The ongoing pandemic has a significant impact on all countries’ macroeconomic situations, and one of the areas, which can be used for examining the trends in this field is unemployment. The significance of this topic is conditional upon its universal nature alongside the availability of substantial data, allowing to make conclusions on shifts on a global level and individual wealth. Understanding this aspect will help make accurate predictions while reflecting specific microeconomic points, including wage expectations and economic output, besides being linked to inflation as a major macroeconomic term related to the problem.
Changes in Unemployment Rates: Statistics
The recent data provided by researchers from the United States show that the changes in unemployment rates are drastic. According to Kochhar and Bennett (2021), 2.1% of men and 3.1% of women lost their jobs over the past year, which means 8.5 million workers were affected. Meanwhile, actual numbers are even higher since the statistics do not include those individuals quitting their employment. These events are triggered by bankruptcies, lag GDP, and worsen the overall situation on the market, whereas higher inflation does not contribute to improvements.
The mentioned statistics are complemented by inequality in indicators concerning personal characteristics. Thus, women’s situation and, more particularly, that of Hispanic and Black female workers was reported to be worse than the position of men. Also, the data confirm that this population group’s struggles influenced the overall representation of female employees in businesses, as can be seen from the corresponding indicators (Kochhar & Bennett, 2021). Nevertheless, the continuation of the crisis shows that equality is achieved in the shares of unemployed people, while Black and Hispanic workers face more problems.
The Wave of Unemployment: Underlying Processes
To understand the tendencies regarding the shifting unemployment rates, it is critical to pay attention to the underlying economic processes. They are mainly reflected by creating an unfavorable environment on labor markets accompanied by bankruptcies of the companies (Banerjee et al., 2020). Consequently, the situation is exacerbated by a fall in GDP equal to the losses caused by the crisis on the level of enterprises (Banerjee et al., 2020). In addition, unemployment rates in the most affected sectors are three times higher than in the organizations only indirectly influenced by the pandemic (Banerjee et al., 2020). These considerations serve as evidence to further complications in recovery, which can be facilitated only by the emergence of new firms.
Policies and the Introduced Changes
The growing unemployment rates are addressed by the governments, whereas their capabilities vary. The main idea developed by them is reallocating resources within the sectors to support those affected the most (Banerjee et al., 2020). This approach is supposed to ensure macroeconomic growth in the post-pandemic world, whereas its actual outcomes remain dubious. For example, one of the measures deemed as effective is elaborating new employment creation schemes, but their implementation depends on available funds (Gisaor et al., 2020). This condition means the worse position of developing countries and the need for a uniform mechanism to match the economic output and wage expectations of different populations.
Possible Short-Term and Long-Term Implications
The implications for the global economy can also be through the lens of short-term and long-term consequences for various sectors. This need is supported by research claiming that individual expectations are distinguished by the area of work, and the perceived hazards correspond to them accordingly (Chodorow-Reich & Coglianese, 2021). Thus, the statistical data show that the employees affected by the crisis are divided into categories depending on the length of unemployment periods (Chodorow-Reich & Coglianese, 2021). For macroeconomics, it means that new measures are to be developed to address the most vulnerable groups.
Measures for Addressing the Challenge
The analysis of the situation conducted above proves the insufficiency of the adopted methods for addressing the consequences of unemployment during the pandemic. The presented data explain the need for suggesting varying approaches to different fields and efficiently reallocating resources in this respect. Also, the evolving labor market conditions should be regularly monitored to assist the bankrupted firms and encourage the creation of companies in the most affected areas. These ideas seem beneficial for regulating wage expectations and, consequently, the economic output that should be reconsidered with regard to inflation.
The Effects of Monetary Policy
The discussed non-budgetary measures developed by the governments are accompanied by other actions connected to monetary policy. In this area, the support is provided by the intention to prevent further bankruptcies by facilitating “purchases of private sector assets” by central banks, allowing companies to build cash buffers (Banerjee et al., 2020, p. 1). In addition, the capability to raise funds is boosted by addressing balance sheers and unemployment equally, and the reduction in the number of working hours resulting from these measures contributes to this challenge’s resolution.
The significance of the issue of unemployment due to the pandemic is emphasized by the surveys conducted by researchers among business owners. They showed the respondents’ concerns regarding the increase in inflation, and the expectations represented by the suggested statistics are alarming from the perspective of negative perceptions of the situation (Binder, 2020). They lead to high levels of uncertainty and the lack of awareness of the actual labor market conditions, exacerbating the attitudes. The prospects of higher inflation add to the challenges, and the overall outlook can be considered pessimistic.
Forecasts Based on Macroeconomic Expectations
In the forecasts based on the macroeconomic expectations described above, there is a clear link between the conditions of the business environment and microeconomic factors. It is explained by people’s lowering wage expectations and the need for educating them on current trends. The population’s concerns might cause the lack of desire to participate in business affairs, which, in turn, will lead to complicated recovery. The impossibility of expanding companies will indicate the beginning of a period of stagnation on the labor market correlating with the absence of jobs that can be addressed only by providing new sources of governmental support.
Recommendations for Minimizing the Risks of Unemployment
The unemployment situation currently addressed by the state support, including non-budgetary and monetary policies, can be significantly improved in several ways. Thus, promoting cooperation between international businesses and budget restructuring for developing countries can create jobs as per the needs of the world population (Gisaor et al., 2020). The resulting establishment of productive economic activities and corresponding shifts in regular operations will facilitate coordination between governments and corporations (Gisaor et al., 2020). In this way, macroeconomic recovery will be possible in shorter terms.
To summarize, unemployment is a macroeconomic phenomenon reforming people’s perceptions, and it is characterized by inequality in the distribution of resources among citizens. This tendency exacerbates the problem and contributes to the formation of vulnerable population groups. The key indicators linked to the process are labor market conditions, bankruptcies, low GRP, and varying circumstances for different sectors. They are complemented by microeconomic points, including the time of employment, wage expectations, and pessimistic attitudes. Thus, an optimal solution for improving the mentioned areas is increasing economic participation through international cooperation.
Banerjee, R., Kharroubi, E., & Lewrick, U. (2020). Bankruptcies, unemployment and reallocation from Covid-19. Bank for International Settlements. Web.
Binder, C. (2020). Coronavirus fears and macroeconomic expectations. Review of Economics and Statistics, 102(4), 721- 730. Web.
Chodorow-Reich, G., & Coglianese, J. (2021). Projecting unemployment durations: A factor-flows simulation approach with application to the COVID-19 recession. Journal of Public Economics, 197, 104398. Web.
Gisaor, V. I., Gwandzang, I. S., & Nev, A. S. (2020). An economic analysis of Covid-19 pandemic and the rising global unemployment. Ilorin Journal of Economic Policy, 7(3), 1-11. Web.
Kochhar, R., & Bennett, J. (2021). U.S. labor market inches back from the COVID-19 shock, but recovery is far from complete. Pew Research Center. Web.