As the UK teeters on the brink of the recession precipice, the most commonly used phrase Cedar’s recruitment consultants hear these days is, “What with everything that’s going on…”.
A year ago, we were all still concerned about Covid and the impact the ending of furlough would have on the jobs market, but the general hope, if not expectation, was that we would see a slow climb back to relative prosperity. Instead, as our clients and candidates remind us almost daily, everything does indeed seem to be going on…
You can take your pick from the massive supply chain issues resulting from the pandemic, the impact of WFH on public (and private) services, mounting concern/frustration with the NHS, the rising tide of industrial action, the difficulties young people have in getting on the housing ladder, and, of course, the increasingly scary world geopolitical situation and the surging inflation that makes every trip to the supermarket an exercise in filling fewer bags with fewer items for a greater cost than a week ago…
For job-seekers though, until very recently, all they had to worry about was whether their new job offered exclusive gym membership, a brand-new Apple Watch and other freebies, plus a choice of flexible working alternatives and an inclusive and safe work environment. All of these things are, of course, desirable in any new job and let no one imagine that our old, pre-pandemic ways of working will return in their entirety, but there is one thing that, above all others, is currently focusing minds and that is the cost of living. Driven largely by Putin’s invasion of Ukraine, the price of energy is going not so much through the roof as punching through the outer levels of the stratosphere. Inflation is eroding everyone’s purchasing power, driving up mortgage payments, destroying savings and weaving its well-known destructive malevolence on the economy at large. And that’s before we consider the vacuum caused at the top of government by the Conservative leadership contest.
Consequently, it’s unsurprising that, what with everything that’s going on, candidates are starting to become more interested in hard cash than soft soap. Although there is still an undoubted demand for wellness, WFH etc., it’s money that increasingly motivates, because when times are tight, priorities shift.
That’s not to say that wages are not going up – they are, and at very healthy rates by recent historical standards. Unfortunately, these meaningful hikes have no chance of keeping pace with inflation, which the Bank of England has forecast will reach a staggering 13% year on year. In fact, the Bank may be being conservative, because Citigroup has just predicted that inflation could reach over 18% before the end of 2022. EY and Goldman Sachs also expect inflation to peak several points above the Bank’s estimate, but no matter who is right, for employees the fact is that even big pay rises won’t prevent them from feeling worse off.
What does all this mean for the job market? Well, it’s hard, if not impossible, to say with certainty. Supply and demand are the traditional arbiters of jobs and salaries and, in general, will continue to be, and for the foreseeable future demand is continuing to outstrip supply.
At any one time, there are a variety of variables that influence specific sectors and individual job disciplines. Yes, people want money first – but they still want everything else – which costs employers, who are, like their employees, struggling to keep their spending under control. As well as increased wages, huge rises in energy, transport and other costs are, of necessity, passed on to customers, pushing up inflation and, in turn, generating even bigger pay demands. Moreover, with the Bank increasing interest rates, the cost of borrowing is rising and while companies can increase their prices, which feed through directly or indirectly to consumers, all of this creates the classic upward wage/price spiral.
So, for now, the cost-of-living crisis means we’re likely to hear a lot more of candidates telling potential employers that, “what, with everything going on, I need more money.” This, increasingly, is the single biggest influence on candidates’ decision making.