How Old is the "New Normal"?

At work...? In the media...? (On training courses, even...???)
Are you plagued by references to "the New Normal"?

Reading a recent report from McKinsey (@McKQuarterly) on 'The growing US jobs challenge' (http://ow.ly/5sllH), I saw it again, heading the first chapter; which went on to describe how the current prospects for recovery are not following the traditional pattern of jobs following economy.  As is becoming the accepted view, McKinsey goes on to show that the labour market in the US (and other 'mature markets') has been undergoing changes over the past couple of decades, which differentiates it from prior economic blackspots.  During the majority of the 20th Century, recession was counteracted by evolving market forces: basic consumerism generating demand and, with it, new jobs.  Industrialisation grew and matured, paving the way for greater product innovation and refinement of consumer products; in turn opening opportunities for lesser and semi-skilled workers.  Towards the end of the 20th Century, however, economic growth shifted toward a dependance upon Services and less tangible consumables, all underpinned by increased technology; meaning lesser skilled and semi-skilled job-seekers have become far less able to find work, should they need it.
Earlier this week, @jeremywarnerUK, Associate Editor and Columnist for the Daily Telegraph (UK), posed the question of "whether we are reliving 1930s or 1970s... BIS thinks the 70s. Greece says it is 30s."  (Courtesy of a RT by MJCarty).  His considered opinion came out on the side of the BIS: "no alternative to tighter fiscal and monetary policy" (see full article, here); but McKinsey may feel justified in arguing a case for 'None of the Above':

The Dept for Business Innovation & Skills (BIS) maintains a doggedly optimistic view of the UK economy, which I applaud and, so far, has managed, broadly, to stay aligned in it's views with the Bank of England and the Treasury in terms of macro expectations.  Yes, tough remedial measures are certainly required, and the current UK administration is making a good stab at those unpalatable necessities, in my opinion. (I also just wish more people would display some personal responsibility for helping the government sort it out - it is the responsibility of all of us to dig deep; pointing fingers, holding strikes, etc, will get us nowhere, fast.)  Thankfully, there is as yet little suggestion that the situation is as dire in the UK, or the US, as that faced previously in Iceland, currently in Greece, or potentially in Portugal and Ireland.

However, steadily, the US and UK economies have become more heavily dependent upon housing, and less so on exports and manufacturing, which tips the balance away from previous examples of recession and removes the capability for lesser skilled elements of the workforce to find work.  This means that, as unemployment grows, the economy is less able to find like-for-like employment.

The situation is exacerbated by rapidly-emerging, demographic changes, as well as uncertainty over pensions and long-term personal planning. (Today, MSN has an article asking whether toddlers should start pensions.) Gen-'Y'ers have grown up not knowing a world without computers, which suits the services and technical economy ours is becoming; but to some extent, this leaves our older, experienced colleagues out in the cold; and with pressure to work till later in life, there is an evident problem emerging.

During the 1920s/30s Great Depression era, firms went under at then-record rates: whole communities built up around the local factory, furniture or hardware business were plunged into helplessness.  In this latest, 21st century phenomenon, we also see firms going under (in the UK, Habitat, Möben and TJ Hughes are the latest retailers to go to into administration, with several others teetering on the brink of the abyss), but the kind of labour force are we likely to see hitting the job queues is slightly, but crucially, different.

The McKinsey report addresses this, unequivocally:

To me, though, this doesn't present the entire picture.  Yes, there are clerical/skilled professionals (accounting, legal, marketing and management of all kinds, from property portfolio managers to HR Managers), but there are also a lot of sales staff, part-time workers, cleaners, catering assistants, etc - many of whom are likely to be less qualified and less able to find alternatives.

It's not all rosy for the skilled, either: UK graduates in the 21st century are competing, more acutely, than ever for graduate positions. I heard a statistic on the BBC the other day: that there are typically 83 graduates per graduate position, currently - apparently nearly doubling the tally for the same point in 2009.  That's tough in anyone's book, but David Willets' plan to make Universities more responsible for the transparency in course-to-job conversion sounds like a good idea.  Of course, the situation is already rotten, with university qualification now cheapened through being seen as an expectation (even a human right!), rather than as an achievement.  With record numbers of students gaining access to higher education (with so many A*s, or A**s AAAs, or whatever the next super-high grades for cheapening A-Levels may be), the workforce is saturated with degrees and employers no longer find them to be a differentiating factor.

Although not exactly comparing apples with apples (- it really is very difficult to find reliable education statistics, even in this age of the internet!), the following charts give some indication about how university applications (and, by implication, the attainment of degrees) has spiraled upwards. 

Partly, this was due to Thatcher's Education Act of 1988, but even with drastically increased numbers of students, the critical factor is that high passes are also increasing.

(The first chart is taken from a very interesting 1999 Parliamentary research paper, available here; whilst the second is my own, cobbled together from sources including Higher Education Statistics Agency (HESA), the Association of Graduate Careers (AGC) and the Association of Graduate Recruiters (AGR).)

With such credentials, on such a high proportion of CVs, how are employers expected to differentiate?  Not only do we see ever more challenging recruitment processes, but additional clues can be found in the health of the recruitment industry: Q1-11 saw 39% fewer recruitment agencies going into administration than that of the prior year (reference).

So, what opportunity does this present for businesses?
Well, most forward-thinking recruiters offered larger graduate roles, placing expectations of  a healthy ROI on these computer-savvy whizzkids.  But, I'm afraid many may be disappointed.  There is a lot of creativity to be harnessed, but business may need to embrace the baggage that comes along with promise: the poor language skills, the lax attention to detail, the occasional AWOL and the hangovers! 

But, I recall my grandfather bitterly complaining about how the Beatles had ruined music...  Perhaps it's the contrast which is normal; but the situation which is new...