KU Leuven: Labor market experienced an unprecedented revival in 2021

This is apparent from a new edition of the Dynam report by the HIVA research team at KU Leuven, in collaboration with RSZ (National Social Security Office) and the three regional authorities. It analyzes the inflow and outflow into the labor market year after year, each time based on the second quarter. The temporary employment sector in particular saw a strong increase in recruitment in 2021, but education also showed a strong increase. At the same time, there are few people who change jobs, and that is a point of attention.

The key finding in the Dynam report for 2021 is that work-to-work transitions have not yet recovered. These are job changes that follow each other directly, without an intermediate step in unemployment. In the event of economic recovery, we expect more mobility in the labor market. These switches are a powerful engine for filling vacancies, because previous research has shown that more than half of all recruitments concern employees who come directly from a previous employer.
The lack of work-to-work transitions sheds new light on the high vacancy rate and labor market tightness: “That’s not what we would expect in these circumstances. Workers remain cautious about switching jobs. Employers avoid layoffs through temporary unemployment and other support measures. Because there was already a shortage in some sectors pre-corona, employers may do their utmost to keep profiles on board,” said Professor Ludo Struyven and Tim Goesaert (HIVA, KU Leuven).

Workers remain cautious about switching jobs. Employers avoid layoffs through temporary unemployment and other support measures.

The exception to the rule are sectors where there is a slight recovery from work-to-work transitions: agriculture, construction, ICT, real estate, liberal and scientific professions, education. Another bright spot in this study is that we are once again seeing more people entering from a non-working position, albeit mainly in short-term jobs with irregular hours.

Federal Dynamics
The start of the second quarter of 2021 was still characterized by strict corona measures (the so-called “Easter break”), but gradually many restrictions were removed. This translated into a strong recovery in the labor market compared to the previous period (2019-2020). About 93,000 net jobs were created. “That is the highest level ever since the start of the Dynam measurements in 2006”, says Professor Struyven, “it is even higher than during the economic boom period before the financial crisis of 2008-2009.”

Regional differences
Recruitment is recovering strongly in each of the three regions of our country. “The recovery is all the more striking after the unprecedented decline in the first corona year,” said Tim Goesaert, co-author of the Dynam study. The Walloon Region leads the list with an increase of 13%. This will reach the pre-corona level. The strong revival of agency work in the Walloon Region can provide an explanation here. In the Flemish and Brussels Regions, the increase is 8% and 5% respectively.

The recovery is all the more striking after the unprecedented decline in the first corona year.

Recruitment is developing positively in every sector, with the exception of the financial sector, agriculture and the health sector. The influx in the temporary employment sector has seen a strong increase of 29% or +28,034 recruitments. In industry, recruitment in pharmaceuticals and mechanical engineering in particular is on the rise, while car assembly scores negatively due to the double movement of both fewer recruitments and more exits. “Especially the catering industry and the administrative and support services (with temporary employment, cleaning and security) are driving the positive development,” says Professor Struyven. The same applies to the outflow. We see the general decline mainly in the hospitality industry (-31%, from 57 598 to 39 844 exits) and administrative and support services, including the temporary employment sector (-21%, from 124 754 to 98 859 exits), two sectors in which the outflow had increased sharply in the first corona year”. Among the sectors hardest hit by corona, aviation and travel agencies in particular continue to evolve negatively.

Compared to the first corona wave (Q2 of 2020), the number of recruitments in almost all age groups will increase in the second quarter of 2021. School leavers (15 to 21 year olds) find a markedly improved connection with the labor market. Particularly in the catering and temporary employment sector, the entry rate is rising sharply compared to the previous period.
During the first wave of corona, more elderly people also left the labor market. One year after the first wave, this trend is reversing: the exit rate is falling. This decrease is strongly pronounced among the over-65s, mainly under the influence of the recurring flexi-jobs.

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