November 30, 2022
What a year 2022 has been. From the Great Resignation to candidate ghosting, the dominant themes were record job vacancies, acute talent shortages, and workers having the upper hand. But as the year draws to a close, the great jobs boom appears to be over as fears of a recession mount. So, what does 2023 hold in store?
Despite economic stresses, the U.S. labor market has held up. According to the latest available data, while the unemployment rate rose slightly in October, job growth remained robust and wages continued to climb. However, in recent weeks hiring intentions have dipped, and we expect this to remain stable into next year.
The Great Rebalance
The post-pandemic frenzy, when people quit on a whim and there were two job openings for every person unemployed, is no more. That was a one-off. In 2023, less job hopping and fewer counteroffers are likely as the demand for talent and the supply of candidates evens out. Salary rises will be less common, too. Many employers have already increased wages over the past 12 months – a shortfall of talent left them with little choice. So, any pay raises they can afford to award in the future will be marginal.
By all accounts, the year ahead will be interesting. However, I do believe that a 2023 recession is unlikely to cut as deep as the 1990s’ financial crisis because it directly follows the pandemic when the economy reached its nadir. Following that, the only way is up. Employers should be able to avoid wide-scale lay-offs – though some sectors such as tech will buck the trend – and we will see a dulling of the market rather than an almighty crash.
Hybrid Under Threat
It is also likely that workers who have gotten used to making demands of employers and having those demands met will lose their bargaining power. The market has changed, and employees won’t want to risk rocking the boat.
What does this mean for hybrid working, perhaps the make-or-break requirement for jobseekers and employees in 2022? People resigned, turned down job offers, or demanded a higher salary if they weren’t offered the flexibility they craved. But in 2023, will market conditions lead companies to reassess their hybrid working strategy? According to LinkedIn research, business executives fear it might, with 68% worried that economic uncertainty could force their companies to backtrack on some of the flexible working advances made. The concern is that those unconvinced about hybrid in the first place will use a recessionary market to get people back to the office. They may just get away with it now, but it could backfire when the market picks up and affect their ability to attract and retain top talent.
A Return To Open Communication
Whatever happens with hybrid, the office will continue to play an important role – if only we let it. Once revered as the place for people to collaborate and communicate, now, showing up at a co-worker’s desk unannounced for a work-related chat is considered disruptive by some – dubbed desk bombing. Surely though, that’s one of the main reasons for going to the office?
We also hear increasingly of ‘quiet quitting’, where employees take work-life balance into their own hands rather than articulating their wants or needs. Employers are also resorting to the silent treatment, freezing out or ‘quietly firing’ workers rather than openly addressing performance issues. Have we forgotten how to communicate? Slack, Messenger, Teams, et al are a godsend when people work in different locations, but there is no substitute for people being together in person, talking, brainstorming and sharing knowledge.
Next year, progressive employers will reinvigorate IRL workplace communication, consigning silence and issues avoidance to the 2022 annals. And they’ll do whatever they can to help their employees set healthy boundaries at work – another legacy of the quiet quitting trend. In the wake of the pandemic, more employers recognize the importance of employee work-life balance and wellbeing. However, the very fact that employees are pulling back on work and trying to carve out more time for themselves suggests there is more to be done.
Time To Take Stock And Reflect
So, what can we look forward to as we gear up for the year ahead? The highs of 2022 may be behind us, but the lows won’t be as low as in previous times of economic crisis. The jobs market is more likely to regain its balance – no more unsustainable levels of vacancies or talent shortages – with the correct number of jobs vacant for the candidates available, or certainly closer than it has been in the past year.
For business leaders, 2023 presents an opportunity – perhaps not for growth but for reflection. Now’s the time to take stock and improve working conditions, ready for recovery when employees and candidates once again favor those employers who create open, flexible, and healthy workplaces where they can thrive.