Employers are hardly interested in grades at all. Do you know anyone that does? Society uses grades as a selector for higher education pretty much exclusively. This is a goal for which we can objectively measure its relevance. I suspect there's a thing or two to learn from that.
An invididual's letter grades are not important, but selecting from a cohort of individuals that outperform others is important (also why it's important to be from that cohort). You're not aiming for every single hire to be successful (probably not practical or possible to invest enough resources to be able to evaluate that), but you can make the odds tilt in your favor.
Couldn't the lack of absolute feedback lead to uncertainty and therefore overcompensation? I'm thinking of my school colleagues who were set on entering college courses with very high entrance requirements. Without a clear idea whether they were doing enough, I could see them absolutely burning out.
Employers are obviously interested in grades that reflect the objective skill level of the to-be-employed.
The problem is people subconsciously build up explanations for their observed performance. If a kid routinely has a hard time with maths, its more probable that they develop a causal model that puts themselves in a static role: "I'm just not good at maths". What inter-subjective grading does is strengthening this belief: Imagine this kid learning really hard for a test, then still getting a bad grade. Lesson learned: Effort makes no difference.
What you want school to archieve is the exact opposite. You want to build up a mental model where the personal effort is the differentiator between good and bad results: "I just didn't learn well enough" instead of "I'm just bad at maths."
Grading that way makes it hard to assess objective performance, but it enables the kid to get nearer to his/her optimal performance.
(The opposite is probably more fitting for HN: Kids who didn't develop this model in school because they were "just good in maths" often didn't learn to learn and later have a hard time in college and beyond. Me included :))
Ideally schools would allow for both: Relative grading all the way up to the last school year, then a final test assessing objective performance. That way you maximize the development of a mental model of self-efficiacy while also allowing employers and universities to decide wheter the person is good enough for the position in question.
(I'm an educational scientist by trade)