Writing in the Globe's Economy Lab blog, MLI senior fellow Linda Nazareth looks at the major economic issues of the year ahead, including the effect rising interest rates will have on debt levels and the housing market. But she notes that of particular interest is how the labour market will transform over the next 10 years, beginning in earnest in 2014. She writes:
"Notice I said "labour" and not "jobs?" That was intentional. See, I truly believe that we are moving to an era of getting the work done, rather than giving people jobs. That means more 'gigs', or contracts for people, and more temporary employment, and more part-timers, and more just using outside contracts to get work done. The big happy work force family will still exist in some companies in 10 or twenty years, but not all.
Linda Nazareth, JANUARY 2, 2014
Oh sure, pick just one. Pick just one issue, one policy, one economic indicator that I will be watching in 2014. Absolutely Mr. Economy Lab Editor, that is just so easy, so simple to do. What's next, just eat one potato chip or something?
Let's start with the obvious thing everyone is going to be watching: the path of interest rates and the fallout from that.
The U.S. Federal Reserve is going to get a new chair (chairwoman doesn't really work for me) so sure, I'll be watching what Janet Yellen does. Then again, we kind of know that she is going to shut down quantitative easing (gradually, of course gradually, starting with last week's announcement that the Federal Reserve is scaling back on bond buying). We also know that the Bank of Canada is likely going to raise interest rates, although they are going to make that happen in a painful slow way, first by tweaking some words on a statement, and then by starting a slow climb. All right, we do not know any of these things for sure, but based on the data we are seeing, these are pretty easy bets. So I'll be watching those policy moves.
And speaking of Canada, of course I will be watching the housing market, particularly in light of rising interest rates. I personally think a few hundred basis points (which will happen over a period of years, probably) will not make that much difference to throngs of desperate-to-be homeowners, but you never know. And I'll also be watching how that whole consumer debt thing works out given the higher rates. Taking on debt has been a fun thing for Canadians, but paying higher interest rates on it will be a lot less so.
But you know, what I will really be watching most closely next year will not have much to do with what happens to interest rates. Because while I am interested in the short term economic outlook, what I really want to know is how things are going to look five or 10 years from now, particularly in the labour market. And that transformation – because I believe it will be a transformation – will start in earnest in 2014.
Notice I said "labour" and not "jobs?" That was intentional. See, I truly believe that we are moving to an era of getting the work done, rather than giving people jobs. That means more 'gigs', or contracts for people, and more temporary employment, and more part-timers, and more just using outside contracts to get work done. The big happy work force family will still exist in some companies in 10 or twenty years, but not all. It is just so expensive, and it represents a model that is not really necessary for a lot of work any more anyway. You do not have to commute and sit at a desk to start work; you can start any time, anywhere if you have a laptop and a wifi connection. Okay, that may not be true if you are a surgeon or a firefighter, but it is true for a lot of other occupations. And even the surgeon and the firefighter do not have to be full time, full year employees.
So let's get back to 2014. Do I think it will be the year that the work world completely transforms into something else? No I do not – but I do think we will see steps in that direction. It will be a one-step-forward, one-step-back kind of thing but we will see some changes, some wrought by workers who want to transform the way they provide their services. And yes, they will likely be hastened by the fact that higher interest rates cause companies to re-think the way they do business.
Will I be watching just one thing? No, I'll be watching lots of little indicators that show the way we are moving from here to there, and I will be chronicling them as we go.
Happy New Year.
Linda Nazareth is a Senior Fellow at the Macdonald-Laurier Institute. Her book Economorphics: The Trends Changing Today into Tomorrow will be published by Relentless Press in January. www.economorphics.com
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