A recent REC/KPMG report has revealed some interesting trends appearing after a strange year in recruitment – one that started with increasing wage inflation and ended with signs of a recession and layoffs at some of the biggest tech companies in the world.
What does that report tell us?
Our Managing Director Rupert breaks it down for you:
- There is still an acute candidate shortage, since many employees are looking to avoid the economic issues by staying put
- Live vacancies have fallen but are still “normal” if you look at pre-pandemic times
- Wage inflation seems to have now left the market. It started last March and has now taken place already. Our estimate is that wages are now on average 10% higher than they were pre-pandemic
- Related to point 3, there has been a lot in the media trade press recently about how companies are preparing to balance the books – as staff have had 10% pay increases they need to be 10% more productive or it simply reduces profitability. Bearing in mind productivity in the UK has been stagnant since 2008 (averaging 1% or less growth per year) this is going to put a lot of pressure on staff to work longer hours/work harder to deliver more to give the financial justification for these pay rises. This most likely ties in with our observation that commuter numbers have now largely recovered despite hybrid working now being available to some and also seeing more clients and candidates working nights and weekends. My expectation is that companies will up what they charge (e.g. in PR Week over 50% of PR agencies have said they are going to charge more) and make some redundancies where people are not proving their worth. Both measures combined will help reclaim profitability.