Pandemic's impact on the labor market will reverberate throughout 2021 and beyond
The digital transformation has changed everything, from hiring and training workers to technology adoption.
“I don’t think it’s news that the COVID-19 pandemic has had the most significant impact on the labor market since the Great Depression,” said Karen Fichuk, CEO of Randstad North America. “We still have more than 10 million jobs to be recovered. The pandemic has exposed deep-rooted vulnerabilities to the workforce and has underscored the need for policies that will promote a fair and even recovery.”
Fichuk and colleagues shared their insights on Wednesday during “The State of the Labor Market in 2021,” an online media briefing.
Related: ADP Research Institute: Workers’ outlook on labor market and our ‘new normal’
“But there is some good news,” she said. “Our top in-demand jobs in our 2021 salary guide show that even amid one of the most fiscally challenging times that we’ve had in our country, salaries across a number of our key industries and job roles have actually increased. The key is matching displaced workers with the opportunities that exist in the economy.”
Fichuk sees several upsides for the labor market:
- Digital transformation has accelerated.
- Organizational barriers are being shattered.
- Productivity has increased.
- Human understanding has improved.
“Fifty-five percent of executives say their workforce is as productive or more productive when working remotely,” she said. “This remote environment has the potential to increase our overall productivity by 13%. Businesses through a number of industries can not only survive but thrive in this new work environment.”
At the same time, significant challenges remain:
- Job losses have hit low-income and minority populations the hardest.
- The recovery time for these groups is slower.
- Companies learned they must do more to promote mental health.
- Keeping up with ever-changing health rules and regulations is difficult.
“Studies show that up to 42% of jobs that were lost during the pandemic are expected to never return,” Fichuk said. “There has been a permanent shift. We need to focus on reskilling these workers.”
She also pointed to the uneven impact of the pandemic. “One of the most concerning impacts is the creation of a bifurcated economy,” she said. “We are experiencing a tale of two workforces. Low-wage jobs were lost at eight times the rate of high-wage ones.”
These trends will affect the way employers recruit and retain workers in the coming year, said Traci Fiatte, CEO, professional and commercial staffing for Randstad.
“The pandemic has forced companies to do things differently than they did before,” she said. “Video interviewing has become normalized. It also has changed the territory restraints that companies put on themselves for the talent they try to acquire.
“What comes after you find the people? You have to keep them. You have to take new approaches where you are allowing for work-life balance. You are seeing a lot more adaptation by companies to provide things like caregiving services to allow for very flexible workforces.”
Paradoxically, salaries for many jobs are increasing despite high unemployment numbers. “Across the board, we are seeing that the pandemic and the higher unemployment rates are not equaling salary decreases,” Fiatte said. “One of the important keys to retaining employees is that at the end of the day, cash is king. You have to make sure people are paid well. That is still the No. 1 variable that people are interested in. Despite the labor market and so many jobs being lost, we actually seeing salaries increasing by 3.5% for most high-demand roles. Yes, you need things like caregiver benefits, but you also have to make sure your salaries absolutely are competitive.”
Nearly three-fourths of employees also say they prefer a hybrid workplace with the option to work from home or the office. The digital transformation has not only enabled more employees to work remotely but also to be more productive
“The pandemic has tested organizations’ technology capabilities,” said Graig Paglieri, group president of the Randstad Technologies Group. “Some have been able to be successful rapidly, especially when they have been able to transition to a remote work environment. This demonstrates the impact technology can have on an organization’s success. By 2030, between 20 million and 50 million new tech jobs are expected to be created worldwide.“
Sixty-three percent of executives strongly agree that the current environment has sped up the transition to the digital age, he said.
“While this is positive news for some companies. it poses a massive threat to companies that do not have the skills and tools needed to operate effectively,” Paglieri said. “The pandemic has undoubtedly taken a hit on the labor market, but it’s demonstrated the resilience of the workforce and its ability to adapt to a remote work environment.”
Fichuk believes salary, benefits and reskilling will be more important than ever as employers seek to restructure their workforce.
“It’s been a crazy busy year as we have seen massive shifts in terms of supply and demand,” she said. “It also has led to organizations rethinking the way they operate by accelerating things like digital transformation, breaking down some of the organizational barririers in the way we historically thought about work and making employees more productive across a number of industries.
“As we enter 2021, companies will continue to have to evolve, and we all will have to be agile and adapt.”
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