Weekly media briefing 22 September 2021

With the OECD raising its inflationary expectations for 2021 and 2022, the latest edition of PwC’s Global Economy Watch report explains that inflation is likely to continue to display high levels of volatility in the short term in advanced economies but will ultimately stabilise in the long term.

While inflation has been a growing cause for concern for policy-makers, businesses and households as economies recover from COVID-19 shutdown, employment data from the G7 group of economies highlights the slack that exists in many G7 economies as the number of jobs still remains below pre-pandemic levels (see chart above) and is therefore likely to contain overall demand-side inflationary pressures.

Yet some of this will be offset by price volatility caused by shortages of equipment and raw materials in global supply chains, where a succession of pandemic-related lockdowns generated a ‘bullwhip’ effect on supply or due to sector-specific rather than economy-wide shortages. For example, 40% of Eurozone manufacturers reported equipment shortages as a limit to production in August.

Barret Kupelian, senior economist at PwC, said:

• “From a structural perspective, we expect inflationary pressures in the G7 to normalise as economies return to pre-pandemic levels of output and employment, while businesses start to adapt to current shortages of raw materials such as timber and logistical distribution challenges.”
• “However, there will be a lot of volatility in the short term, especially when faced with sector-specific shortages such as with semi-conductors in car manufacturing or CO2 for use in food distribution, where it is not easy to substitute other materials.
• “While many of these trends are global, they will affect different countries depending on the structure of their economy. For the UK, logistical changes and challenges to trade as a result of new post-Brexit arrangements may exacerbate certain shortages compared to Eurozone economies and create further spikes, some of which could be prolonged.”
  
  

Executive pay at FTSE 250 firms falls by nearly 20%

PwC analysis of the first 150 remuneration reports published by FTSE 250 companies shows that the average total pay for FTSE 250 CEOs dropped from £1.6m to £1.3m in 2020. The fall was largely driven by a reduction in bonuses with 40% of CEOS receiving no bonus last year compared to just 7% in 2020.

Phillippa O’Connor, reward and employment leader at PwC, said:

• “The 2021 AGM season has demonstrated that FTSE 250 remuneration committees have listened to investor guidance and expectations in light of the pandemic, operating with restraint in the majority of cases.”
• “The environment we have experienced this year will likely continue into the 2022 AGM season, with more polarised voting outcomes to be expected and a continued focus from shareholders on ensuring pay and incentive payouts are aligned with the underlying performance of the business and the wider conditions of their workforce, customers and communities in which they operate.”
  
  

UK's recovery plans must address gender inequality as four out of five women unaware of green job opportunities, PwC research finds

Gender equality must be at the heart of the UK’s green and fair recovery, according to a new PwC report which underlines the extent to which women’s career progression and opportunities continue to be disproportionately hampered by the pandemic. The findings are based on a survey of 4,000 people in the UK that outlines how women are more likely than men to feel the pandemic has damaged their career prospects, as well as highlighting a lack of awareness in relation to the job opportunities presented by the growing green economy.

The report, Targeting Gender Equality, sets out a number of recommendations that require close collaboration among employers and Government. These include some of the following insights:

• Gender equality should be a specific focus within green economy plans - 63% of survey respondents supported investment in green jobs but just one fifth (20%) of women believe they have the skills they need to work in a green job, compared to nearly one third (31%) of men. Only 21% of women say they are aware of the opportunities for green jobs.
• Legislative measures to support women in work - targeted careers support for women to access traditional male-dominated industries and more affordable childcare and shared parental leave were among the interventions that people felt were most likely to level up gender opportunities.
• Measures to boost the confidence of women who are out of work - Nearly one in four (38%) unemployed women say the pandemic has worsened their access to employment opportunities compared to 23% of unemployed men. Around one third (32%) of unemployed women say a lack of confidence is the primary barrier for returning to work.

Rachel Taylor, economic and business affairs leader at PwC, said:

• “The pandemic has exposed and exacerbated what were already deep-rooted gender inequalities in the labour market. This research points to a lack of confidence among women who find themselves out of work, and comparatively fewer opportunities for young women starting out on their careers. This is compounded by the physical and mental health burden faced by many of the women surveyed.
• “As we look to the future, we must take the opportunity to address these inequalities and this should be front of mind when planning the recovery. With the continuing momentum of the green revolution and the resulting emergence of new industries, policy-makers and businesses must work side-by-side in bringing about a level playing field which will allow women to play a leading role in shaping the future.”

Something to listen to: Listen to the latest PwC UK Careers podcast episode today. In this episode our hosts speak to one of our inspiring women, Semsi Sonmez, on her incredible journey to becoming a Partner at PwC. Listen here.

Something to read: The Value of Zero: Understand how the Net Zero transition may affect shareholder value. This article for New York Climate Week, discusses how business leaders can better understand and manage the risks and opportunities brought by climate change and the world’s growing efforts to combat it.

Something to watch: You’ve got 10 years to solve the four most urgent challenges facing the world: what are they and how do you do it? That's what our Global Lead for Strategy & Leadership Blair Sheppard will be discussing with Rob McCargow at #DigitalDNA. Get your ticket today.