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The Social Impact of Career Transition on Individuals, Organizations, Communities and Governments

Data from LHH and industry insights from the World Employment Confederation, the umbrella group for workforce solutions companies, has confirmed a direct connection between the use of career transition services and the overall burden that governments have faced throughout the pandemic supporting the massive job loss that followed the arrival of COVID-19.

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Posted On May 16, 2023 

Out of the bleakness of the pandemic, there’s a ray of hope for working people and the governments that have supported them.

There’s little doubt the pandemic has completely disrupted the working lives of hundreds of millions of people. In fact, the International Labour Organization estimated the global labor market lost the equivalent of 255 million full-time jobs in 2020 alone.

What that number does not tell us, however, is what happened to those people who were laid-off or furloughed during the worst of the pandemic. And although losing a job is a traumatic experience regardless of the specific circumstances, not all job losses are created equal.

Deep dives into labor market metrics are showing that people who have access to career transition services are not only spending less time unemployed, but they are also often landing new jobs that pay as much or more than they earned previously.

That combination of less time without work and comparable or better pay is making a huge but largely unseen contribution to the overall effort to shield working people from the worst economic consequences of the pandemic.

Data from LHH and industry insights from the World Employment Confederation (WEC), the umbrella group for workforce solutions companies, has confirmed a direct connection between the use of career transition services and the overall burden that governments have faced throughout the pandemic supporting the massive job loss that followed the arrival of COVID-19.

“The need to invest in and facilitate labour market transitions is identified by international policymakers as one of the key elements for recovery from the Covid-19 crisis,” said Bettina Schaller, President of the World Employment Confederation. “We must maintain work and employment as we build for a sustainable new normal. Career guidance and transition support will therefore make crucial contributions to protecting workers sustainably and to enabling well-functioning labour markets.” 

Our calculations show that for every dollar private employers spent on LHH career transition services in 2020, government treasuries saved up to $2.60 in economic support for individuals simply because they spent considerably less time unemployed.

This is a significant if not largely ignored benefit that accrues to government and to taxpayers when employers make timely investments in career transition.

“At a time when governments are struggling to both fight a public health crisis and sustain their economies, any positive contribution that alleviates some of the burden being carried by taxpayers is important,” Schaller noted.

The ripple effect of a lost job

Whenever an employer is forced to lay off an employee, it sends a shock wave through the economy.

The economic uncertainty that accompanies a job loss means people spend less. Even those individuals who were not laid off and remain with their employer can suffer from consumer chill simply by watching their co-workers lose their jobs.

That chill can quickly spread to all sectors of the economy; as people spend less, businesses sell less goods and services, and begin to see a precipitous drop in earnings.

The chill then extends to governments that suddenly collect less income and sales taxes while, at the same time, are being asked to spend more through unemployment insurance and other social programs.

This ripple effect has been especially profound during the pandemic.

The International Labour Organization, a United Nations Agency, reported an 8.8 percent decline in global working hours, which is equivalent to the loss of 255 million full-time jobs. That steep decline in working hours had an immediate and disastrous effect on the global economy, which contracted by an estimated 4.5 percent or nearly US $4 trillion less in economic output.

Governments responded to these negative macro forces with unprecedented stimulus and economic support for the unemployed. In the first two months of the pandemic alone, governments from around the world invested more than $10 trillion in stimulus to keep their economies afloat, a sum that is more than three times the total government stimulus provided during the 2008-09 global financial crisis.

That support literally saved national economies from collapsing under the weight of job losses and the collateral loss of economic activity. But it came at a tremendous cost: the Institute of International Finance estimated that governments around the world borrowed $19.5 trillion to battle the health and economic consequences of the pandemic. That has made those governments more indebted than at any other moment in modern history, including the massive debts accrued during World War II. 

How career transition eases the pandemic burden 

As noted earlier, anything that helps an unemployed person quickly join the ranks of the employed again has the potential to pay a huge dividend to a government that is straining to keep up with massive layoffs and other economic disruptions. Career transition programs had already been established as one of the few ways that governments can mitigate these economic crises.

In its 2021 Social Impact report, the WEC estimated job-to-job transitions are, on average, between 30 and 50 percent quicker when the individual involved has been provided with career transition or career management support.

However, those figures do not reveal the entire value of career management and career transition support. Data from candidates in the LHH Active Placement practice found that 90 percent of candidates in transition were able to land a better job than they had before, with a similar or better salary. And that 81 percent of candidates reported their new jobs reflected a better overall alignment with their career objectives. That alignment means higher levels of engagement and productivity for employers.

These findings mirrored another LHH study of job seekers in Switzerland that found more than two-thirds of career transition candidates believed they had acquired skills during their program that helped them not only find a new job, but also made their careers more sustainable.

Career transition support provides a dividend to the individual, and to society

The traditional value proposition behind career transition has always relied heavily on the idea that it was the right thing to do, both for the individual and the organization. For the individual, it’s an opportunity to avoid prolonged unemployment, and to find a better and more aligned job; for the organization, it’s an opportunity to do right by its departing employees and in the process, protect its reputation as an employer of choice.

However, we can see now that timely and focused support to help people move from one job that has been totally disrupted by the pandemic to another, less vulnerable job has deeper, broader benefits to all of society.

At a time when government is being asked to be all things to all people, it’s nice to know that employers and employees can work together to provide some small measure of relief to social programs and national treasuries that have been pushed into new levels of indebtedness.

Career transition is all about generating better outcomes for everyone involved. At a time when we’re all fighting the same battle against COVID-19, that is no small victory.