UK employers face a shrinking labour force and will continue to wrestle with hiring challenges into 2023 and beyond, according to a forecasts released by sister companies Indeed and Glassdoor.
The two online recruitment firms’ Hiring and Workplace Trends Report 2023 concludes that a large and widening post-pandemic participation gap amid rising economic inactivity rates including long-term sickness will continue to constrain the supply of labour well into next year. And in the longer term, an ageing population means the size of the UK workforce will shrink.
The report, which tracks trends across Canada, US, France, Germany, and the UK, shows that, without sustained immigration, an increase in productivity, or a focus on attracting new workers, many industrialised countries will see further constrictions in available labour.
The findings echo those of the Recruitment and Employment Confederation, which made a similar forecast in September.
The squeeze is likely to persist in the UK where job postings remain 42% above their pre-pandemic level despite a recent softening in demand for workers.
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Elsewhere, the report highlights that as the cost of living crisis continues to bite, pay is the top consideration for jobseekers to keep pace with mounting bills.
However, the desire for flexible work continues unabated and ranks highly as a top employee priority, notably for older workers who are considering re-entering the labour market to top up earnings.
The report also found that hybrid and flexible working had become a permanent feature of the labour market with jobs offering this rising by 274% since the start of the pandemic while searches for remote work had increased by 674%. This has widened the pool of available labour for employers and allowed opportunity to become more geographically dispersed. Additionally, employees with access to hybrid work are generally happier with their company.
Compensation was the key consideration for jobseekers, found the report, predictably given the cost of living crisis, but flexibility was also a necessity for many people, especially those who had caring responsibilities. Interestingly, 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.
Researchers found that corporate focus on diversity and inclusion had surged in 2020 and 2021, according to benefit reviews on Glassdoor, 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 and inclusion programme, up from about 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.
Jack Kennedy, UK economist at Indeed, said that while the UK labour market had adapted since the onset of Covid in 2020, the “pandemic exposed underlying frailties that look set to hamper hiring in the near future”. The key question for jobseekers and employers, he said, would be for how long the jobs market “could defy economic gravity and keep chugging along”.
For Lauren Thomas, UK economist at Glassdoor: “Two concerns will remain top of mind for job seekers in 2023: compensation and benefits, and diversity and inclusion. With decades-high inflation causing real wages to shrink, employers are finding creative ways to compensate their workers without blowing up their budgets. And as hiring slows, there will be a greater focus on retention and workplace happiness.”
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