Deep Dive Into Recent Employment Trends and Global Workforce Challenges
Published by HRCap, Inc. on September 11, 2024
The labor market represents the intersection of labor demand and supply, where employment opportunities meet job seekers. Two of the most common indices utilized to check the health of each country’s labor market are unemployment and employment rates. The unemployment rate measures the percentage of people without a job, while the employment rate is the percentage of people working among all of the population who are at a workable age (mainly 15 years or older).
While unemployment and employment rates offer a snapshot of the labor market, they don’t tell the whole story. Macroeconomic factors such as population growth and decline, education, company dynamics, compensation, and work hours also significantly shape the labor market. These are crucial to consider because even if the two countries have similar employment or unemployment rates, the situations of both employees and employers can differ significantly.
By analyzing and comparing such situations based on the greater macro and microeconomics context, HRCap offers insight into the labor market in the United States, Asia, and Europe.
Labor Market In The United States
In the first quarter of 2024, the U.S. labor market remained strong, although experts predict hiring will slow through 2025 to 2026, with recovery expected when GDP growth rebounds. The unemployment rate in May 2024 was 4%, lower than the usual unemployment rate. The employment rate is 60.10%, which slightly outperforms the average employment rate of the United States from 1948 to 2024, which is 59.25%. In April, employers added 175,000 jobs, which signals the slowdown in the labor market, according to the Bureau of Labor Statistics. In August, the Bureau of Labor Statistics announced revisions that showed an even weaker labor market than previously reported: 818,000 fewer jobs were added between April 2023 and March 2024.
Although the overall unemployment rate does not suggest any problem in the U.S. labor market, low GDP growth forecasts for the end of 2024 have led companies to scale back hiring to preserve profits, which caused short-term problems for job seekers. This hiring slowdown has particularly affected recent college graduates, as the unemployment rate for 20 to 24-year-olds spiked from 6.3% to 7.9%, the largest annual increase since the pandemic. More than 40% of the class of 2024 plans to freelance or take gig work, as traditional entry-level positions in finance, consulting, and tech are scarce or favor experienced candidates. Additionally, 4.5 million people answered that they could not land full-time jobs or the company had cut the billable work hours.
The sectors that are most popular to the college grads—white-collar positions in finance, consulting, tech, and others—are not hiring enough or prefer hiring experienced workers who can be productive immediately without major investment in training from companies. Although the job postings for entry-level climbed 3%, it was primarily service-industry jobs at gyms, hair salons, and medical establishments. Students also encounter difficulties finding internship opportunities since the labor demand for corporate positions is low.
While young people encounter difficulties finding jobs, some employers face labor shortages, especially in health care, hospitality, and education. In May 2024, the U.S. had 6.6 million unemployed people, yet 8.1 million job openings, indicating that even if all of the unemployed people were hired, 1.5 million positions would remain vacant. This disparity results from a mix of macroeconomic factors, including a surge in new businesses, a $4 trillion increase in pandemic savings, reduced immigration, and a mismatch between available jobs and workers’ skills.
Labor Market in Asia
Labor Market in Korea
The Korean labor market has recently seen a notable shift, particularly highlighted by a boost in female participation and a growing senior workforce diversifying across various industries. In 2023, female employment outpaced male employment, driven largely by growth in service sector jobs, where women are typically employed. Employment among seniors (60+) has been climbing steadily across various industries such as manufacturing, lodging, and restaurants. Korea’s unemployment rate for 2024 is 2.5%, and its employment rate is 69.8%. Compared to the same time in 2022, there was a 336,000 increase in employed people, which indicates that the labor market has been recovering to the pre-pandemic level.
Despite these positive indicators, Korea faces three significant labor market trends: youth unemployment, discouraged young workers, and an emphasis on work-life balance. Youth unemployment, long seen as a chronic issue, fell to 6.7% in 2023 for those aged 15-29, but job quality remains low. The lodging and restaurant sectors, known for temporary jobs, were the main drivers of youth employment, while long-term contracts decreased by 45,000, signaling a lack of job security for the younger generation.
In 2023, the economically inactive population surged by 5.1%, reaching an all-time-high record. Many young people, those who are in their 20s, avoid jobs at small or mid-sized companies, preferring large corporations or public enterprises, which account for only 10% of job opportunities. As a result, there were 1.26 million unemployed recent graduates, many of whom opt for part-time work or stop job hunting to prepare for a position at well-known companies. This has led to a 46.5% low employment rate among young people and a shortage of 524,000 workers.
Lastly, young people also value the balance between work and life significantly compared to the previous generation. Although Korea implemented a new labor law in 2021 that decreased monthly work hours, the younger generation quit their jobs within a short period due to work-life balance after surviving fierce competition to get a job at large corporations or public enterprises. According to the survey conducted by the Ministry of Employment and Labor, early quitting of new employees costs 20,000,000 KRW (about $14,500) per person every year.
In conclusion, the labor market remains structurally imbalanced despite the low unemployment rate. On the one hand, young professionals struggle to secure their desired jobs. On the other hand, those who land popular positions often leave within two years, causing enterprises to face labor shortages and hiring challenges.
Labor Market in Japan
Japan’s labor market is marked by a low unemployment rate (2.6%) but a relatively low employment rate (61.4%) due to a large proportion of economically inactive elderly people. Japan’s working-age population peaked in 1995 and has been shrinking since. As a result, two-thirds of small and medium-sized companies face labor shortages, creating ample job opportunities for college graduates. In 2024, 98.1% of recent graduates were able to find jobs.
On the other hand, Japan is experiencing an increment in part-time job positions while there is a labor shortage in the lodging and restaurant industry. In 2023, 32.3% of the workforce held part-time positions, but their working hours decreased by 1.4%. This decline is attributed to the "wall of yearly income," where additional work hours do not lead to higher income due to tax and social insurance contributions. Therefore, part-time workers intentionally work less, creating a labor shortage for the lodging and restaurant industry, which is composed mainly of part-time workers.
Labor Market in Singapore
Singapore has had a healthy labor market but has recently experienced a growing mismatch of job seekers and employers. In the first quarter of 2024, the unemployment rate stood at 2.1%, while the 2023 employment rate remained high at 82.6%. In 2023, 93.8% of college graduates secured jobs within six months of their final exams, with 89.6% achieving the same in 2024. Despite the strong performance of students in the labor market, some industries are struggling. The Food & Beverage Services and Retail Trade sectors, in particular, are experiencing high vacancy rates. Across the broader labor market, there are 1.6 job vacancies for every unemployed person. Sectors facing significant labor shortages include healthcare, STEM-related fields, and technical roles such as investment advisors, carbon methodology analysts, and biotechnologists. According to experts, this mismatch stems from a gap between the skills job seekers possess and those employers need, compounded by a declining birth rate, which further reduces the available workforce.
While there is a mismatch in the labor market, Singapore is adapting to fast-paced changes quickly. As one of the most advanced economies in Asia, Singapore has created jobs in software development, management, and scientific research. Also, to avoid falling behind in DEI requirements, many employers in Singapore highlight or at least mention diversity, inclusion, and belonging in the job descriptions compared to other Asian countries. One of the key factors placing Singapore ahead of other countries is that 0.3% of their job postings are related to AI, equating to roughly one in every 250 job postings. This rate is three times higher than in the U.S. and four times higher than in the U.K.
Labor Market in Europe
Labor Market in France
France has been experiencing moderate unemployment, and both the economically active population and job openings are increasing. In 2024 first quarter, France’s unemployment rate is 7.31%, and the employment rate is 68.8%. Most recruitment growth is focused on services, accommodation and catering, agricultural trades, and establishments with less than 10 employees. The majority of the employment was formal employment (86.9%), and 72.4% of them were permanent contract or civil servants, which indicates good job security.
Despite the good news, France is also suffering from a lack of manpower in certain sectors, such as health and social work, personal services, and construction. In 2023, according to the EU, employers in France anticipated that recruitment difficulties would persist for 61% of their projected job openings.
Labor Market in Germany
Germany boasts one of the lowest unemployment rates in Europe but still faces workforce shortages in key industries. In 2024, the unemployment rate stands at 6%, while the employment rate is 77.1%. With 93.3% of college graduates securing employment, Germany is one of the best labor markets for graduates in Europe. However, the labor market still needs a larger, highly educated workforce, either through academic studies or intensive vocational training. There is a notable shortage of professionals such as doctors, nurses, engineers, scientists, and computer scientists. This presents a significant opportunity for skilled and educated job seekers from other EU countries who may struggle to find career opportunities in their own markets.
Germany's labor market has distinct characteristics compared to other countries. Positioned at the heart of Europe, Germany has the highest number of cross-border workers, primarily from Poland and France. Additionally, while Germany is known for its major industries like chemicals, electronics, and automotive manufacturing, 55.1% of its workforce is employed by small and medium-sized enterprises (SMEs).
Labor Market in Italy
Italy has moderate unemployment of 7% and an employment rate of 62.2%. The country’s labor market is expected to grow due to investments from the National Recovery and Resilience Plan (NRPP), which will generate more than 70% of the jobs in sectors such as construction, tourism, advanced services, education and culture. However, labor shortages persist in STEM, healthcare, economics, and technical vocations, as only 60% of the NRPP-driven labor demand can be met by the current workforce.
Labor Market in Spain
Spain has the highest unemployment rate in Europe, but it is improving. It had a 12.8% unemployment rate in 2023, and it dropped to 11.27% in 2024. The employment rate in 2024 is 52.26%. Spain implemented a Recovery Plan policy which led to more investment and growth in the external sectors. Due to this policy, the unemployment rate is projected to have a downward trend in Spain, and the permanent job creation soared five times before the labor market reform.
However, some structural vulnerabilities remain. Spain’s aging population poses future economic risks, and there is a shortage of skilled workers in the transport, healthcare, IT, and renewable energy sectors. Additionally 8 out of 10 businesses in Spain are small businesses that focus on service or trade and have 2 employees or less.
Labor Market in Switzerland
Switzerland has one of the strongest labor markets in Europe with a 2.3% unemployment rate and 80.3% employment rate. Additionally, 93% of the students in Switzerland can find jobs that match their skills and fields within a year after graduation. The most employment upswing was in the lodging and restaurant industry, health and social affairs, industry and construction, and services with an overall increase in job openings. Like other European countries, Switzerland needs more workers in health care, IT, engineering, and construction.
Just like Germany, Switzerland has many cross-border workers. In the future, the demographic change will lead to a shortage in the labor market as it is impossible to replace all the retiring baby boomers with the influx of younger people.
Labor Market in The United Kingdom
The U.K. has an overall decent labor market, although it faces some challenges. The unemployment rate is 4.2%, while the employment rate is 74.5%. Even though the unemployment rate is not extraordinarily high, recent college graduates are struggling to secure jobs as employers are cutting down on hiring due to the latest recession. Just like other European countries, the U.K. is experiencing a shortage of skilled workers in IT and healthcare & social services. Brexit, the withdrawal of the U.K. from the European Union, has further exacerbated issues for industries dependent on “low-skilled labor,” as the flow of workers from the EU has significantly decreased.
Interestingly, work-life balance is becoming a priority for a wide range of employees in the U.K., with not only Gen Z but also millennials and older workers re-evaluating their work commitments. According to recent research, 60% of workers aged 35-44 and 40% of those over 55 would consider quitting their jobs for better work-life balance.
Comparative Analysis
All countries examined in this comparative analysis face some form of labor shortage or mismatch in their labor markets. European countries and Singapore are experiencing shortages in sectors like healthcare, IT, and engineering, while the U.K. and Japan are struggling to fill service worker roles in industries such as lodging and restaurants. Meanwhile, Korea is grappling with a shortage of workers in small and mid-sized companies, while the U.S. faces gaps in non-corporate service sectors like hospitality.
Among the countries that are mentioned, the U.S., Korea, France, and the U.K. are experiencing fewer job opportunities from large enterprises while there are more job openings in the lodging and restaurant industry.
Interestingly, the perception of SMEs varies significantly between countries. In Germany, the labor market is strongly supported by SMEs, which employ more than half of the workforce. In contrast, Korea is facing a talent mismatch, with many job seekers avoiding SMEs, leading to higher unemployment among the educated youth. While European countries are focused on attracting highly skilled workers with college degrees, Korea has an overabundance of graduates who are unable to secure the quality jobs they seek.
In terms of work-life balance, Korea has strong sentiments that differ from many European countries. This divergence can be attributed to differences in the work culture and government-enforced labor policies. While European nations have long regulated working hours, with legislation limiting the workweek to 48 hours as early as the 1990s and 2000s, Korea only introduced similar laws three years ago. Additionally, in Korea’s corporate culture, long working hours have historically been associated with greater productivity and dedication, and leaving the office before one’s boss was often seen as impolite.
Conclusion
Although there is a global trend of labor shortages, the nature and drivers of these shortages vary across countries. For nations that are experiencing a slowdown in the labor market, the central bank can consider cutting the interest rate, like the U.S. Federal Reserve recently signaled an interest rate cut in the future. Given the complexity of labor markets and their interaction with diverse economic factors, it is essential to go beyond unemployment rates and consider the broader context of each country’s labor dynamics.
HRCap is committed to understanding the unique trends and challenges in labor markets across various regions and serves as a strategic partner for our VIP clients across various regions and geographies by offering tailored recruiting solutions to meet the specific needs of each market.
Sources: HRCap, Trading Economics, The Washington Post, Morningstar, NBC News, U.S. Chamber of Commerce, Ministry of Employment and Labor, KLI Employment and Labor, Hankyoreh Newspaper, The Economy, The Asahi Shimbun, Ministry of Manpower, Human Resources Director, European Union, The Network, Schengen News, SWI, Fortune, The Guardian
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