How Much Will the Global Economy Pressures Weigh on Staffing Firm Demand in 2023?
In December 2022 alone, the U.S. added 223,000 jobs to the economy, bringing the unemployment rate down to 3.5%. Inflation is still hanging on at 6.45% for December 2022. Though inflation seems to be cooling, these factors are still warranting continued interest rate hikes from the Federal Reserve in an attempt to slow economic growth and prevent a recession.
Borrowers could see mortgage rates hover around 5% well into 2023. If this soft landing works as the Fed intends, it will gradually restrain the level of spending in the economy, causing inflation to drop. Unfortunately, this outcome is not guaranteed; in years past, when the Fed has raised interest rates to fight inflation, it has caused a recession. A Bloomberg poll of economists in mid-June found they expect the Federal Reserve to cut interest rates in late 2024.
Recruiters should take advantage of the current market. With job openings holding steady, rising wages, and inflation continuing to limit consumer buying power, candidates are more likely to continue looking for new opportunities.
Further complicating the economic situation is the war against Ukraine, making it harder for the Fed to engineer a soft landing. Global growth projections have significantly dropped since the beginning of the war, and any unforeseen developments in the conflict could heighten geopolitical risk and worsen the war’s economic effects on the U.S.
Expect New Technology Improvements
In the coming years we expect to see more jobs being automated, and by the end of 2023 Gartner expects 40% of all enterprise workloads to be deployed in cloud infrastructure and platform services, up from 20% in 2020. Through 2024, enhancements in analytics and automatic remediation capabilities will refocus 30% of IT operations efforts, from support to continuous engineering.
New tools and technology (think AI and ChatGPT) will allow all industries— healthcare and IT especially— to continue advancing virtual services. IT teams will have to focus on integrating new technologies to reliably manage big data across a disparate environment. This will likely create new jobs for those with experience in data science and database administration; business intelligence, analysis, and reporting; and cloud architecture and operations. Staffing firms as a whole should familiarize themselves and their individual teams with the latest technology available in their industries to maintain a competitive advantage.
Remote and Hybrid Work Will Continue
Remote work is predicted to continue and increase through 2023 and beyond. Ladders says 24% of all professional jobs in the U.S. and Canada are hired for permanent remote work now and this number will increase to 25% by the end of 2022 and continue to rise in 2023. With employees being free to work from anywhere, the growing popularity of remote work may bring an influx of high-earning, well-educated professionals to smaller cities across the U.S. that previously weren’t home to citizens with such high paying jobs.
This shift to working from home allows for more than avoiding an inconvenient commute—it has the power to transform communities. Not to mention, this is huge for recruiters! It opens them up to a variety of different candidates who might have previously felt too distant to contact.
According to many staffing and recruiting leaders, the candidate-driven market is likely to stick around through 2023. A survey by PwC of more than 52,000 workers in 44 countries indicates the Great Resignation is set to continue, with one in five saying they are likely to switch jobs in the next year. The survey ultimately concludes that higher pay, fulfilling daily duties, and a friendly, relaxed work environment are the main factors pushing employees to change jobs.
Expect to See More Contract Positions as Inflation Remains
Average raises are predicted to be 4.1% in 2023, which is less than half the headline rate of inflation at 9.1%. While 4.1% is significantly higher than a standard 3% cost of living adjustment, those who receive a raise less than 4.1% will effectively see their pay cut due to lower purchasing power, unless the inflation rate goes down to 2.4% by December of 2023. This makes offering candidates new opportunities far more compelling; recruiters should play up cost of living as well as engage challenges and job stability.
As goods and services become more expensive, and businesses can no longer increase wages, many companies will try to get ahead of the game by hiring more contract workers to cut hiring costs. According to a Robert Half survey:
Seeking out clients who need a team of contractors will likely give your staffing firm a competitive edge in the years to come.
Challenges and Opportunities
Demand for workers still remains near record highs, with 10.5 million job openings at the end of November 2022. Additionally, some 5.9 million Americans quit or changed jobs that month, according to the latest report released by the Bureau of Labor Statistics, as workers continue using their leverage in an economy where job openings outnumber job seekers. Employees at all levels are more in control of their careers than ever before—and they expect more from their employers than in years past.
BLS data from December also makes it clear businesses are desperate to keep the employees they do have, with layoffs and discharges holding steady at just 1.4 million. How can staffing firms capitalize on a candidate-driven market and bring clients competitive talent who can help them achieve their goals?
As job seekers continue to raise their standards, it is imperative staffing firms provide an exceptional candidate experience if they want to engage with and deliver top talent. So, how do you do that? Here are the top three ways:
A high level of attention to detail in these areas sends a positive signal to candidates that recruiters have their best interest in mind.
If your staffing firm is struggling to reach and engage your desired audience in this challenging job market, echogravity can help. Our team executes impactful marketing initiatives in alignment with your unique business objectives. To learn more about all of the services we offer, visit us at https://echogravity.com.