers, meaning that diversified hiring practices will be needed to reach different groups of job seekers and strengthen your workforce. Passive, currently employed workers are attractive since they will already be trained and will have all the benefits of already being in the workforce. However, the new reforms for current unemployment insurance legislation introduced by the Act will hopefully increase the number of active job seekers to match the growing demand, by encouraging and supporting the long-term unemployed. With reemployment assistance and “bridge to work” programs there will be a greater number of potential candidates eager to rejoin the workforce.

The American JOBS Act’s multi-pronged approach to economic stimulus brings a new opportunity for economic growth. Tailoring your hiring and training practices to approach and appeal to the long-term unemployed will broaden your resources and reach candidates that will add fresh perspectives to your workplace, helping your business grow and develop.