At the end of last year, economists were expecting the UK to enter a recession and companies were adjusting their plans accordingly.
“It’s going to be a challenging 12 months,” said Janine Chamberlin, UK country manager and vice-president at LinkedIn, when Raconteur spoke to her in December 2022.
With big-tech jobs already being cut in large numbers at the time, both she and James Reed, chair and CEO of recruitment firm Reed, were expecting large-scale redundancies in the UK, given the widely predicted economic downturn.
But the International Monetary Fund (IMF) has since issued a far more optimistic GDP growth forecast for 2023. Having predicted a 0.6% decline in UK output at the start of the year, the IMF now expects to see an increase of 0.4%. This slight but significant upturn in the nation’s prospects, driven mainly by resilient consumer demand, has been a modest confidence boost to a private sector that had largely been bracing itself for worse news.
“Reflecting back on several months ago, neither the grand fears of a recession nor the optimistic hopes for a return to rapid growth have come to fruition,” notes Brad Harris, professor of management and HR at business school HEC Paris.
The labour market loosens
This is reflected in the UK’s recruitment figures. Competition for talent was particularly intense last year, given that unemployment was at its lowest level for half a century and the jobs market was extremely tight, with vacancies peaking at 1.3 million in March 2022.
But the market has been loosening ever since then. Although job vacancies remain plentiful compared with historic levels, the total has dropped to about 1 million as employers have scaled back their recruitment plans. Over the same period, the unemployment rate has crept up from 3.7% to 4%.
Reed’s latest figures indicate a 17% year-on-year decline in job postings and a 29% increase in applications, which suggests that a recession starting in H2 still isn’t out of the question.
“It also signals a shift from a candidate-driven market to more of a buyer’s market,” Reed says. “This indicates that employers have assumed more control over hiring decisions, while jobseekers are likely to face increasing competition for opportunities.”
He adds that, even though the UK has avoided a widely predicted recession so far this year, its lacklustre economic performance “has led to a surge in redundancies. The number of UK employers who have proposed redundancies is on the rise and is closing in on mid-pandemic levels.”
Employers have assumed more control over hiring decisions, while jobseekers are likely to face increasing competition
Reed observes that several key industrial disputes in progress at the start of the year have yet to be resolved, while many pay offers have failed to match the rate of inflation.
“The decline in real wage growth has affected most working people, while the spread of strikes has further highlighted the challenges facing society,” he says.
While periods of economic uncertainty often encourage people to play it safe and stay with their employer, many have been intensifying their jobseeking efforts. So says Ngaire Moyes, who is serving as LinkedIn’s UK country manager while Chamberlin takes maternity leave.
She explains: “People have realised that they may no longer have the luxury to take their time in moving jobs if hiring continues to slow, so they’re looking to make the leap now.”
This means that employee engagement needs to become a high priority for firms if they’re to retain their most valued people.
“It will be important for employers to look at how they can give people more chances to learn new skills and/or change jobs internally,” Moyes says. “This will help them to retain top talent and also bridge skills gaps.”
The debate about flexible working rages on
As our experts foresaw in December 2022, the return to HQ has been a hot topic this year so far. Chamberlin correctly predicted that many firms would rethink their flexible working policies as the economy faltered and budgets tightened.
We’re still sorting out what flexible arrangements and the future of work are going to look like
LinkedIn’s data indicates that the number of job ads for fully remote roles in the UK is long past its peak. Google, TikTok, Disney and JP Morgan have been among the growing number of high-profile firms that have been trying to encourage those working at home to return to the office. The range of persuasive tactics has also expanded, with some companies accounting for people’s in-office attendance rates in their performance and pay reviews.
“We’re still very much sorting out what flexible arrangements and the future of work are going to look like,” says Harris, who doesn’t foresee the debate on the respective benefits of central and remote working being settled any time soon.
Despite evidence showing that flexibility doesn’t harm productivity and is preferred by employees, many managers remain sceptical and still see HQ as the best place for teamwork and innovation to flourish.
Firms that move beyond this debate and focus on how flexible working can improve their employee value proposition stand to make the most gains, according to Harris.
“In the short to medium term, some companies will embrace flexibility and others will resist it entirely,” he says. “Most businesses will sit somewhere between those two poles.”
AI makes a resounding impact
High-profile breakthroughs in artificial intelligence over the past few months have had a range of implications in the world of work. Conversational models such as ChatGPT have quickly found a place as workplace assistants. Jobseekers have also used such tools to accelerate the application process, leading some observers to argue that generative AI will devalue and eventually kill the cover letter. Meanwhile, HR teams have been applying the tech to the task of filtering applications.
Moyes would advise employers to focus on “how they can use AI to empower staff in their jobs, create new opportunities and improve productivity”.
Harris stresses that firms exploring new applications for AI would do well to remember that “context matters. There’s still no substitute for good old-fashioned critical thinking when it comes to applying technological innovations.”
He adds: “All eyes are on AI right now. I’m confident that it will change the way we work. The question is: by how much? My guess is that it will bring many first-mover advantages and many first-mover adversities – and maybe even fatalities.”
