How to Navigate European Labor Economics - Julius Probst

In today’s episode, I chat with Julius Probst, European Labor Economist at AppCast. A PhD graduate from Lund University in Economic History, Julius brings a unique perspective to the table, combining his knowledge of historical economic patterns with current macroeconomic trends.

Julius starts by sharing his journey, from his early passion for macroeconomics and monetary economics during his bachelor's and master's studies, to his role at Appcast. 

The conversation then shifts to the heart of European labor economics. Julius provides an in-depth analysis of current trends, emphasizing how macroeconomic factors such as inflation, GDP growth, and policy decisions influence labor market dynamics. He highlights the importance of demographic variables, drawing connections between population trends and workforce changes, and how these elements are integrated into his economic analyses.

Demographic trends make this an important discussion for those considering the future of organizational talent. What got us here simply won’t get us there as our population rapidly ages. 

It was another in a line of memorable discussions. And I hope you enjoy this as much as we did recording it.


Julius Probst

Julius Probst is the European labor economist at Appcast. Before that, he was working as economist and application specialist at Macrobond Financial. He did his M. Sc. in Economics with a specialization in macroeconomics and his PhD in Economic History at Lund University in Sweden. During the PhD, he also worked as a researcher for the European Central Bank for half a year.

LinkedIn
Twitter


Thinking Inside the Box

Constraints drive innovation. We tackle the most complex issues related to work & culture. And if you enjoy the work we’re doing here, consider giving us a 5-star rating, leaving a comment & subscribing. It ensures you get updated whenever we release new content & really helps amplify our message.

LinkedIn
Website
Apple Podcasts
Google Podcasts
Spotify
Stitcher
Pocket Cast


Matt Burns

Matt Burns is an award-winning executive, social entrepreneur and speaker. He believes in the power of community, simplicity & technology.

LinkedIn
Twitter

Transcript

Julius Probst: Two in terms of like, can we use artificial intelligence to do economic analysis and forecasting? Can economists use artificial intelligence? Definitely. And it's already happening. So economists at central banks and elsewhere are using big data analysis and, uh, to try to forecast, uh, things like inflation rates and so on. But you also need to be a little bit more careful. You need to be careful with that.

Matt Burns: Constraints drive innovation. Hey, everyone, it's Matt here for another episode of thinking Inside the Box, a show where we discuss the innovative ways organizations and their leaders overcome, um, complex issues at work. If you're interested in checking out our other content, you can find us at our shiny new website, insidetheboxpodcast.com, and on all of, uh, your favorite podcast platforms by searching thinking inside the box. And if you enjoyed the work we're doing here, consider leaving us a five star rating, a comment, and subscribing it ensures you get updated whenever we release new content and really helps amplify our message. In today's episode, I chat with Julius Probst, the european labor economist at Appcast. Julian's, uh, a PhD graduate from London University in economic history and brings a unique perspective to the table, combining his knowledge of, uh, historical economic patterns with current macroeconomic trends. And we started there with Julius, sharing his journey from his early passion for macroeconomics and monetary economics during his bachelor's and master's study to, more recently, his role at Appcast. And the conversation shifted to the heart of european labor economics. Julius provides an in depth analysis of the current trends, emphasizing how, uh, macroeconomic factors such as inflation, GDP growth, and policy decisions ultimately influence the european labor market dynamics. He highlights the importance of demographic variables, drawing connections between population trends and workforce changes, and how these elements are integrated into his own unique economic analyses. And that demographic piece cannot be overstated. Considering the opportunity in front of us, the future of organizational talent, what simply got us here won't get us there as our population rapidly ages. And Julius was kind enough to provide a perspective that was really helpful to illuminate some of those dark corners. It was another in a line of memorable discussions, and I hope you enjoyed as much as we did recording it. And now I bring you Julius Probston. Hello, Julius. How are you doing today?

Julius Probst: Hi, Matt. I'm doing well. Thanks for asking.

Matt Burns: Looking forward to this chat. It's going to be a fun conversation. But before we get there, let's learn a bit more about your background, your experiences, and what's led you to today.

Julius Probst: Sure thing. Yeah. So, I'm Julius, uh, uh, probes I'm the european labor economist for Appcast, based here in London. Appcast is, uh, the global leader in programmatic recruitment. And, uh, is part of the Stepstone group, which is one of the leading job boards worldwide and active in about 30 countries or even more. I have a phd in economic history. I'm german, but I have studied for most of my life abroad. So I did my bachelor in economics at master's university in the Netherlands, and my master and my phd, uh, in economic history at Lund University in Sweden. And Lund University is one of the largest scandinavian universities. And so after I was done with my studies, I worked briefly for half a year for the European Central bank. And then afterwards I worked for macro bond, which is a, um, macroeconomic and financial data provider. And now I'm working for Appcast since the beginning of this year, so since January.

Matt Burns: And the collection of that experience gives you a unique vantage point into a period of time that I think, for lack of underutilized adjectives, I would say is an unprecedented time in our history as we move forward into this interesting kind of realm of demographics mixed with labor uncertainty, mixed with technology innovation. I'm just curious, from your perspective, would you mind sharing some of your insights on the current trends that you're seeing in european labor markets and how you're seeing macroeconomic factors affect and influence those labor market dynamics?

Julius Probst: Yeah, definitely. So I'll focus mostly on the UK, but also on european labor markets. And as you rightly said, the last couple of years have been quite unprecedented and there has been a lot of things going on. The COVID pandemic, then we got the vaccines, then we got an economic recovery. So it has been a very unique time period in recent economic history. And the labor market also underwent some significant fluctuations and is seeing some changes right now. So here in the UK, obviously, as in all the other advanced economies, the economy was shut down temporarily during COVID Obviously, these lockdowns significantly affected GDP, and unemployment increased temporarily as well. And then during 21 and 2022, we saw kind of like a relatively strong economic recovery. Not quite as strong as in North America, but european economies also recovered quite quickly from the pandemic after the population got vaccinated. And so in 2022, the UK labor market was actually extremely tight. So that means that the unemployment rate was actually very, very low. Employment growth was very strong. And also, the UK is suffering from some of the after effects of Brexit, which has been leading to labor shortages in certain sectors. And so during 2022, a lot of companies and in some sectors you had labor shortages and a lot of companies were actually struggling to recruit. It was a pretty good labor market for workers. And now, obviously this year, that has actually changed a little bit because the economy is slowing down and recruitment has definitely slowed down as well.

Matt Burns: Well, let's talk a bit about that before we get there. I'd love you to speak a bit more about the demographics that are playing up piece in this, because, as you alluded to, the confluence of two factors. One, you have the pandemic and the obvious economic implications of the, as you mentioned, global shutdown in most developed economies. And then you have, on the top of that, you have record low unemployment, which those two factors usually don't work side by side. They're usually in very different, um, trajectories from one another. Talk a bit about the demographics in the european market, the UK market, and how are they affecting the current situation that we find ourselves in today.

Julius Probst: Yeah, so I myself, I'm writing quite a bit about demographics and long run demographic developments because they are currently affecting european labor markets quite a bit. Especially my home country, Germany, which has had extremely low fertility rates for decades. And actually, Germany's population would be shrinking if it wasn't for decades already, if it wasn't for immigration. And Germany's labor force is stagnating as well. Here in the UK, demographics are actually quite similar. They are a little bit better than in Germany, but you have a similar trend where actually the labor force is going to stagnate, uh, in the coming years. And you have this very large generation of baby boomers who will most likely retire in the coming years and leave the labor force. Now, what you've seen over the last decade, and this will be even more pronounced in the decade to come, as I said, is this stagnating labor force, and that is affecting the labor market already today. So we have, in countries like Germany, also in the UK, we have historically low unemployment rates all over Europe, but especially in Germany. And that is happening despite the fact that the, uh, economic growth is actually quite weak. So Germany's economy just has entered a recession. But what I've written about is that it's a full employment recession. And so this is something very different from what you had a couple of decades ago. So at the moment, countries can experience economic weakness, even negative growth rates, for short periods, without significant labor market weakening. And so in Germany, you have a historically low unemployment rate, even though, uh, the economy has shrunk for several quarters now.

Matt Burns: It is an interesting period of time, and I think that's why I'm curious to hear your perspectives on how all these factors influence your work or your thinking. At appcast.

Julius Probst: Yeah. So at appcast and us being part of Stepstone, we are looking, uh, at these long run demographic changes, obviously, quite closely. It also does factor into our company's thinking and strategy, obviously. So I think for job boards in general, this is an interesting time in the sense that now, especially last year, it has been a quite difficult period of time for recruiters and companies in general to hire, uh, people because you had this rapid economic recovery on the one hand, and on the other hand, you have these long run demographic factors that will mean that the labor force is actually stagnating. Companies will have to look at these developments, monitor them and countries in general as well. Obviously, one way of tackling these issues is to allow for more migration. Another way would be with technological change. So replacing workers with robots, in a sense, and achieve higher productivity growth, these kind of things.

Matt Burns: And when we think about the broader economics you mentioned in your, uh, introduction and, uh, your background and experiences, you were looking a lot at historical economic patterns. And I think one of the reasons, Julius, why I love demographics, and you mentioned in particular the long range demographics, is that it's the closest thing that we have to some sort of future facing crystal ball. We can look and say that somebody who's 30 years old today is going to be 40 years old, ten years from now, 50 years old, 20 years from now, 60 years old, and so on, so forth. When you think about historical economic patterns and events, especially the ones that you explored during your phd, I'm curious if they've informed, if at all, your understanding and analysis of the current situation that we find ourselves in.

Julius Probst: That's a good question. Obviously, when you look at economic history, uh, you can always draw parallels, but at the same time, what we've experienced over the last couple of years has been quite unique with the COVID pandemic, the intermittent economic shutdowns, and before that, the decade before we had the 2008 2009 great financial crisis. Um, obviously something like that has occurred in the past. Right? And that's why it's also so interesting to study economic history, actually, and I think some economists maybe should be studying economic history more because the 2008 2009 financial crisis, that is something very similar to the Great Depression of the 1930s, for example. Right? So in the 1930s, you had like a, uh, financial crisis, you had banking failures, you had a recession that lasted for a few years, and all of that also affected the labor market. You had mass unemployment, in 2008 2009, it wasn't that bad. But still, unemployment rates rose significantly both in the US and in Europe. Right? So I think you can always draw parallels to the past. But then again, some economic events are actually quite unique. And what happened during COVID in 2020, when that hit us, that was something that was actually quite unique worldwide, obviously, and had, like, large implications for the economy and the labor market. Welcome.

Matt Burns: Hey, everyone, it's Matt here. I hope you're enjoying today's conversation. And before we continue, I, uh, want to update you on my latest creative.

Matt Burns: Project this week at work.

Matt Burns: Every Friday at 07:00 a.m. Pacific Standard time. That's 10:00 a.m.. Eastern and 03:00 p.m.. GMT, my good friend Chris Rainey of HR leaders and I discuss the latest trending topics on the minds of executives globally, from organizational culture to technology and.

Matt Burns: The future of work.

Matt Burns: We cover it all, and we invite some of our favorite colleagues to join us, from Dave Ulrich to Whitney Johnson, and executives from iconic brands such as NASA, Krispy Kreme, and WebMd. What can I say? We like to keep things interesting. And if you've been following us for a while, you'll no doubt recognize the fun partnership Chris and I have developed over years.

Matt Burns: Podcasting together.

Matt Burns: We're not afraid to be real, share.

Matt Burns: Our own challenges, and ask the tough questions.

Matt Burns: Joining?

Matt Burns: Well, that part's easy.

Matt Burns: Follow me on LinkedIn, click the bell icon on the top right of my profile, and you'll get notified when we go live. And now back to our discussion.

Julius Probst: Welcome.

Matt Burns: And when you think about the role of today, 2023, we've talked a lot about labor market, the contraction of certain markets. From a demographic perspective, from an economic perspective, I think we'd be remiss in 2023 to not have a conversation about artificial intelligence. And when you read articles on whether it's LinkedIn or your preferred media source, you see lots of conversations and hangering about artificial intelligence as a vehicle to see potentially, in some cases, job loss. People may lose their jobs in some cases. And I think that in large part is probably overblown, given the broader digitization of at least enterprise organizations. I'm curious, when you think about the current situation, economically speaking, what role does artificial intelligence play in your analysis? And when you're thinking about forecasting, are you thinking about using artificial intelligence in different ways, yourself, in your practice, than perhaps you have in the past?

Julius Probst: Yeah. So I do think that now, with artificial intelligence, it could potentially a game changer for the economy and the labor market in the very long run. But it is also a little bit too early to tell. Right. And so I think you're also right when you say that the fear of, uh, mass unemployment or technological unemployment is overblown. So that fear has always existed, even already during the industrial revolution more than 100 years ago. Right. But what we've seen over the last couple of decades with those demographic factors is that unemployment rates actually generally have been trending downwards in countries like Germany and in Europe, as we discussed. So I think artificial intelligence can help the economy in the long run, help workers to be more productive, which would generate, uh, increases in living standards, but it will also not happen overnight. If you think back and look at the implementation of the Internet and all of that, it took many, many years for Internet adoption to be widespread, and it also took several years for companies to change how they do business and so on, for productivity growth to accelerate in the US economy in the 1990s and early two thousand s and in Europe as well. Artificial intelligence also will not be a game changer overnight, but it will take several years for this technology to be adopted by the business sector and for it to have an impact on labor productivity and to increase incomes, uh, et cetera. So I think it really does take some time for technology to affect the economy and the labor market in terms of like, can we use artificial intelligence to do economic analysis and forecasting? Can economists use artificial intelligence? Definitely. And it's already happening. So economists at central banks and elsewhere are, uh, using big data analysis and to try to forecast things like inflation rates and so on. But you also need to be a little bit more careful. You need to be careful with that, right? Because the more data you have, the more overwhelming it can become and can also kind of like be your analysis, but can become too noisy in a sense. Right. If you have like a million or several million data points, on the one hand, it can help you to maybe do kind of like a little bit more precise forecast, but it can also just generate more noise. So I think you have to be careful there as well. If that makes sense.

Matt Burns: That makes total sense. I recall in a previous life when I led an, uh, analytics function for a large global organization, and the access to information was never the issue. We had millions of data points that we could analyze and ingest and model and take action, presumably against. But oftentimes we found ourselves stuck in this loop of change management and accountability and to your point, really struggling to take action that's meaningful and collaborative with the information. I think artificial intelligence while gives you the opportunity to enhance and obviously exponentially increase your computing capability and analysis capability, to your point. Garbage in, garbage out. If we're not looking at the right hygiene elements, if we're not approaching the problem set with the right kind of discipline and alignment, we're going to run into challenges, in fact, bigger challenges, with artificial intelligence. It's analysis on steroids, and I think it's an interesting factor among many. And, um, one of the reasons why I wanted to have you on today, because I thought, as we talk about the broader factors that are affecting organizations and workforces. As an HR executive, oftentimes I'd spend most of my time looking inside the four walls of an organization. I was really focused on what's happening within my organization, what's happening in the employee base, what's the current strategy of the organization, where are we going, et cetera. Increasingly, as I go, as I talk to HR leaders of today, they're spending more and more time looking externally because the external factors are having a much larger impact on the day to day than they did 510 years ago. If I'm a business leader today, sitting in an organization, regardless of function, what are some of the most pressing economic challenges that you see from your vantage point today?

Julius Probst: Well, it, uh, depends a little bit on where you operate, obviously. Right. So I would say if you are in Europe, in a country like Germany, one of the biggest issues today is really that kind of like worker shortage and skilled worker shortage. So it is estimated, uh, right now already that there is at least half a million workers missing in Germany right now, probably more. And this problem will just become more serious in the coming years. Germany did receive kind of like a large, relatively large inflows of immigrants over the last ten years as well. But a lot of them have been refugees from Ukraine, from Syria, uh, from the Middle east in general, they probably do not speak German. They also might not be well educated. So Germany, despite those inflows, is actually still facing kind of like a worker shortage of skilled workers. And that is a serious issue for more and more companies in Germany right now. So if there's these surveys and more and more companies are actually reporting that the one factor that is holding back their production is workers. If you are somewhere else, if you are in the UK, for example, you also have this worker shortage, but, uh, for a slightly different reason. On the one hand, you also have the demographic factors, but you also have the factor of Brexit. Right? So, with Brexit, you have now here in the UK, a worker shortage in, uh, manual occupations and blue collar, uh, sectors. And another serious issue here in the UK is the housing market. So the UK has a pretty serious dysfunction when it comes to the housing market. And also that is kind of distorting the labor market. So internationally, house prices here in the UK, compared to incomes, are extremely high, especially in the greater London area. And that is increasingly having a, uh, very large negative effect on the labor market.

Matt Burns: I'm curious, when you're looking for information, where do you go for sources? Do you have people in your network that you go to? Are you following certain people on LinkedIn or subscribing to certain magazines or articles? I mean, just curious, when you're looking to get information, where you go.

Julius Probst: Yeah, so I generally read economic news. I'm reading Bloomberg news, the Financial Times, the Economist, that are three very good sources, I would say. And other than that, I'm also obviously reading research papers. So academic research papers that are coming out on the labor market, the macroeconomy. But for somebody who just want to read kind of like economic news that are more easily digestible, I would suggest Bloomberg and the Financial Times, if I may say so, maybe also, uh, our own blog, uh, recruit Economics, where I write about the UK and european labor market and the economy.

Matt Burns: If you take a moment and just step back and think about the future as you see it, what are some of the predictions that you have for the labor markets in which you're looking at today? Whether it's the UK market, the european market, even the broader global market, what are some of the things that you see in our future, let's say on the kind of one to three year horizon?

Julius Probst: I think over the next year, Europe and also the UK will continue to struggle with this current economic slowdown. So as I said before, Germany is already in a recession. The UK will most likely fall into a recession by the end of this year or in the beginning of next year. These recessions will most likely not have a substantial negative impact on the labor market. Unemployment rates will continue to be relatively low, but obviously they will have an effect on living standards. So I think Europe and the UK will continue to struggle with an environment where of extremely slow or even negative growth. But after that, obviously there will also be an economic recovery within the one to three year, uh, time horizon. Yeah.

Matt Burns: I think it's important to point out for folks, it's very easy to get caught up in the here and the now. We all want to live in the present. And as you would rightly point out, economics are about cycles, and we're in the midst of a cycle right now. Now, yes, there are factors that are unique to this period of time, given the aforementioned things around the pandemic and technology innovation, but the economy goes through ebbs and flows, and it certainly is certainly a unique period of time now. But when we take a step back and look at the broader picture, we can start to infer certain lessons that we can apply in our organizations today. And I think, Julius, you've been really helpful today in helping illuminate some of those things that organizations are thinking about, some of the factors they should be paying attention to, and where they can go to for information. So in return, if folks want to get a hold of you directly, what's the best place to, uh, reach you?

Julius Probst: Yeah, the best place to reach me is just to connect with me via LinkedIn. I'm fairly active on LinkedIn. I post a lot of charts about the UK and european economies and labor markets there and also post all my articles on LinkedIn.

Matt Burns: Um, very good. Yeah, and as, uh, somebody who has been a regular follower of your content for the last little while, I can certainly attest to the quality. And I'll link the details for your LinkedIn profile in the notes of this podcast. Julius, thank you so much for your time today.

Julius Probst: Yes, thank you so much. Thanks for having me. Matt.

Matt Burns: Vento HR is a digital transformation consultancy working at the intersection of strategy, technology and people operations. We partner with organizations, private equity and venture capital firms to accelerate value creation and identify the organization's highest leverage initiatives. And this can take place in many forms, from strategic planning and alignment to technology procurement, implementation and integration, along with organizational design, process reengineering and change management. With our proven track record of working with complex, high growth organizations, we provide a Ah lens that goes beyond the balance sheet, increasing enterprise readiness, resilience and value. For more information, check us out@bentohr.com.