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Retirements common factor in US, UK labor shortage: IMF

WASHINGTON: An exodus of older workers is the “common thread” behind the baffling labor shortages faced by companies in the United States and Britain, the IMF concluded in a report released Wednesday. The “mismatch” between job openings and workers’ willingness to do those jobs, especially low-paying positions, also plays a role, but pandemic aid payments were not a big factor keeping workers away, the International Monetary Fund found in its research.

However its report said the issue of women sitting on the sidelines due to difficulties with childcare and schooling amid the COVID-19 pandemic was a problem specific to the United States alone.

“We found that lower participation among older workers not returning to work is the common thread, and matters most. Mismatch plays a secondary role,” authors Carlo Pizzinelli and Ippei Shibata said in a blog post about the findings. “The fall in female participation is unique to the US, but quantitatively important,” they said, noting that as of October 2021, the absence of mothers of children under five years old “accounted for around 16 percent of the total US employment gap with respect to pre-Covid levels.” Contrary to the narrative often promoted in the United States, the researchers found “only a modest and temporary effect” from expanded unemployment aid.

The more important issue in both countries was that “the share of older workers not in the labor force rose markedly.” In the United States, the exodus and early retirements of workers 55 and older combined with the “she-cession” of female workers, “may account for roughly 70 percent of the US employment gap compared with pre-COVID levels,” the authors said. In the UK, the absence of older workers accounts for 35 percent of the shortage.

Both countries have been hit by a surge in employees leaving their jobs known as the “great resignation,” but the majority of unfilled openings are concentrated in low-wage jobs, the report found. “Workers may have become more reluctant to take up jobs in low-skill occupations, which are traditionally associated with lower wages and poorer working conditions,” the report said, although that explains only a small fraction of the employment gap.

Resolving the labor shortage and preventing persistent scars on both economies requires addressing the pandemic so workers can return to their jobs, the authors said. They also recommend “well-designed training programs to reduce risks of mismatch.” In the United States, they called for “expanded childcare and preschool opportunities,” measures US President Joe Biden has pushed for in legislation that is stalled in Congress.

After Microsoft announced it would spend tens of billions of dollars to buy a video game company, World Bank President David Malpass on Wednesday drew a contrast between the deal and the amount of money rich nations have pledged to help poor countries facing higher debt loads. “I was struck this morning by the Microsoft investment — $75 billion in a video gaming company” compared to just $24 billion over three years in aid for the poorest countries, Malpass said, referring to donations allocated in December by 48 high- and middle-income governments.

“You have to wonder, is this the best allocation of capital?” he said of the Microsoft deal in a discussion at the Peterson Institute for International Economics. “There has to be more money and growth flowing into the developing countries.” Microsoft on Tuesday announced the purchase of US gaming giant Activision Blizzard, the firm behind hits like “Call of Duty.”

Malpass has called on the richest nations in the Group of 20 to provide more debt relief to the world’s least-developed countries that qualify for interest-free loans. A G20 debt service suspension initiative expired at the end of 2021, and this year alone, those countries must pay $35 billion in debt service. “The debt payments are staggering,” and it has become a “compounding” problem, Malpass said. —AFP


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