The crisis is currently impacting the UK with the cost of living at a three decade high. Fuel and energy prices are the main drivers of this, with food prices also rising to record levels.
With this, the majority of workers are receiving either a pay rise not in level with the high interest rates, frozen wages or, in some cases, wage cuts. Businesses with contracts locked to wholesale prices will start to suffer as spending power decreases.
Some workers are having to make major changes to their plans, either looking for better paying jobs or moving sectors. Around a third of workers are reporting that they are looking to move job as their pay is not rising in line with the cost of living.
At the same time, it is likely that some who had planned to make a move, find themselves stuck, their savings being drained by bills. Over three quarters of job seekers worry about how the cost of living crisis will affect them. Disposable income being impacted was a major factor of their anxiety. For a lot of workers, they were barely covering all of their expenses as it was.
Add to this the extra pressure of paying for more energy in order to work from home, which will also make people reconsider one of the few positive gains that happened during the pandemic to return to the office. Those who work in the office and drive to work will be reconsidering their position.
This creates an unusual situation in the job market where some industries will find a glut of workers hitting the market and others will find a dearth. It leaves everyone in a sort of limbo: can’t make a move, have to make a move.
This may also reverse the stances of Younger Millennials & Gen Z, who have thus far been selecting their roles based not only on salary expectations but career progression and workplace culture. If this crisis continues for an extended period of time, those individuals will have to choose wage over beliefs. It would be extremely sad if that did become the case as those workers were starting to facilitate the emergence of much more inclusive working environments.
This brings up a much larger point: will this change the job market back from being one where the candidates have more options and thus more power, back to one where the employers have the power? For this to happen, option of employment would need to shrink.
Smaller businesses have reported record energy bills with projections looking to be 10 times what the same businesses paid last year. If this comes to pass, a lot of business will be going out of business. The UK government is promising help but time will tell what exactly that will be and just how helpful it will be.
If all of those businesses go to the wall, the job market will shrink. If the job market shrinks, there will be more unemployment and with that comes a more desperate workforce willing to take less in pay in order to secure a job.
This could be the start of very desperate times. Employers should demonstrate a duty of care to their employees by allowing them to express their fears. HR departments should be doing their best to listen to those under their care and communicating this information to upper management as sensitively as possible. The best thing a business can do right now, apart from boost wages which we understand is becoming harder, is to treat their staff like human beings.
On the business side, if a company has not yet streamlined its hiring practices, which is something we have been advising for years, this is the time to take a serious look and break down those bottlenecks which cause the hiring process to grow wildly over budget (in terms of both resources and time). If you need help, look to specialist recruitment partners.
Curious about how Zenshin Talent can help your organisation? Contact us today for a no-strings conversation about your needs and our experience.