If individuals have remained unemployed for a prolonged period due to the absence of appropriate job skills so there is a mismatch between labor demand and supply – a structural imbalance in labor markets, then this is very different than if individuals lost their jobs during a deep recession that has been followed by a still tepid recovery – a cyclical problem in labor markets. In the first case, the long-term unemployed may be less well-attached to the labor market in terms of exerting downward pressure on compensation, while in the second case they were particularly unlucky – they are long-term unemployed because of bad timing. I suspect that a much greater proportion of those who are currently long-term unemployed have simply been very unlucky compared to historical averages. This blunts somewhat the distinction between being short- versus long-term unemployed. •  If the long-term unemployed are simply unlucky as opposed to not having the appropriate skills, then their impact on wages presumably depends on whether or not there is an excess supply of short-term unemployed. If there are plentiful shortterm unemployed, they may get the best job opportunities first. In part, this reflects employer bias against the long-term unemployed when they compete with those who have been unemployed for shorter periods. But, once the short-term unemployed pool is depleted, then the long-term unemployed will become more relevant to the labor market supply, so their impact on wages and the labor market will likely increase as the labor market tightens.
We need this collaborative approach to turn promises into practice. One glance at the NGFS website will show you just how much we are doing on that front.23  22 23  NGFS Climate Scenarios NGFS Website 8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  Green Finance and Green Recovery  Governments around the world are now considering green recovery packages to rebuild economies hit by Covid-19. Such measures to “build back better” offer a unique opportunity for the financial sector to step up by mobilising green finance to maximise the impact of these packages. The benefits for the financial sector go beyond managing the risks from climate change. Identifying the risks will also reveal the enormous opportunities of supporting the transition. And the innovation that follows will be good for business as well as good for the planet. Indeed, there is increasing evidence of a commercial benefit to sustainable investment, both during the recent market volatility around Covid-19 and over the long-term. 24 It is therefore no surprise that global sustainable funds reached nearly $ trillion in assets under management at the end of 2019.25  Next steps  So where does this leave us and what is next on the climate pathway? I like to think of our journey in phases. The first phase was identifying what risks climate change posed to the financial system and convincing the financial sector of the need to act. We have done this.