The Road Ahead

With unemployment now reaching 9.5% and on track to hit 10% in the next few months, recruiters should consider their career options for the near term. Unemployment is a lagging indicator, so it may well be that things are getting better. There are glimmers of hope that may suggest the worst is over — The Dow and S&P 500 have been rising; global markets from Japan to London have also seen gains of about 25% in the last few months; housing sales are up along with consumer confidence.

But none of this means that a recovery is in the making. All it means is that the pace of decline is slowing. The good news is that there’s less bad news, but the bad news is that there’s still plenty of bad news.

Stimulus

The last 18 months have resulted in job losses equal to job gains of the previous 42 months. A recovery will require job creation of 200,000 or more per month. Right now there’s nothing to show this will occur anytime soon, despite any claims to the contrary.

Lately the President has talking about how many jobs are being “created or saved” by stimulus funds. That’s an interesting way to put it. The New York Times has diplomatically described these claims as being “unverifiable.” Considering what a big deal the administration has made about the need for transparency let’s be undiplomatic and call them what they are: BS. There is no way to measure if a job has been “saved,” and such talk only underscores the fact that the Administration lacks confidence in the ability of $787 billion stimulus package to do much. It was supposed to prevent unemployment from exceeding 8%. Well, so much for that. So far the money has largely gone into infrastructure projects, most of which do not result in permanent jobs.

The massive increases in public debt, in America and other countries, while necessary to stabilize economies, will result in sluggish growth for years. The IMF estimates that public debt in the world’s leading economies will rise to 100% of GDP by 2010 and to 140% by 2014. To put it in perspective: by 2014 the United States and other members of the OECD will owe, on average, $50,000 for each one of their citizens. No country has ever managed to spend its way to prosperity, and the massive amounts of borrowing by governments will reduce funds available to private industry and consequently limit growth. This means that the economies of most countries will struggle to realize their potential — dragged down by such large debt burdens.

What this all means is that in most of the world’s economies, the government will be the dominant source of growth — and jobs. And governments are not good at that. Recent policy actions don’t suggest otherwise. The Speaker of the House — the Honorable Nancy Pelosi — made the statement that the cap-and-trade bill could be described by four words: jobs, jobs, jobs, jobs. If government programs were so good at creating jobs and managing growth, the Soviet Union would have been the biggest economy in the world. And considering the track record of the Speaker’s home state of California in that respect, it might help to know what exactly the lady bases her claims on.

Whatever your opinion on climate change, this bill is a bad idea and incredibly ill-timed. The bill imposes more tax burdens at a time of economic decline, while expecting growth in employment from development of green technologies that are in their infancy at best. Most are years away from reaching the point where they will go mainstream enough to generate sizable numbers of jobs. There just aren’t enough jobs that will be created in the next few years making windmills and solar panels to make a sizable dent in the unemployment picture. Add to that the possibility of healthcare reform with a potential tab of $1.6 trillion, and increases in minimum wage, and one has to wonder: What exactly are policy-makers thinking?

Where the Jobs Are

Since 2008 employers in America have eliminated thousands of recruiting jobs. A lot of these are not coming back anytime soon. Perhaps the President can find a way to save some, but assuming he may not find time in his agenda to do so, recruiters looking for work should consider working for the Federal Government and employers that provide services to the government. The American Recovery and Reinvestment Act is designed to fund the creation (or saving?) of 3.5 million jobs over the next two years. Funding for government projects that will create these jobs is now starting to flow. Federal agencies that will directly create new jobs list their positions here.

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To get some leads on what projects are being funded, and therefore the providers that may need recruiters, look for RFPs put out by Federal Agencies. These are all published in the Federal Register and on the individual agency websites, along with details on those being awarded these contracts.

Looking wider, companies that deal with growing economies — specifically China, India, Australia, and Singapore — will also be hiring. The World Bank forecasts that the Chinese and Indian economies are expected to grow by about 7% this year. Certain Middle Eastern countries, particularly some in the Gulf States, like Qatar, will also see growth rates of 5%. The International Labor Organization projects employment growth will be positive in South Asia and parts of the Pacific. Businesses based in these regions and doing business here are hiring. Even in Western Europe, several countries — like Switzerland — are experiencing chronic shortages of talent.

Regionally, of 381 metropolitan areas in the U.S., the 15 that are still growing are mostly in oil and natural-resource-rich regions of Texas, Oklahoma, and the Dakotas. The energy industry, in these areas and elsewhere, is also seeing a resurgence — oil-rig operators are bringing more rigs on-stream, up 25% in the last month.

This Too Shall Pass
It ain’t over till the plus-sized woman sings, and by most accounts right now she’s not even on the stage. Recruiting as a profession has been around for over 2,000 and it will survive the current crisis. The road ahead is bumpy and uncertain. There’s little to be optimistic about. Welcome to an era of lowered expectations. But recruiting is still a business-critical function.

Raghav Singh, director of analytics at Korn Ferry Futurestep, has developed and launched multiple software products and held leadership positions at several major recruiting technology vendors. His career has included work as a consultant on enterprise HR systems and as a recruiting and HRIT leader at several Fortune 500 companies. Opinions expressed here are his own.

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8 Comments on “The Road Ahead

  1. Wow.
    This isn’t exactly what I was hoping to read first thing in the morning.
    Seems like someone may have woken up on the wrong side of the bed this morning before writing the article.

  2. Raghav is clearly a realist, not an eternal optimist. I agree with him. Most of the economic growth domestically will be in the Federal Government. Check what the college grads are mostly doing. It’s either grad school, healthcare, or looking for government jobs.

    Internationally, the countries with intelligent and cheap labor with a lower cost of doing business–not us– will do well as he pointed out.

    The need for recruiters will remain. IMO, there’ll just be need for a lot fewer of them (us) as globalism economically “makes the Earth flat,” as Thomas Friedman wrote.

    I don’t believe we can continue to both provide for everyone through government while fostering a pro business/jobs creation environment as government sucks too much money out of the private sector economy as well as squeezing out other borrowers in competition for capital.

    I think Raghav for this sobering piece as it’s possible the paradigm is broken, we’ve hit critical mass, and things won’t be returning as they always have.

    Bill

  3. I’m not sure what kind of world Dustin was expecting when he woke up, but Raghav’s sobering characterization has the courage to be true– something that beats the cold comfort of self deception in the long run.

    And we still haven’t rid outselves of the Wall Street Banksters that continue to suck us clean with their AVERAGE management total comp levels running north of $400K per year, topped with executive comp that could buy small countries. These levels of pillage cannot represent “value for money”. They can only represent levels of self indulgence that work against shareholder value, in the same way that the Governor of South Carolina has so publicly eroded his own family values.

    Financial markets and corporate compensation practices need to be constrained by careful regulation to provide the working capital and performance incentives for creating real market value, instead of the engines of greed, deception, and the erosion of American competitive advantage that they have now become.

    Then, maybe Dustin can read something a bit more to his liking when he gets up in the morning. Not until.

  4. Raghav (We spoke about FOT a few months back)- Thanks for the great article. (way above my head, but I learned something which is great)

    Note: There was no complaining in this article. (big difference between a complaining and “keeping it real”)

    If you are in the top 10% of your field, you will be fine.

    The real problem is we been sold a bill of goods in our lovely (socialist)educational system.. Go to school, get a good job, save for retirement = MEDIOCRITY

    What the world needs is “people who come alive”….

    And you WON’T come alive, unless you LOVE your Vocation!

    Peace,
    Brian-
    http://www.johnstonsearch.com/about.php

  5. I have always enjoyed reading Raghav’s articles, and this article is truly an exceptional one. One word to describe Raghav is that he is a ‘pragmatist’ with a clearly defined world view and good general knowledge.

    Keep ’em coming, Raghav!

    Best,
    Shibu

  6. Thank you for actually stating the truth! The current economic crisis we are in is a result of government interference and it will not improve until government gets out of the way. As long as there is more “stimulus” spending, we can expect to see the economy getting worse.

  7. Raghav –
    Great post.

    Inflation and blooming debt will get a ‘pass’ for a few years due to the inflationary pressures we sure hope don’t last like Japan’s (their Nikkei 200 now 25% of what it was on the last day of 1989 at 38,916 when it was 13x the Dow). $53 Bil. at last look has been spent of the $787 Bil. (albeit about $300 Bil of it tax cuts also yet to come), Obama denying a 2nd (really the 3rd) Stimulus, so no wonder things are sluggish, after some Q2 euphoria after almost slipping off a financial cliff in Q4.

    Things are NOT moving forward as some expected (see Consumer confidence off 10%, Dow off 4 weeks) but should (hopefully) pick up in a month or so.

    Now we find out the true underemployed/unemployed figure is 20.6% or over 30 mil. adding those who have been out over a year. Oh well. One was in court, recently, ‘You are here for drinking”. “Great, when do we start?” Order in the court!” “Ok, make mine scotch”.

    With that I’ll close, as I could talk this stuff all day.
    Best,
    Jon

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