Hiring for a future beyond the cost-of-living crisis

Skills shortages are rife. The cost of living is sky high. How can I approach the market right now??

The cost-of-living crisis is hitting hard. With inflation on the rise and real earnings falling, it’s business critical to stay ahead of the curve and adapt your recruitment strategies accordingly. ?

In this post, we’ll explore practical tips to help you navigate a looming recession and manage your workforce for a future beyond the cost-of-living crisis.??

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How is the current economic climate affecting hiring??

This month we see employers feeling the pinch as the UK economy continues to falter. Multinationals are laying off entire departments, flooding the candidate market with expensive talent.??

?The short-term view looks bleak. Average permanent salaries fell 6% in 2022, compared to the same period in 2021.??

Ann Swain, Global CEO of APSCo, comments:?

“December has long been a quieter month for recruitment activity. However, while there has certainly been a decline in hiring noted, the fall in average permanent salaries paints a more concerning picture. There is still significant pressure on the labour market, particularly for highly skilled professionals. Businesses and recruiters alike shouldn’t fall into the trap of believing the labour market has swung back in favour of the employer just yet. The power is still very much in the hands of the candidates, and without appropriate remuneration packages in place, access to crucial resources will become increasingly limited for firms.”?

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Should I be preparing for a recession??

The Great Recession of 2008 is a haunting memory for many business owners. We witnessed a 5.1% drop in GDP, watched 8.7 million jobs vanish into thin air, and were met with hiring freezes and disheartened job seekers. But the true test of resilience came in the form of the almost five-year long recovery process to regain the jobs lost during the 18-month economic downturn.??

So, are we staring down the barrel of another 2008??

The reality is that recessions are difficult to predict. Our economy has languished over the past two quarters, with GDP falling and inflation ticking up. Thankfully, unemployment remains relatively low - perhaps a strong job market is keeping us out of the "recession zone" for now.??

Bolstering your workforce against a coming recession is - without a shadow of a doubt - a critical focus. Even if you're wrong, your recruitment plans will be airtight.?

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The Big Question: What is a living wage??

The Real Living Wage foundation just announced a 10.1% increase; the largest in the foundation’s history. Yet research by CV Library recently found that many industries are offering lower salaries than in previous years, which can make it difficult to attract and retain top talent.??

For the average worker, the cost-of-living crisis is not necessarily a shock. It’s the final nail in the coffin, after over a decade of depleting quality of life and reductions in disposable income.??

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How is the cost-of-living crisis affecting jobseekers??

It's important to understand the cost-of-living crisis in context. Real household disposable income per capita has doubled every 30 years since 1948, but the financial crisis has had a significant impact on this trend.?

This is why understanding market sentiment is key when advertising jobs. The cost-of-living crisis is an unavoidable reality for many, so think about how this may affect willingness to take new jobs.?

As James Burns pointed out in a recent post – GenZers won’t even click on a job ad if the salary isn’t listed. In a climate where financial instability is a very real fear, he says, “who can blame Gen-Z for wanting guaranteed stability before they take a chance?”?

Read James’ post on including Pull Factors in your job adverts.?

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What benefits are jobseekers looking for??

To stay competitive, employers need to think outside of the box – advertising legally required benefits as “competitive” is, quite frankly, offensively out of touch.?

TotalJobs research found that 75% of UK professionals are considering changing jobs for a higher salary, and they're also looking for benefits and perks to maintain their lifestyle choices.?

UK job market data also shows that "training" is the most commonly offered job perk in 47.5% of job posts. Although training is important, it may be viewed as a basic requirement rather than a perk by job seekers. ?

Shockingly, pensions were advertised as a competitive benefit in 33.2% of job ads. Pensions are not considered a benefit – they’re a legal requirement, with minimum employer contributions of 3%. Only 1.6% of job?ads mentioned offering higher pension contributions above the legal minimum.?

So, what benefits are attractive to jobseekers in 2023? In recent research from StandOut CV, some of the least common "perks" in the UK were unlimited holiday allowance, charity days off/volunteer time, birthday day off, free/discounted childcare, mental health support, and enhanced parental leave.??

For candidates, standard benefits packages aren’t cutting it anymore. In 2023, expect to personalise benefits packages to attract better talent and retain the people you need. ?

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How important is data in hiring??

We wrote recently about the importance of Data - 53% of senior executives have identified data and analytics as their top investment priority in the next two years. This will partially come from a desire to realise business benefits borne of a modern data strategy.?

Additionally, data centricity will become the cornerstone of effective workforce planning. Organisations will be empowered by data; able to recruit the right people, track employee sentiment and motivation, run teams more effectively, and deliver the right training to boost productivity.?

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What is?a retention-focused culture??

All the above culminates in a strategic hiring plan, but also points towards the need for a retention-focused culture. ?

According to research by Oxford Economics, it costs an average ￡30,000-plus to replace one employee earning ￡25,000+ p/a. That's over 100%+ of annual salary to backfill a role. Evidently, it pays to get people to stay.??

By focusing on creating a culture that prioritises economic security, economic mobility, equity, respect, and voice for your employees, you can build a more resilient and authentic organisation.?

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What’s the long-term view??

Research from ManpowerGroup indicates that 2023 is starting off strong, with employers determined to keep hiring despite the economic downturn and high inflation. ?

Talent retention is expected to be challenging this year: this is still a largely?candidate-driven market. Candidates and existing employees are looking for ways to maintain their lifestyle choices and increase stability in the face of a worrying economic outlook. ?

As skills shortage deficits widen, employers will need to keep hiring in order to maintain a competitive workforce. ?

However, we expect an increased focus on internal upskilling programmes and succession management strategies. Not only is upskilling your workforce more cost effective than hiring in new talent, but it also feeds into positive employee satisfaction. ?

People want to feel that they are valuable and worthy of investment – both in terms of what they can bring the company and their own career development. ?

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I want to hire great tech talent ?

At Big Red, our consultative approach to tech recruitment means you get timely market insights and advice to help you make the best approach to the market. In this rapidly shifting recruitment landscape, being ahead of the curve is more imperative than ever. ?

Need to hire now? Discover our on-demand, project style recruitment service. ?

Want a recruitment partner to take the strain off your hiring? Find out how our managed recruitment service could help you. ?

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Quick Links?

• How can we close the data skills gap? ?
• Hired / Tired / Fired – Recruitment Trends 2023 ?
• Why stability is your 2023 Green Flag ?