By Ryan Dominic Sy; Managing Partner, Bull Run Consulting Co.
The pandemic is to blame for today’s inflation. That’s at least what most economist are saying. People started to enjoy their freedoms once hard lockdown measures and tight restrictions on movement ended. They are now able to spend the money they hadn’t used while being locked up at home. This creates a spike in demand at a time when supplies are coming in slow due to supply chain and logistics problems.
There’s also a huge drop in production since the pandemic began. Combined with breakdowns in shipment and the supply chain in general, this drives the prices higher. Now that inflation is high in a time when unemployment is rampant, the next big question is whether it will ease next year.
There’s a possibility that strong inflation might not ease anytime soon, and the labor market situation might have a hand in it. Despite the high level of unemployment, there’s an increase in available jobs. The reason for this is the difficulty in filling the jobs. The incongruity in the jobs market doesn’t seem to make sense, but it is real. Employers are hiring but no one gets hired.
There’s this obvious disconnect that there are many unfilled jobs around yet there’s still a lot of displaced employees unable to find jobs. But just because a company wants a worker doesn’t mean a worker wants to work for them.
Most laid off employees come from large companies where they’ve enjoyed an orderly, well-structured, and well-organized tenure; not to mention the wonderful company perks and benefits. The number of available jobs, on the other hand, are mostly from companies who weren’t large enough to require a drastic restructuring. These are smaller companies that don’t have the same level of working conditions and privileges as those large companies where most laid off workers came from.
Despite the high unemployment rate, people are still choosing the perfect job. As these companies now realize that it isn’t easy to attract the best hires, they’d increase the salaries they’re offering. Then with the increase in salaries comes an increase in consumer spending. Eventually the demand for goods and services rises and so will their prices for as long as there’s the bottleneck in the supply chain strained by the effects of the pandemic.
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