After almost three years of skill shortages, candidates have previously held the upper hand within the job market. However, as the economy slows downward, the 2023 outlook is beginning to shift with increased hiring freezes and redundancies.
With the cost-of-living crisis, Russia/Ukraine war and lingering impacts of COVID-19, recession is on the horizon. According to the International Labour Organisation, employment growth will drop by 1.3% in 2023 and will see global unemployment rise by 3 million.
Despite this, experts seem confident that the recession will be temporary. UK Chancellor Jeremy Hunt has recently deployed emergency tax rises and spending cuts in an effort to make the recession “shallow and short”. Whilst the move will undoubtedly influence short-term company personnel shrinkage, potential long-term benefits are yet to be seen.
As for the job market, the effects are nuanced. Smaller companies may face stagnated growth after unstained post-pandemic hiring surges. Larger corporations, however, will now be able to snap up newly available talent with reduced competition in what remains a relatively tight labour market.
Whilst statistics from less than a year ago showed more vacancies than unemployed individuals, we are now seeing a decline. According to ONS, UK vacancies were down by 85,000 compared to rates from a year prior. The causes are clear. ONS reports:
The fall in the number of vacancies reflects uncertainty across industries, as survey respondents continue to cite economic pressures as a factor in holding back on recruitment.
It’s clear that the synergy of geopolitical tensions, supply chain bottlenecks and COVID-19’s aftermath is now hitting the job market.
A Nuanced Situation—Skill Shortages Remain
Despite this decline, ONS reports that vacancies remain 365,000 above 2020 levels. This very much supports hopes of a “shallow and short” recession and confidence that we can avoid reliving that of 2020 or even 2008.
After remaining such a hot topic for the past few years, skill shortages certainly aren’t gone despite turning tides. Rather, talent demand and shrinkage are becoming more situation-dependent.
Certain industries like technology are increasingly having to reduce recruitment after the 2021 hiring frenzy. Skills within sustainability and cyber security, however, remain in demand. Nuances can also be seen regionally, with the North-East overtaking London in growth or even within companies from department to department.
An Uncertain Future
According to some, the current situation is more of a recalibration than a crisis after several years of uncertainty. And hopes remain high for speedy economic recovery and an improved employment outlook.
Certain businesses are indeed having to shrink down and pause intake as a means of survival. However, larger companies, as well as those still facing shortages, may hold valuable career opportunities.