Inflation Effects on Hiring
A topic on everyone’s mind is inflation. Supply chain issues continue, opportunistic price gouging is prevalent, wage growth and consumer spending are encouraging the Federal Reserve to raise interest rates, and uncertainty around recession indicators has kept executives anxious. In the coming year, what are inflation’s effects on hiring?
The longer we stay in our situation, the more likely we will experience either a recession or a slower growth trajectory. We’re already seeing signs of this with layoff announcements. While unemployment remains low, some believe we’ll see hiring slowdowns and unemployment rise.
According to a recent article by Lauren Winans, CEO of Next Level Benefits, in Forbes, “Employers should find ways to operate as efficiently as possible. Focus on keeping operation costs under control and managing the workforce through attrition. When employees leave, employers should evaluate if the position needs to be replaced, repurposed or outsourced.”
She also highlights the need to be pragmatic about how much work employees are expected to do. Since the great resignation last year, many employees have had to handle an increased workload. If leadership isn’t taking steps to alleviate this, they need to. Employees who have been loyal to their employer may be losing patience. While some expect hiring to slow down, that doesn’t lessen the need for employers to take care of their employees.
For those looking for a new role, take your time and do your homework. Now is not the time to make a change for the sake of making a change. Ensure the company you’re speaking with is in a good financial position. You don’t want to join a new organization to be laid off six months later.
Also, assess your current position. Are you able to stay while the economic uncertainty continues? For some, this may be the best option for the short term. However, if you’re determined to find a new role, you may see less competition.
According to Economist Giacomo Santangelo at Monster, “Firms aren’t going to slow down hiring; they’re going to change the way they hire.” He does not equate higher unemployment to slower hiring. Instead, he predicts a change in hiring full-time employees for a role. Instead, he believes companies will start taking advantage of the gig economy by hiring contract, freelance, and other part-time workers.
This approach supports a new workforce segment and provides cost savings for the companies that employ it. There is no need for expensive benefit packages, and the cost of a full-time person is likely higher than freelance rates.
And this change is not lost on employees either, “Research shows that the barriers for companies breaking into the gig economy could be minimal. In fact, a new survey found that workers are already moving in this direction as a way to make up for a lack of pay. According to the survey, 85% of workers have increased or plan to increase their amount of gig work in the past six months, with 58% citing inflation as the reason behind this change.”
The inflation we’re seeing today is unlike anything we’ve seen previously. Strong economic indicators conflict when trying to predict if it will lead to a recession. The uncertainty should keep executive teams and boards focused on agility, including hiring, in the coming year.
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