Although rising inflation and the cost-of-living crisis dented consumer confidence and hit workers in the pocket, the number of job vacancies and applications remained remarkably resilient last year. While some companies responded by increasing salaries and offering other perks to retain their workers, skill shortages still prevail, and the competition for talent remains red hot.
Looking at some of the headline numbers for 2022, our data revealed that the number of job applications almost hit the 60million mark, albeit not quite the high of almost 64 million in 2020. Nevertheless, this represented a 19% year-on year rise compared to 2021, which is indicates that candidates are looking for new opportunities and won’t hesitate to move if they’re not happy where they are.
Finances and Flexibility
This candidate mindset highlights two key trends. The first is a desire to seek better pay, as we’ve seen with the recent Public Sector strikes, given that real wages and consumer spending power are falling with salary rises not keeping up with inflation. That said, with energy prices starting to come down and inflation predicted to fall later in 2023, the financial pressures should start to diminish. The other key consideration is around flexibility — those employers enforcing a return to the office or not offering hybrid arrangements will risk losing their top talent.
In terms of job vacancies, these rose to 2.6 million in 2022 from 2.3 million in 2021 and, incredibly, 1 million more than the 2020 total. So despite the tough economic conditions, organizations are still on the hunt for talent, which is proving difficult given the persistent skill shortages. Interestingly and encouragingly, the rate of growth of permanent jobs was higher than contractor or temporary vacancies, accounting for 69% of all jobs, up five percentage points on 2021 figures.
If we analyze some key sectors, we find that supply chain vacancy numbers fell in 2022 — the year ending with a 22% drop in Q4 — but this isn’t surprising given the heady heights of 2021. Of note, application numbers remained steady and over the 1 million mark during the first three quarters of the year, a level only matched in the first quarter of 2021. Although the cost-of-living crisis will continue to be felt, employers in the supply chain arena should be in a better position to meet their needs given that the gap between demand and supply of talent has narrowed.
We saw a rebound in the travel and tourism sector during the first half of 2022 with back-to-back job rises of 30% and 10% in Q1 and Q2, respectively. Application numbers skyrocketed in Q1 — up 90% on Q4 of 2021 — continuing on an upward trajectory in Q2, albeit a marginal rise of 2%. Despite vacancy numbers falling by 16% and 12% respectively in the final two quarters of the year, these figures were nonetheless higher than corresponding 2021 numbers. Moving forward, organizations must maintain a solid workforce base to maintain growth as conditions start to ease.
Growing uncertainty and cost of living woes also had a negative impact on hiring in the FMCG sector, with company profits hard hit, leading to a fall in jobs. Vacancies in Q4 fell by 14%, the lowest levels since Q1 of 2021. Rising inflation and the squeeze on household budgets also had an adverse effect on job seekers, as application numbers fell by 7% in the final quarter of 2022. Although there is more pain ahead, the main indicators are set to improve in the latter half of 2023, so companies need to secure the skills they need ahead of the eventual pickup.
Attraction and Retention
Although the UK economy has just managed to avoid a technical recession by a whisker and the recovery is likely to be slower than other G7 and EU countries, the labor market will remain relatively buoyant. And as conditions start to improve in 2023, employers must offer competitive rewards and benefits packages and an enticing employee value proposition if they want to attract top talent — but they must also prioritize retention so they don’t lose their best people.