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Are there really that many job vacancies?
We’ve been speaking with employers across the UK about the future of screening, digital transformation, and the current state of the job market. Below is our view on some of the discussions we’ve been having.
Are there really as many jobs as we’re being told?
Even though employment rates are rising, there are more vacancies than ever. How can this be? In short, it’s a hangover from the pandemic and we’re making up for lost time. ONS data shows a sharp spike in vacancies from mid 2020 to now. However, over a broader timeframe, job vacancies were virtually identical between 2019-2020 and 2021-2022, at 822,000 and 827,000, respectively.
This data might not give us the full picture though. The ONS survey pulls from 6,000 employers across the country, which only represent .1% of total businesses. It’s likely that the self-employed and gig economy platforms are underrepresented in this sample. We know that gig economy roles have exploded during the recession, and are expected to grow 54% between 2019 and 2022. Just think of all those riders now delivering your groceries and digital nomads working part time from abroad.
So, while we think the overall number of total vacancies has remained constant, the pandemic has turbocharged the gig economy and there are now technically lots more part-time roles that could be filled. This highlights the importance and opportunity of streamlined screening, onboarding, training, performance management, and offboarding.
What does this mean for companies that need to start cutting back on headcount?
Assuming that total vacancies are roughly equal, that the labour force is becoming more dynamic, and that employers will need to cut back on headcount, then the answer is in flexibility and doing more with less. Employers will need to push for the utilisation of skills, and work dynamically wherever possible. That doesn’t mean pushing 4 people to do the work of 5; it means strategic planning, upskilling, cross-skilling, and the ruthless removal of inefficiencies.
Luckily, gig workers, contractors, and the employers driving this segment of the economy largely embrace this dynamism. The 20-and-30-something’s of the labour force grew up under the shadow of austerity; they’re overly familiar with tight budgets, zero hour contracts, and jumping from one free software trial to the next. Moreover, these same individuals are willing to forego a higher salary for more flexibility, with one US survey finding that 61% of employees would take a pay cut to continue working from home post-pandemic.
Is the UK more likely than other countries to engage in mass firing if we enter another recession?
As with most questions on culture, we would expect the UK to fall somewhere between the US and Europe on this one. Looking back to the Global Financial Crisis, we see just that when it comes to unemployment levels between 2007 and 2010. During this period, unemployment grew 115% in the US, 48% in the UK, 38% in Italy, and 14% in France. However, during the same period unemployment actually decreased by 20% in Germany, in what is being touted as their second “economic miracle”.
Although Germany’s GDP took a similar-sized hit to the UK and US, the effects on employment were reduced for a number of reasons; employers were slower to hire in the economic bubble leading up to the recession, and they were also quick to reduce hours and lower salaries through the Kurzarbeit system. Again, this emphasises the importance of keeping people in work through flexibility. This was achieved 15 years ago, when teleworking was in its infancy, so we should be capable of much more now. Although maintaining the same level of pay is core to the idea of a 4-day work week, the trials which have just launched across the UK will be pivotal in shaping the future of working time patterns.
What employees are most likely to be laid off?
We believe that the less flexible, “I shaped” employees would be the first to go. They can’t stretch as much in a system that increasingly demands elasticity. Looking more broadly, consumer-facing industries and Tech, the latter of which has been massively over-indexed, will be the first to slash jobs. Take Klarna for example, which sits at the intersection of the two; the BNPL giant announced in May it would lay off 10% of global staff, and is on-track for a historically poor revaluation, losing around 89% of its market cap.
Although Tech companies will suffer financial losses and be forced to reduce headcount, the individuals they’re laying off are some of the most employable and will quickly be absorbed elsewhere. As such we argue that the younger, more adaptable crowd should be retained and shape the core of your workforce. With that said, we also appreciate the need for more senior leaders to use their experience to drive the necessary changes.
What are the alternatives to laying people off?
As we’ve outlined above, reduced hours and wage cuts are some of the alternatives. Millennials appear to be driving the Great Resignation, with a 20% increase in resignations among their demographic between 2020 and 2021. Although motivations for quitting vary, prioritising work/life balance appears to be a leading cause. If employees are keen to spend less hours on the job, why not start this conversation before they jump ship?
What does this mean for EDI and emerging talent planning?
The pandemic has often been referred to as a ‘great equaliser’ and we think that Tech has played a similar role. Candidates now apply for roles en masse, circumventing previous, more nepotistic systems. There is an abundance of free learning resources online, which allow people from every background to upskill. Remote work, too, has helped to bring high-paying jobs to all parts of the UK, as opposed to limiting it to more affluent pockets.
Although the playing field may be more equal, employers will still need to have strong EDI policies in place to allow all types of players to get on the pitch in the first place. We think that taking a broader approach to hiring based on skills as well as opening up to remote workers from domestically and abroad will yield the best outcomes for businesses in this environment.
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