The balance of power between employers and job seekers often ebbs and flows. Yet in 2022, job seekers certainly had the upper hand. The shortage of candidates has persisted throughout the year, often leaving employers across industries scrambling to fill vacancies.
A significant driver of this shortage is the number of people absent from the labour market, with economic inactivity having increased by over 600,000 since the eve of the pandemic. Some 2.5 million people report long-term illness as the reason for economic inactivity. The UK’s unemployment rate, which was at 3.6% in September, remains historically low despite the recession. Continuing tightness in the labour market, while advantageous for job security, does not improve the situation for employers struggling to hire.
But if the year of hiring challenges that was 2022 taught us one thing; employers must be prepared for 2023. While the macroeconomic climate will be challenging, several factors continue to stifle their ability to recruit talent. Therefore, it’s vital to understand the forthcoming trends in order to navigate them.
- Hiring challenges set to persist
The difficult hiring conditions employers are facing will remain in 2023. The UK continues to experience a large and widening post-pandemic participation gap amid rising rates of long-term sickness. In the longer term, an ageing population means the size of the UK workforce will shrink.
This means that to attract the talent that is available, employers must become an attractive proposition to join. With candidates likely having freedom of multiple options, does your job posting stand out and what enhanced benefits can you offer?
- Remote work is here to stay
Remote work has become a mainstay, particularly for knowledge workers, and it isn’t going anywhere. Jobs offering remote work in the UK rose by 274% since the start of the pandemic while searches for remote work grew by 674%.
It’s clear that the pandemic-enforced shift to widespread remote, hybrid and flexible working will be a permanent feature of the labour market. The companies embracing this will widen their talent pool and could relax some of the strain on recruitment. And employees with access to hybrid work are generally happier with their company.
- Pay matters most but benefits sweeten the deal
Compensation is the key consideration for jobseekers right now — understandably so in a cost of living crisis. Still, flexibility is very often a must-have for many people, especially those who face barriers to work such as caring responsibilities or are taking on multiple jobs to make ends meet.
Benefits will also be a key tool in attracting and retaining workers who have adapted to new preferences. Recent Glassdoor analysis showed how in-office benefits such as gyms and kitchens are being noted much less often in reviews for UK-based employees relative to pre-pandemic times.
- Happiness is key to employee retention
Even amid profound economic challenges, corporate leadership will find it necessary to focus on employee retention and happiness. More satisfied employees are far less likely to consider outside employment opportunities, as failure to address attrition rates is a detriment to building quality workforces.
In the UK, a 1-star increase in an employee’s Glassdoor rating is associated with a 19% decline in the likelihood that they begin a new job application on Glassdoor within the next week. Employers are becoming increasingly likely to walk away from a job if they feel it negatively impacts their well-being.
- Younger workers push for diversity, equity and inclusion
Corporate focus on diversity and inclusion surged in 2020 and 2021, but these recent advances appear to have stalled in 2022. In 2021, half of UK benefit reviews indicated that their employer had a diversity, equity & inclusion (DE&I) programme, up from one-third in 2017 and 2018. In 2022, it slipped back slightly to 48%.
A 2022 Glassdoor study of UK employees found diversity and inclusion policies are more important to younger workers than other age groups. As more Gen Z workers enter the labour market in 2023, employers must consider how their DE&I efforts appear to this crop of workers. It can make you a more attractive place to work but equally, failing to hit the mark can reduce employee satisfaction.
New Working Norms
Covid meant everybody changed the way they work and now that temporary trends have settled into permanent ones, we can see what a post-pandemic world of work looks like. The scale and speed of change have been dramatic and while the UK labour market has adapted and shown signs of resilience, the pandemic exposed underlying frailties that look set to hamper hiring in the near future.
The key question for jobseekers and employers will be how long the job market can seemingly defy economic gravity and keep chugging along and what levers they have at their disposal to ease challenges.
Indeed
December 2022