The past few years have been challenging for the hiring sector, and it looks like things could get worse before they get better.
Employment rates have largely returned to pre-pandemic levels this year, but the outlook for next year looks more bleak. Rising food and energy costs are exacerbating the cost of living crisis, and a recent U-turn in the government budget has sent inflation soaring, sending the UK headlong into another recession.
As a result, sourcing and retaining talent is becoming more complex. Recent reports indicate that the job market has entered a period of stagnation, forcing many companies to freeze hiring as they struggle to keep up with salary expectations.
So how can business leaders overcome economic uncertainty and thrive in this environment? planning ahead to ensure that any skill gaps are covered.
Understanding the Job Market Stagnation
In hiring, market stagnation refers to slowing job growth, plateauing output, flat wage growth, and candidates demanding more than employers can offer.
The stagnation often follows the stagnant economic growth we have experienced since the initial coronavirus lockdowns in 2020. The economy showed signs of recovery after the government eased restrictions. However, hiring activity is declining as employers become more cautious about their hiring plans due to rising costs and staff competition.
Latest KPMG and REC UK Report on Jobs survey shows starting salary growth falling to its lowest level in 18 months, permanent employment falling for the first time in almost two years and temporary employment stagnating. Hiring intentions are rising, but recent reports show business confidence in the UK economy has turned negative on concerns about labor shortages, political turmoil and inflation.
As a result, it is becoming increasingly difficult to recruit and retain staff in the current economic climate. People are less likely to switch jobs at or below their current income, and candidates are trying to hit the market with salaries up by as much as 30%.
Similarly, in today’s turbulent market, workers are likely to stay put rather than move in anticipation of further economic instability. So, unless your hiring manager includes an appropriate long-term budget for headcount growth at the start of the fiscal year, you can feel the stagnant pain heading into the new year.
As a result, employers sooner or later assess their hiring needs and are eager to fill a role, but lack the funds and resources to present attractive job offers to top candidates. You should avoid facing a scenario where
Adopt a proactive hiring approach
It’s easy to get complacent when things seem to be going well in the short term. But if there’s one thing we’ve learned from the recent turmoil, it’s how quickly things change.
Candidates still drive the job market, so companies are cutting jobs to attract and retain workers. Businesses are changing rapidly in the modern world and employers need to stay one step ahead of their staffing needs.
Hiring managers must focus on improving the most critical areas of the hiring process to successfully overcome current and future hiring challenges.
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Before embarking on recruitment efforts, which often prove to be costly and time-consuming, companies assess market trends to develop competitive offers.
This is also true for existing employees. By investing in compensation, training, and bonuses, hiring managers can close skill gaps from the inside, increase retention, and reduce the pressure to keep hiring more staff.
Focus on diversity and inclusion
Diversity and inclusion policies (or lack thereof) have a significant impact on today’s workforce and play an integral role in progressive employee value propositions — the way employers attract and engage desirable employees.
Highlighting issues and opportunities within this business area is an important part of social responsibility for modern organizations. Additionally, cultivating an inclusive, culture-focused workplace can attract interest from more candidates, increasing the chances of successful hiring and retention.
Get professional help
Meeting candidate expectations for salary, bonuses and benefits is always important. There is now no room for negotiation as market stagnation threatens to affect company earnings.
Enlisting the support of a third-party recruiting team ensures that someone is continuously monitoring the job market, conducting accurate budget assessments, and overseeing the entire recruiting process. By handling these tasks, business leaders can focus on generating long-term growth from simply surviving amidst economic uncertainty.
Julie Mott, Managing Director Howett Thorpe.
