Why aren’t more people being sacked?

If central bankersoecd are to defeat inflation, they must cool the labour market. For the past couple of years growth in rich-world wages has added to corporate costs, sending prices relentlessly upwards. But as they began to slow the economy, monetary policymakers hoped for an even rosier outcome. They wanted to achieve a “soft landing”, which involves both bringing down inflation and doing so without mass job losses. It is a lot to ask of a tool as blunt as monetary policy.So far, and unexpectedly, labour markets from San Francisco to Sydney are co-operating. Central bankers started to raise rates at a time when demand for labour had almost never been so strong (see chart 1). Last year the unemployment rate across the club of rich countries, measuring the share of people in the labour force who would like a job, was a shade under 5%, which was close to an all-time low. Excess demand for labour showed up in an unprecedented surge in unfilled vacancies, which reached an all-time high. Workers bargained for higher wages, knowing that they had plenty of options elsewhere.