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Covid-19 forces workers into better paying jobs – leading macroeconomic influencers

Economists believe that the shift of workers from the services sector to white collar and professional jobs in Canada, is driven by health and job risks. Consequently, employers offering lower wages are more likely to have job vacancies.

Jim Stanford

Jim Stanford, economist and director of the Centre for Future Work, based at the Australia Institute, retweeted an article by David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives (CCPA), on the food, restaurant, and bar workers in Canada are not just sitting aside jobless but about one-fourth million of them are back into the labour market, and in different and well-paying jobs as the Covid-19 pandemic ebbs away. Additionally, the results of low wages for job vacancy rates have deteriorated for low wage employers, as they struggle to increase wages in order to fill those vacancies.

The food and accommodation sectors were particularly hard hit by the Covid-19 pandemic in the country. However, reports suggest that by February 2021, a quarter of million workers in Canada had found new jobs outside their workforce. In addition, there are almost 57,000 fewer unemployed workers in the food and accommodation sectors compared to September 2019.

Data also suggests that most of these unemployed workers have moved to better jobs, such as professional services. In addition, as the job vacancy rate is twice as likely to be driven by low wages in the pandemic, wages increases will now have to be much higher than what existed before the pandemic.

Timothy Taylor

Timothy Taylor, economist and managing editor of the Journal of Economic Perspectives, shared an article on goods, services, and inventories since the Covid-19 recession. Taylor opines that unlike normal recessions where the consumption of services does not move much, but the consumption of goods drops sharply first and then rebounds with time, the short, sharp Covid-19 recession was different.

Government-backed lockdowns and social distancing policies enforced in the US, forced the consumption of services to drop drastically, without having fully recovered yet. Meanwhile, the consumption of goods dropped slightly, but quickly rebounded above the pre-pandemic levels.

As some economists claim, the US economy has achieved its pre-pandemic growth size in the second quarter of 2021. However, the production of goods has climbed as the production of services has not yet fully recovered. Therefore, there is an unusually high rise in goods consumption, but a drop in services consumption. Further, the rise in goods consumption, coupled with supply chain disruptions have led to inventories being held in stock and to be sold later. Consequently, the economy suffered larger and longer dislocations in services industries than expected, while the rebound in goods industries was much stronger than realised.

Fabio Ghironi

Fabio Ghironi, a macroeconomist and Paul F. Glaser professor of economics at the University of Washington, retweeted an article by the International Monetary Fund (IMF), on market sentiment having deteriorated since early 2021, amid concerns over risks to global financial stability and rising inflation. Despite efforts to contain the financial risks during the prolonged Covid-19, economists believe that the global community is faced with three inherent challenges in a pandemic-stricken era, that of Covid-19, climate change, and the crypto.

There is growing anxiety among investors about the uncertainty of the price pressures, which seem more persistent today. Uneven production and distribution coronavirus vaccines, along with the Covid-19 virus mutations, are leading to more infections and more divergent economic prospects for different countries. Additionally, new uncertainties triggered by financial vulnerabilities, in some major countries, have put markets on alert with regards to increased downside risks, policy uncertainty, and surging commodity prices.

While the crypto assets market is growing rapidly amid highly volatile prices, there is a promising opportunity emerging in the financial sector for a more sustainable recovery, via sustainable funds that can help scale the transition to a green economy. Although sustainable investment funds constitute a small proportion of the investment fund universe, the trend is picking steam in recent times. For instance, net flows in sustainable funds increased significantly in 2020, and climate related funds grew fast, surging by an overwhelming 48% of assets under management.

 

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