Weak Growth, Tight Job Markets Are a Global Phenomenon
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Weak Growth, Tight Job Markets Are a Global Phenomenon

Economists cite ageing populations and relatively low immigration as factors that became more pronounced during the pandemic

By TOM FAIRLESS
Mon, Aug 8, 2022 11:40amGrey Clock 4 min

From Berlin to Tokyo to Sydney,  economic growth is slowing or turning negative across advanced economies, yet labour markets remain historically tight.

Talk of a “jobful recession” has centred on the U.S., where payrolls grew by more than half a million in July and the unemployment rate declined to its prepandemic low of 3.5% even as economic output contracted in the three months through June. The same conundrum crops up around the world.

In Germany, growth stalled in the three months through June, and the country faces imminent recession as its energy supplies dry up. But the unemployment rate remains close to a 40-year low, and almost half of companies say worker shortages are hampering production. The jobless rate in the wider eurozone is at a record low. New Zealand’s economy shrank in the first three months of the year, but its jobless rate, at 3.3%, has stayed close to a multidecade low.

It is the opposite of the “jobless recovery” diagnosed after the 2008 global financial crisis, when economic growth in the U.S. and parts of Europe picked up but unemployment remained painfully high for years.

The current dichotomy might not last. Central banks are raising interest rates to rein in high inflation, which could in time undercut labour demand. The Bank of England on Thursday raised its policy rate by 0.5 percentage point, to 1.75%, and forecast a lengthy recession that would likely boost unemployment to 5.5% from its current 3.8%, which matches the prepandemic low.

Still, subdued growth may coincide with ultralow unemployment more often in coming years, judging by the country that experienced it first. For three decades Japanese growth has been low or negative, averaging 0.8%, but its unemployment rate has never been more than 5.5% and has ratcheted steadily lower since 2010 to stand at 2.6% now—close to its prepandemic low of 2.2%.

The reason, economists say, is a tight labour market because of an aging population and relatively few immigrants, features that have become more pronounced in other advanced economies during the pandemic.

In the years before the pandemic, Japan took steps to make it easier for mothers of small children to work, keep older workers on the job, and loosen restrictions on migrant labour, such as allowing foreign students to work 28 hours a week. But just as those measures were making an impact, the pandemic hit and Japan closed its borders to most new workers.

A shortage of workers forced Masaya Konno, a business owner in Tokyo, to temporarily close his Japanese-style pub last month. Even after he increased pay to ¥1,300  an hour, which is ¥100 to ¥200 above the wages prevailing a year ago, he still can’t find enough workers. “We couldn’t overcome a labour shortage,” Mr. Konno said.

Unemployment and growth usually show a predictable relationship known as Okun’s Law, named for the Yale University economist Arthur Melvin Okun, who first proposed it in 1962. In the U.S., Okun’s law predicts that a 1% decline in output below its potential causes an increase in unemployment of half a percentage point.

However, that relationship can shift depending on factors such as workers‘ output per hour and labour-force growth, said Laurence Ball, an economics professor at Johns Hopkins University. If there are fewer workers and job seekers, the labour market can remain tight even if growth is weak.

Since February 2020, the U.S. labour force has shrunk by about half a million. In Germany, the labour force shrank by about 350,000 over the same period, while in the U.K. it shrank by about 550,000.

Migration has slowed across advanced economies as governments restricted entry to keep out Covid-19 and its variants. In New Zealand, the number of people arriving with work visas shrank from about 240,000 in the year through June 2019, to just 5,000 in the year through June 2021, government data show. In the U.S., the slowdown in immigration began in 2017, when the Trump administration adopted a range of policies to curb both illegal and legal immigrants. The annual net inflow has fallen from more than one million in 2015-16 to about a quarter of a million in 2020-21, according to the U.S. Census Bureau.

Meanwhile, older workers dropped out of the workforce, in some cases to avoid exposure to Covid-19. Some younger adults quit work to care for children or other family members.

There are signs that as vaccines cut the risk of severe illness or death from Covid, workers have returned to the labour force and migration has resumed. In New Zealand, the number of people arriving with work visas surged to almost 5,000 this past June. That suggests unemployment may start to respond more to changes in economic output.

Other forces might be more durable, however. Older people aren‘t yet returning to work in the U.S.: The labour-force participation rate of workers aged 65 or older has fallen to about 23% from 26% in early 2020. Rapidly aging Germany and Italy are expected to lose millions of workers to retirement over the next decade, which suggests labour shortages will persist.

While sustained low unemployment is generally a boon, Japan’s experience also shows the downsides: It means that the economy isn’t able to quickly direct workers to growth areas, which can limit “creative destruction”—the elimination of obsolete industries so that new industries can grow.

Takahide Kiuchi, an economist at Nomura Research Institute and former Bank of Japan policy board member, said, “Japan’s economy may look more stable with mild inflation. But the flip side of a stable economy is the negative impact of slow changes in the industrial structure.”

Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication: August 7, 2022.



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BHUTAN LAUNCHES WORLD-FIRST NATIONAL CRYPTO PAYMENT SYSTEM FOR TOURISM

Bhutan is pioneering a new frontier in travel by allowing tourists to pay for flights, visas, hotels and even fruit stalls using cryptocurrency via Binance Pay.

By Jeni O'Dowd
Wed, May 14, 2025 2 min

Bhutan has become the first country in the world to implement a national-level cryptocurrency payment system for tourism, marking a major milestone in digital innovation and travel.

Launched in partnership with Binance Pay and Bhutan’s fully digital DK Bank, the system enables travellers with Binance accounts to enjoy a seamless, end-to-end crypto-powered journey. More than 100 local merchants, from hotels and tour operators to small roadside vendors in remote villages, are already live on the system.

“This is more than a payment solution — it’s a commitment to innovation, inclusion, and convenience,” said Damcho Rinzin, Director of the Department of Tourism, Bhutan.

“It enables a seamless experience for travellers and empowers even small vendors in remote villages to participate in the tourism economy.”

Using supported cryptocurrencies, tourists can now pay for nearly every part of their trip, including airline tickets, visas, the Sustainable Development Fee (SDF), hotel stays, monument entry fees, local guides, and shopping, all through secure static and dynamic QR code payments.

Binance CEO Richard Teng praised the move, saying: “We are excited to partner with Bhutan as we are not only advancing the use of cryptocurrencies in travel but also setting a precedent for how technology can bridge cultures and economies. This initiative exemplifies our commitment to innovation and our belief in a future where digital finance empowers global connectivity and enriches travel experiences.”

Known as the “Kingdom of Happiness,” Bhutan has long prioritised Gross National Happiness over GDP, with a strong focus on sustainability, cultural preservation, and societal well-being. The new system aligns with these values by reducing payment friction and bringing financial inclusion to local communities.

Among the key features of the system:

  • Seamless Experience: Tourists can pay with crypto for all travel-related expenses.

  • Inclusive Reach: Small vendors, even in remote areas, can accept QR code payments.

  • Lower Fees: Transactions cost significantly less than traditional payment methods.

  • Comprehensive Support: More than 100 cryptocurrencies supported, including BNB, BTC, and USDC.

  • Secure and Instant: Real-time confirmations, 2FA, and encrypted transactions via the Binance app.

Behind the local settlement mechanism is DK Bank, Bhutan’s first fully digital bank. Licensed by the Royal Monetary Authority of Bhutan, it aims to deliver accessible financial services to all, including marginalised and unbanked communities.

The launch is being hailed as a bold step forward in integrating digital finance with global tourism — one that could set the benchmark for other nations looking to modernise the travel experience while empowering their local economies.

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