The Cost-of-living-crisis And It’s Effect Upon Recruitment

The CIPD have recently stated that ‘’the labour market in the UK remains tight, with nearly half of all employers reporting hard-to-fill vacancies’’. This follows a surge in energy prices and a dramatic increase in living costs.

As the 'cost-of-living-crisis' intensifies and the threat of recession looms, HR teams are searching for innovative solutions to support their existing workforce AND attract new talent.  In response to the challenges our network is facing, Walker Cole International (WCI) has conducted a variety of on and offline polls and interviews to extract data from the current market. More specifically, we have aimed to explore the way in which the political and economic climate has affected candidate motivators and subsequent behaviour.

Supporting and retaining the current workforce

Simply put, there are two ways in which employers can take meaningful action to retain permanent talent; increase an employee’s income or assist them in reducing costs.

·         Over 96% of survey respondents claimed that an enhanced household income would have the most significant impact upon their family wellbeing (WCI). If you can afford to offer a financial increment or provide a cost-of-living bonus, it will no doubt alleviate pressure. Employers should however be mindful that this course of action could unintentionally do more harm than good for those who claim tax credits/ childcare allowances etc.

·         As we continue to move away from the COVID pandemic, employers have re-evaluated hybrid working policies with many asking staff to return to the office for up to five days per week. Whilst we have observed a general trend of flexibility, the cost of commuting has accelerated therefore a U-turn may be required. If the business impact is palatable, employers should consider reducing the number of days commuters are required to pay for transport whether this be for petrol or train/bus fares.

·         The re-evolution of accessible benefits is also impactful as employees look to reduce their expenditure upon luxuries. Over 60% of our survey respondents placed a greater value upon lifestyle benefits than they did 12 months ago, the two of the most favourably received perks being gym memberships and a cycle to work schemes.

·         When asked to comment upon ‘non-financial’ support, the most frequently received suggestion was the provision of sound financial advice.  An unexpectedly high number of survey respondents suggested they had significantly benefited from financial management seminars recommended or arranged by their internal HR teams,

·         As much as permanent employees are feeling the squeeze, so are professional contractors and successful organisations have recognised that treating your flexible workforce with care and consideration will go a long way towards staff retention. As with their salaried counterparts, interims are seeking additional income and the ability to reduce outgoings. They do however have the added concern of stability.

·         The nature of contracting means that workers have traditionally expected to be ‘between projects’ for certain months of the year, often enjoying extended holidays over the Christmas and summer periods. Given the instability of the hiring market, the preference for this type of ‘break’ is on the decline with many contractors expressing a desire to make an immediate move from one project to another.  With his in mind, Walker Cole are advising our partners to show an early intent to provide contract extensions.

Considerations when hiring external talent

A recent survey by Walker Cole international found that over 60% of respondents were actively considering new employment as a direct result of the cost-of-living crisis. This figure has also been supported by numerous independent sources. Whilst this information should be positively received by the talent acquisition community it is important to note that 75% of the same group were solely motivated by the need for a pay increment.  With outgoings on this rise, and energy costs soaring, it is not simply a case of selecting the best talent in a ‘buyers’ market’. The unfortunate reality is that businesses are finding it increasingly challenging to identify qualified employees that they can afford - an observation that is true for both permanent and contract hiring.   We have summarised our research findings below and provided some simple recommendations to help counteract the challenges of ‘hiring during a crisis’.

·         First and foremost. the market should expect to see more counteroffers and a higher-level of counteroffer acceptance. As such, the provision of a strong, first offer will increase the likelihood of securing top talent.

·         Certain industries will see a natural decrease in applicants as candidates prioritise stability of employment alongside personal finances. Employers will need to broaden their acquisition strategies to consider transferable skills and move quickly with intent after identifying suitable profiles.

·         Over 50% of the professional contractors surveyed were concerned that day rates were reducing to levels observed throughout COVID19.  In addition, over 80% anticipated longer periods of unemployment, prioritising opportunities with higher day rates and remote working to compensate for loss of income. Where possible, employers should continue to provide competitive day rates and offer contracts outside of IR35 which are highly sought after given the undoubted tax benefits.

·         Finally, the pool of available, specialised talent is shrinking as apprehension surrounding the market is driving contractors to return to permanent positions. This may be of benefit to employers looking to attract long-term talent as the choice of applicants will increase and could in turn, provide an opportunity to make a more cost-effective hire., The opposite however will be true when considering flexible hires who will be in short supply and increase their daily rates accordingly.

Walker Cole International will be using our findings to conduct more specific research into this area over the coming months. Should you wish to share your own insights or express an interest in our forthcoming roundtable event, pleased don’t hesitate to get in touch – hd@walkecole.com