Tag: Cost of living

VC-backed companies under pressure with bleak macro-economic and geo-political outlook

Swedish “buy now, pay later” company Klarna has announced its intention to lay off 10% of its global workforce in a pre-recorded video message. Klarna CEO Sebastian Siemiatkowski cited “the war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession” as the reasons for the layoffs.

This news comes off the back of a report which emerged last week, stating that the Swedish company’s valuation fell by 30% from the $45.6 billion valuation it received last June.

Even with the decreased valuation and layoffs, Siemiatkowski reassured employees that “Klarna continues to hold a strong position in the market” and says he remains “relentlessly optimistic about Klarna’s future.

BNLP businesses boomed at the start of the pandemic, where lockdowns meant that customers had little else to do with their time but shop.

More than two years on, however, luxuries are just not in the budget of many consumers, and clearly, retailers are feeling the pinch. With ever-increasing fuel costs, utilities rising by 50%, NHI contributions increasing, food prices rocketing, and inflation expected to reach more than 10% by year-end, consumers are tightening their belts. BNLP businesses, such as Klarna, have insights into these sentiments, with their product being used by 17 million people in the UK.

Klarna is not alone in its troubles. Grocery delivery start-up, Gorillas, has also recently announced its intentions to cut 300 jobs – around half the employees at its Berlin headquarters. Gorillas are also looking at pulling out of Italy, Spain, Denmark, and Belgium. According to a TechCrunch report, the company has a large debt to suppliers, with a burn rate of $50 million to $75 million.

More venture capital-backed companies will likely announce layoffs and hiring freezes as they prepare for tough times ahead. Layoff tracker, Layoff.fyi reported that in Q2 of 2022, over 13,000 tech start-up employees had been let go.

Other casualties of the current negative macroeconomic outlook include AI start-up BeyondMinds, which recently closed its doors, and healthtech business Kry’s reduced its team by 10%.

Siemiatkowski admitted that Klarna’s decision to reduce numbers was one of the “hardest” decisions in their history but a necessary move to stay “laser-focused on what really will make us successful going forward.”

“While crucial to stay calm in stormy weather, it’s also crucial not to turn a blind eye to reality,” he added. “What we are seeing now in the world is not temporary or short-lived, and hence we need to act.”

Ken Brotherston, TALiNT Partners CEO also made comment: “The US and European tech markets are very turbulent, inflation is high and the war in Ukraine and ongoing supply chain issues in China all create a perfect economic storm. The impact on employment/hiring is less clear as there are structural shortages in many markets but it’s clear that buyers are spending less and this results in diminished demand for retail staff.”

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Concerns over cost of living more worrying than the pandemic   

In his Spring Statement, Rishi Sunak rightfully mentioned that talent is the backbone of the economy, and while it was disappointing to hear that National Insurance Contribution increases will go ahead, the 1% reduction in the lowest rate of income tax was a positive boost for millions of workers. The Chancellor has also set out plans to cut the basic rate of income tax from 20p to 19p from 2024, the first cut to the basic rate in 16 years.    

It is clear that the Government is aware of the strain the population is under with rising cost of living, but is it doing enough?  

According to survey from CV-Library, the Government’s Spring Statement has fallen short for UK professionals with the majority of the 4,000 respondents already in disagreement with Sunak. He stated that the UK labour market is in a strong position to deal with the current global challenges but 60% of respondents do not share his beliefs of optimism.  

The Government’s Spring Statement has fallen short for UK professionals as the latest survey from the UK job board, CV-Library, revealed.   

The vast majority, of the 4,000 respondents were already in disagreement with Sunak, and his statement last week that the UK labour market is in a strong position to deal with the current Global challenges with 69% feeling that the Chancellor is wrong about the job market and do not share his beliefs or optimism.  

On the day inflation hit a 30-year high, 71% of respondents said that concerns over cost of living have superseded worries about the pandemic. The survey revealed which costs UK professionals are most concerned about:  

  1. Energy 60%  
  1. Fuel 20%  
  1. Food 16% 
  1. Travel 4%  

Lee Biggins, Founder and CEO of CV-Library commented:“Our survey proves that rising energy costs are the biggest concern for most people and the Government simply isn’t listening. With UK workers having to wait up to two years for the 1p drop in income tax, the immediacy of the rise in the unemployment allowance is a welcome relief for UK businesses but, overall, there feels like little has been done that will make a significant impact and help drive the change and investment needed for growth.”  

Joanne Frew, Head of employment at DWF, commented on the employment implications of the announcements made by the Chancellor today at the Spring Statement. She said: “Although the Spring Statement will bring much needed relief to many, it is questionable what assistance it gives to those employers who are struggling to recruit and retain the best talent.  With such a competitive market many employers have been struggling with labour supply which inevitably has led to pay increases in certain sectors. Against a backdrop of a relatively robust labour market throughout the pandemic, pay increases are anticipated at 3% for 2022 reflecting a record breaking high according to the CIPD.” 

Ged Mason OBE, Morson Group CEO commented: “The conflict in Ukraine and the cost of living crisis has shone a light on the UK’s need to be more self-sufficient when it comes to energy, and though it wasn’t directly mentioned in the Chancellor’s statement, the government will soon be setting out its energy security plan, which will rubber stamp investment to scale up hydrocarbon, nuclear and renewable energy generation. This is what this country needs today, and we’re well-versed in these core markets to support ongoing skills demands, be it niche and volume labour requirements.  

Ken Brotherston, CEO at TALiNT Partners weighed in: “Whilst, on the face of it, there wasn’t much in the Chancellor’s spring statement for employers or employees, the increasing costs of travel and fuel can potentially be mitigated by optimising flexible working policies. Post-pandemic, more flexible working models are a clear direction of travel anyway, so those employers who are use these effectively can genuinely claim to not just being able to accommodate candidiates’ lifestyle preferences but save them money as well.” 

 

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35% of under 30s looking for new roles 

CareerWallet a recruitment and employment technology company has published a national employee survey that has revealed new trends and insights into the UK job market. The report has highlighted the huge impact the steep rise in the cost of living has had on the job market with over a quarter (26%) of employees looking for a new role and 13% already requesting pay rises to ensure their current role covers additional costs. 

The survey showed that a further 12% of all employees are considering asking for a pay rise in the next few months with only 25% of all employees not considering changing roles or asking for a pay rise due to increased costs in the UK. Out of the employees surveyed the under 30s have been most impacted with 35% currently looking for a new role and the North East is the region most effected with 40% of all employees in the process of changing roles. 

The survey showed how many employees are being impacted directly by the increased cost of living and further highlights to employers that current salaries and any pay rises need to cover these costs to ensure they keep hold of their staff and prevent them from looking for other opportunities. 

Craig Bines, CEO at The CareerWallet Group, commented: “The survey has highlighted how UK employees are already being impacted by the rise in the cost of living and are actively looking to counter this by pursuing a new role or a pay increase and it is important that all employers are aware of this and act quickly to keep their talented people in their businesses.” 

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Yorkshire has the fastest internet speed in the country

Many large businesses in the UK including PwC, ASDA, UBS, KPMG and Adobe have shared their intent to move to a hybrid of model of working permanently.

But which major cities in the UK offer the best lifestyles for the flexible workforce? Gazprom Energy, the business energy supplier, ranked each major UK city on the following: cost of living, wellbeing (average ratings of life satisfaction, happiness, and anxiety), commuting time (minutes), average salary (£), average internet speed (mbps), and coffee shops per capita.

Once rating was complete, Gazprom created an overall score called the Hybrid Working Score (out of 100) for each city. They then ranked the cities from best to worst.

Key findings from the study include:

  • London is the UK’s worst city for hybrid working (35/100), despite employers in the capital being among the first to instigate hybrid working and offering the most flexible policies
  • York is the best city for hybrid working (64/100), helped along by a moderate cost of living, a respectable wellbeing standard and a lower average commute
  • Surprisingly, Hull and St Albans enjoy the highest average internet speeds (both 138 Mbps) in the country by far, helping employees to get the job done – while those in Worcester (47 Mbps) and Exeter (50 Mbps) have to put up with the worst
  • The worst commutes employees can expect when travelling between home and the office belong to London (avg. 66 min), Nottingham (41 min) and Leeds (40 min)
  • Yorkshire has the fastest average internet speed overall at 85 Mbps, followed closely by the East at 82 Mbps. Northern Ireland and Wales tie on being the regions with the slowest internet connections, at 61 Mbps.
  • Regionally, Yorkshire is also the best part of the UK for hybrid workers, followed by the North West – with Wales and London being the worst.
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