Are shifts in AE labour markets structural

Mukovhe Takalani, Jean-Francois Mercier, Blessings Nkuna and Kagiso Mphahlele

No 11055, Occasional Bulletin of Economic Notes from South African Reserve Bank

Abstract: This note evaluates aspects of labour market tightness in AEs, examines whether they are resolving, and explores how they could potentially impede normalization of inflation. Recent years have seen a noticeable shift in the Beveridge curve within AEs, indicating a change in labour supply dynamics. The post-pandemic recovery in labour force participation has been slow and uneven among AEs. Persistent tightness in labour markets is evident through high job vacancies and recruitment challenges. Firms appear to engage in labour hoarding, which contributes to high wage growth. Encouragingly, labour market normalisation (mostly through improved supply) seems underway. Nonetheless, some shifts take longer to resolve, sustaining the risk of durable changes to wage-unemployment dynamics.

Date: 2024-04-25
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