Allianz Survey on Job Attitudes; Global Insolvency Report - Growing risks & uneven state support

TGIF – short for Thank God it’s Friday – strikes as very appropriate: On a sunny Friday afternoon and when referring to the findings of our first Allianz Survey on Job Attitudes; for the latter, we checked the pulse of a representative sample of workers across the UK, France, Germany, Italy and the US in April. To better gauge the changing nature of job attitudes, we have built three personas called “rationalists” (mainly working for money), “realists” (looking for the meaning of work but not at all costs), and “idealists” (work as a journey to make the world a better place and improve herself on the way). A rather gloomy outlook for the balance of risks for companies following the war in Ukraine and new lockdowns in China; find out more about the three signs of resilience that should help prevent a massive surge in insolvencies and more valuable insights in our Global Insolvency Report. Overall, after two years of declines, we expect global business insolvencies to rebound by +10% in 2022 and +14% in 2023, approaching their pre-pandemic level. Have a good weekend!

Allianz Survey on Job Attitudes: TGIF?

Today Allianz published its first “Allianz Survey on Job Attitudes”, checking the pulse of workers in Great Britain, France, Germany, Italy, and the US. For this, a representative sample of 1000 people in each country was surveyed during April. Please read the full report here.

Maslow job priorities: A more value-based attitude to work cannot necessarily be gleaned from the responses to the survey. When asked what was decisive in valuing a job, the majority of British respondents cited the “classic” criteria: work-life balance (59,4%), security (54.5%), and pay (30.3%). Although these three criteria top the list in all five countries, the order differs: British respondents are the least “money-driven”. This is corroborated by looking at the criteria that play a minor role: 24.3% of British respondents said that a “sense of purpose” is of relevance for them in valuing a job. A general societal meaning of their professional activity therefore does not seem to be of great importance to the majority of respondents. “This result is not surprising.” said Ludovic Subran, chief economist of Allianz. “Basics as pay and security has to be met first before more lofty aims can be taken into account. To paraphrase Bertolt Brecht, first comes a full stomach, then comes ethics. But that doesn’t mean it’s unimportant. Quite the contrary, comparable to the Maslow pyramid: purpose sits at the top and is the one criteria that really can make a difference and constitute a distinguished employer. It’s the key to draw and retain top talent in an ever tighter labour market.”

Homo economicus still common: To better gauge the changing nature of job attitudes, we have built three personas, based on the answers to direct questions about respondents’ decisions in certain work situations. The three personas are called “rationalists” (mainly working for money), “realists” (looking for the meaning of work but not at all costs), and “idealists” (work as a journey to make the world a better place and improve herself on the way). The majority of British respondents belong to the “mixed type”, the so-called “realist” (47.9%). Almost as many (40.3%), however, belong to the “rationalist” type. In contrast, only a small proportion (11.7%) can be classified as “idealists”. There is a clear influence of age: While 21.5% of British respondents from the GenZ can be counted as “idealists”, the corresponding proportion among the Boomers is only 5.2%. “The differences between the generations are significant, but not as stark as expected.” said Arne Holzhausen, co-author of the report. “They might reflect not so much differing attitudes and values, but rather the courage to live them; younger employees at the beginning of the career have less to lose. But overall, even the youngsters seem to be quite a cautious bunch. No wonder: they have lived through almost as many crises as years in their job.”

The big quit: A total of 16.8% of British respondents reported they had quit their job in the past 12 months; the figure was only higher among American respondents (18.2%). But while the wave of quits seems to have already peaked in the US – the rate of those planning to quit in future is lower than those who have quit in the past – there might be still more to come in Great Britain: 18.9% of British respondents reported that they plan to quit in the next 12 months. The reasons for quitting are mostly the typical ones: almost 50% of British respondents plan to change jobs for reasons of overwork (stress and work-life balance); almost 30% promise themselves better career opportunities. Both are unsurprising in a labour market where those unable to work from home face particular pressures under Covid-19 conditions, and at the same time the number of job openings is shooting up due to strong demand. Specific reasons such as childcare, fear of Covid-19 infection or early retirement play only a (very) minor role.

Global Insolvency Report: Growing risks and uneven state support

The war in Ukraine and new lockdowns in China have significantly deteriorated the balance of risks for companies. The shockwaves are visible in the extended supply-chain disruptions and transportation bottlenecks, as well as high input costs and shortages, notably for energy and commodities but also labour. To add to this, the global surge in inflation is accelerating monetary tightening, which will increase funding costs for companies. In that context, we have updated the business insolvency outlook for our panel of key countries. You will find our comprehensive analysis here. The main takeaways are:

In the very short term, three signs of resilience should help prevent a massive surge in insolvencies. At the global level, the total cash holdings of listed firms was 30% higher at the start of 2022 than in 2019, and deposits of non-financial corporates (NFC) were 29% higher in the Eurozone and as much as 57% higher in the US. Our proprietary data also show that the number of fragile firms[1] has decreased, particularly in Italy and France. In addition, the Q1 2022 earning season confirmed that listed companies have been far more capable of passing cost increases onto prices than expected.

However, pockets of fragilities and uncertainty over how long the current shocks could last have already sparked the return of temporary support measures in some countries. First, working capital requirements increased in 2021 particularly in Asia, Central and Eastern Europe and Latam, and for sectors such as household equipment, electronics and machinery equipment. Second, non-financial companies in the Eurozone have posted a noticeable deterioration of their debt-to-GDP ratios (+5.2pp compared to +3.5pp for the US). In response, governments in France, Germany and Italy have already extended existing partial unemployment programs and introduced new forms of state-guaranteed loans, with more measures likely the longer this crisis lasts. We expect state support to be more targeted and limited this time around, but it could still delay the full normalization of business insolvencies once again, notably in some European countries.

Overall, after two years of declines, we expect global business insolvencies to rebound by +10% in 2022 and +14% in 2023, approaching their pre-pandemic level. While state support will keep insolvencies artificially low in France (32,510 cases) and Germany (14,600) in 2022, the UK could see a sharp rebound in 2022 (+37% y/y to 22,305 cases). One in three countries will return to pre-pandemic levels in 2022 and one in two countries in 2023. Africa and Central and Eastern Europe will both reach new record highs. In Asia, China should be able to maintain insolvencies in check but other countries could see an increase due to the deterioration of the regional and global environment. In contrast, companies in the US (15,500 cases in 2022) should benefit from the buffers accumulated since the pandemic, helped by the Paycheck Protection Program being massively transformed into subsidies and the recovery in profits.