This year employers gathered to attend FutureWorks, Indeed’s marquee event hosted in London. Indeed Hiring Lab’s Senior Economist Jack Kennedy and Novo Constare (VP and GM Staffing Solutions, Indeed & CEO, Indeed Flex) joined forces to speak about labor market trends, what they found in their research, as well as how recruiters can respond to the demands of the current labour market – and how it’s gradually shifting.
Labour market trends: the big picture
Statistics from Indeed’s FutureWorks demonstrate the story that there’s a slowing in labour demand, and job postings are coming down from their elevated level from midway last year to the backend of last year. They peaked at 50% above pre-pandemic levels (2020 baseline), but since job postings have cooled. While current statistics don’t match the post-pandemic hiring boom, we’re still seeing postings above pre-pandemic levels at 15%.
There’s also clear evidence that job-to-job moves are cooling, too. Last year, there was much opportunity for workers to move between jobs, peaking in the first quarter of 2022 at just under one million. They have still remained somewhat high in subsequent quarters (over the historical 20-year average of around 707,000 at 841,000), but indicators show that there is a gradual decrease of workers moving job-to-job.
What does this mean for candidates and recruiters alike?
Workers have an increased ability to move between jobs as a result of high vacancies, peaking in the first quarter of 2022. The tight labour market also supports high wage growth, and employees are seeking higher pay in order to meet the demands of a cost of living crisis. Wage growth is tracking core inflation – in other words, prices set in the UK’s domestic economy. Domestic services are becoming increasingly expensive, therefore.
This is being met with growth in nominal wages in order to match this. It also makes sense then that pay is one of the top concerns of employees – 23% stated that this was the most important, followed by change of career or career growth.
But what about for recruiters? As Kennedy explains, the tight labour market is still a persistent challenge for recruiters in 2023. He diagnoses this as being due to what’s known as 'the inactivity gap', marked by high job opportunities and high numbers of people who are not participating economically nor are seeking work.
There has been some improvement in inactivity figures, however, in the last few months (at 21%). That being said, this rate is still above pre-pandemic levels. The UK government has tried to boost economic activity by introducing measures like improved childcare and other similar reforms. However, these childcare reforms will not be introduced in phases until April 2024, and will be fully introduced by September 2025.
But why is there a gap in the first place? Let’s find out.
The inactivity gap – and why it persists
So why is there an inactivity gap? Kennedy explains that long-term sickness following the pandemic is potentially affecting the number of people returning to the labour force. This may also be as a result of additional caring responsibilities, after all, chronic illness doesn’t just affect the abilities of candidates to work full-time, but their families as well.
As we found, careers are being put on hold by long COVID. 3% of those suffering from COVID continue to experience symptoms for months or even years after their initial infection. Symptoms like fatigue, physical weakness, and lack of concentration are top concerns of those who experience long COVID. For employers, this means that many talented candidates (both young and old) are slipping through the net due to a lack of understanding of the condition.
And as Indeed & Glassdoor’s Hiring and Workplace Trends 2023 report shows, wellbeing support and financial advice are becoming more popular than gym perks, for example. This means that employees are expecting employers to take a more active approach in providing health support.
There are solutions to this. Employers can put in place reasonable adjustments to make returning to work easier for candidates who have been out of the workforce for a long period of time.
For more information on what to do, you can read the UK government’s principles to support disabled workers and workers with long-term health conditions in work. This can help inform a health policy which provides some transparency to employees about what to expect in terms of accommodations and support for ongoing health concerns.
Candidates are tackling high cost of living with temporary work
Temporary work is becoming an increasing option for employees as they struggle to meet the demands of a cost-of-living crisis. This is because meeting employee demands of higher pay is also an issue for many employers, too, as Constare finds. Wages aren’t keeping up with inflation, and so employees are demanding higher wages to match this. But not all employers are able to keep up with this either, and so may not be able to offer what their employees are looking for.
In fact, 52% of UK workers said that they were either planning on using, or currently using temporary work as an additional source of income. This is also reinforced by the fact that 80% of temporary workers were new, or returning to temporary work – meaning that they had not previously been working in a temporary job or returning after at least a one-year absence.
But with both workers and employers returning to temporary work, what is the catch? Employers claim that temporary staffing leads to high turnover; workers say that they aren’t treated well in these roles. Indeed Flex – therefore – is asking: is temporary staff falling behind?
Constare looks at how app-based staffing platforms might be the solution to some of the concerns that both workers and employees have with temporary working. These can be used to better match temporary workers with the right jobs, meaning that they can find jobs that their skills are most suited to. Companies can leverage information on candidates like their skill profile and experience in order to both make quicker hiring decisions, as well as find stronger candidates for specific jobs that need filling.
Labour market trends aren’t encouraging, but there are some solutions
The labour market is still tight, and with inflation to boot, it’s currently difficult for both employers and employees alike to have their needs satisfied. Recruiters are struggling to find the right candidates, and employees are turning to additional sources of income in order to meet the cost of living crisis. One potential solution is to look at how to improve temporary work recruiting processes to better source candidates and advertise job opportunities. To meet the needs of employees slipping through the net due to long-term sickness, we suggest investing in return-to-work strategies, developing health policies, and looking at creating reasonable adjustments.