Global Temporary Labor Market to Recover Only Partially in 2021
The global staffing industry revenue was expected to decline 18 percent in the base case scenario in 2020, and 25 percent if the COVID-19 outbreak lasts longer.
After a lockdown of three months in 2020, the labor market trends have undergone a drastic change in terms of loss of employment, government regulations, and salaries falling. According to Beroe’s labor market analysis, the industry would experience only a partial recovery in 2021. While the pandemic has affected the labor market of all countries worldwide, some countries like the U.S., Japan, UK, France, Germany, Netherlands, China, Australia, Italy, Switzerland, Canada, Belgium, and Spain are forecasted to decline even more under the base case scenario. India was forecasted to experience an increase of 11 percent in 2020.
The current high market maturity countries for the labor market in the world are the U.S., UK, Australia, Japan, the Netherlands, Germany, followed by medium maturity markets like Indonesia, India, Spain, Argentina, Poland, China, and more. The pandemic has affected not only companies but has also left many jobless. As per the World Economic Forum (WEF), the age group between 18 and 24 has been most affected. This age group is also highly correlated to economic growth.
Temporary workers are contract-based workers and this kind of employment is preferred for labor-intensive work like the construction, logistics, and healthcare industry. Staffing firms don’t see this industry getting back to normal anytime soon. Additionally, a change in government regulations – for example, the suspension of H-1B and L-1 U.S. visas in 2020 – forced many workers back to their home countries. Although government regulations worldwide are now getting more flexible, there is still uncertainty of a second wave of the virus that makes temporary labor hiring difficult.
On the other side, e-commerce websites are hiring logistics temporary workers in full swing, and the healthcare industry is hiring temporary staff for sanitization. In other industries like IT and digital jobs, remote working is becoming the new normal and companies are getting back to hiring consultants and freelancers with remote working.
In all, temporary contract migrant workers have been affected the most and this situation might get better if the pandemic is short-term. The impact on the labor market has been highest in the U.S., UK, and India. Temporary staffing constitutes 90 percent ($438 billion) of the global staffing revenue and the pandemic has affected the manufacturing sector more than the services sector. Another challenge faced by companies worldwide in terms of both manufacturing and services markets is the lack of skilled labor. In that case, sourcing models by staffing companies are ensuring to fill positions with the talent at competitive rates.
While the labor market is slowly recovering but the question of uncertainty is still prevailing. The drivers for the labor market are dominated by SOW, growth of the gig economy, demand for professional staffing, and rise in global penetration rate. KPIs that hiring companies should take under consideration are quality of the candidate, order fill rates, time to fill, and more.
- The global staffing industry revenue was expected to see a decline of 25 percent if the coronavirus outbreak lasts longer. It is expected to see a bounce back in 2021 but the recovery will only be partial.
- The market was forecasted to decline in countries like the U.S., China, Canada, Japan, UK, and Germany. However, in India, the market was expected to remain upbeat in 2020.
- The drivers for the labor market are dominated by SOW, growth of the gig economy, demand for professional staffing, and other factors.
- The cost of sourcing labor is forecasted to increase since it would be difficult to find the workforce for ground-level support.
In its long-term impact, due to the pandemic, the monthly wage would further increase in many countries, which will lead to the overall rise in labor cost.
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