Great wave of layoffs or great reorganization?

The world of work has changed dramatically in recent years – not least because of the mass flight of workers. It is not known if the pandemic triggered these changes or only accelerated long-term trends. It is clear, however, that many of these changes will continue, according to the Pictet-Human Advisory Board.

Nobody foresaw a mass exodus of workers. However, it seems that the pandemic has caused demographic, social and technological trends to converge to such an extent that people have begun to question the way they live and, therefore, their work.

According to the Advisory Board, people listen to themselves and realize that there are many possible ways to express themselves. This is not a new phenomenon, this trend already existed before Covid. It is surprising, however, that it took hold so quickly after the pandemic.

One explanation for the sudden increase in layoffs is the high rate of personal savings, which has increased in part thanks to financial assistance and other pandemic support programs. This is especially true for those aged 55 and over, many of whom have not returned to work following the economic recovery. Unlike in the past, they have not given up their jobs for another job that would bring them more satisfaction. They just preferred to retire from working life.

Some may have chosen to retrain or volunteer. Education usually becomes a lifelong task. This drives the demand for less formal training, for more differentiated certifications. There is evidence that more and more people are turning away from formal education such as law and business. The number of enrollments for postgraduate studies has dropped significantly in recent years.

Some prefer to develop their manual skills further, for example as plumbers or graphic designers. The sources of education have been globalized through online learning opportunities. This gives people the opportunity to break away from the one employer they devote themselves to in the long run and instead take paid and unpaid jobs – each on a flexible basis.

Due to the tight labor market, companies therefore need to become more flexible in order to be attractive to employees. Many are now experimenting with new forms of work that often go beyond working from home. You have to be very brave as the head of the company if you want to return to the pre-pandemic status quo.

For example, some changes relate to the automation of other functions – in the future, even more robo-lawyers and robo-accountants will take over simple tasks so people can concentrate on functions that require a lot of expertise. In fact, in 60 percent of all jobs, about a third of the tasks may already be automated.

In other cases, the workplace may be transformed to compete with work from home. More and more often there is a mixture of what makes the office environment so successful – spontaneous ideas as a product of random interactions, space for effective mentoring and coaching, the possibility of meeting colleagues – and the advantages of working from home, i.e. shorter travel times, less disruption and a comfortable environment.

Inflation, however, distorts this picture. Due to the exceptionally low unemployment rates and the high number of vacancies, workers now have the upper hand. But if they don’t all come together, some of these benefits will be lost to inflation. Rising prices will mean people have to supplement or increase their incomes, forcing them to do subordinate and substandard work and forcing them to work longer. A tighter monetary policy alongside inflation will, in turn, limit employment opportunities should the business investment climate deteriorate.

With the fluctuation of power shifted towards the worker and the employer, the face of employment has undoubtedly changed. The trend of the Great Retirement could be reversed if economic conditions worsen in the coming years. But the need to reorganize the world of work will likely remain. A wide range of educational resources and forms will help people develop their skills, and the development of technologies that enable learning and working from home will make the future of work look completely different than it is today.

The trends and technologies discussed in this article are just some of the investment motives behind Pictet-Human’s strategy. The strategy focuses on services that help us adapt to the demographic and technological changes that change our lives.

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