Derived from the Ancient Greek word ?st???s?? meaning “deficiency” or “lagging behind,” hysteresis is the dependence of the state of a system on its history and can be applied in slightly different ways to the fields of physics, chemistry, engineering, biology and economics.
Used extensively in the area of labour economics, it is a great word for thinking through the implications of the ongoing Covid-19 crisis because it refers to an economic event that persists into the future, even after the factors that led to that event have been removed. Hysteresis is the argument that short-term effects can manifest themselves into long-term problems that inhibit growth and make it difficult to “return to normal.” An example of hysteresis is an unemployment rate that continues to rise even after the economy has begun recovering.
Economic hysteresis has another useful connotation. It implies that our behaviour is shaped not just by current realities and expectations, but by our memories. A classic example is that people brought up during the Great Depression of the 1930s became more risk averse than the generations that both preceded and followed them.
So how will hysteretical factors play out once the global pandemic is brought under control? There are likely to be both medium- and long-term implications.
Once the pandemic is over, it is unclear how many of those who have become unemployed will step straight back into work, but it is probably safe to say that it won’t be all of them. The usual way governments deal with the stubborn issue of unemployment is through fiscal stimulus, especially targeted at regions or industries that are most affected.
But it is uncertain whether politicians will have the will and/or resources to adopt such expansionist monetary policies when they have already spent unprecedented amounts of money to subsidize workers and industries through the height of the crisis. During the last downturn, the solution perceived to be the most appropriate by most governments was one of austerity, not investment. So, higher levels of unemployment may well be around for longer than any of us would like.
Skills Shortage. Still
The labour market will also be different, with different growth industries, different types of skill requirements and different ways of working. With the nature of the job market itself undergoing fundamental change, career paths that looked quite secure at the beginning of 2020 turn out to be entirely fragile in a pandemic. Most new graduates will likely not be rushing into catering, travel and tourism or oil & gas sectors, among other industries, which could lead to a particular skills crunch in these industries.
So, while it seems likely that staffing firms will be operating in a market with plenty of candidates to choose from, they may still not have enough candidates with the right skills.
Workforce trends that were ongoing before the crisis, such as automation and remote working, have been stimulated over the past few months and this momentum is likely to be carried forward once the crisis ends.
According to Satya Nadella, CEO of Microsoft, “We’ve seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security — we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything.”
Adecco recently surveyed 8,000 office workers in eight different countries and found that three-quarters of employees want a mix of office-based and remote working and that 69% believed employment contracts should be based on results rather than hours worked.
Embracing Flexible Staffing
One positive outcome for the staffing industry is that it is unimaginable that businesses will come out of this crisis with less regard for the cost of labour and the benefits of flexibility. Staffing firms, therefore, might be optimistic that demand for contingent work will receive a boost and, with it, total talent procurement programs that properly address the whole of the workforce. But it is important to bear in mind that temporary agency work is only one option among many and SIA research shows most HR and procurement professionals expect freelancing and statement-of-work consulting to be the highest- growing contingent flavours as their workforce mix evolves over the next 10 years.
The Social Construct
What about the longer-term implications of behaviour shaped by our memories? How will the attitudes and habits of a younger generation be affected by the enforcement of social distancing and facemasks in public? More health conscious perhaps? More socially aware and maybe even more tech-obsessed if such a thing is possible.
With online social and work interactions overtaking offline ones over the past few months, accompanied by improvements in the software that support such engagements, in-person meetings may not be regarded as being as essential as they have been in the past. Although the counterargument here is that those forcibly deprived of social engagement may react by becoming more garrulous and outgoing than previous generations.
The incidents of staff taking time off of work due to illness will increase. Pre-pandemic, going to work with a runny nose and a cough was regarded by some as emblematic of their commitment to work. How quickly social attitudes can change. Anyone who turned up at work today with a cold would be treated more like a thoughtless social pariah than a dedicated, hard-working colleague.
Important social issues have been highlighted as the pandemic unfolded and perhaps these will be the enduring legacy from the crisis. Throughout the world, wide levels of income inequality have led to quite different health outcomes. Both coincident with — and accentuated by — the pandemic has been raised awareness of structural racism. Where previous generations have failed to fully address issues of inequality and bias, global protests (from notably young protestors) have re-awakened what had been a somewhat dormant political issue. It’s been 56 years since Sam Cooke wrote the civil-rights anthem, “A Change Is Gonna Come.” Perhaps the most significant outcome of Covid-19 will be that his prediction will now come to pass.