Tag: Cost of living

Market at “boiling point” by a post Brexit talent shortage

London-based network engineering recruitment firm Hamilton Barnes has reported that “a counter offer culture” is gripping the tech recruitment sector as candidates “go to market to get a payrise” triggered by the cost of living crisis and a post-Brexit talent shortage.

George Barnes, Co-founder and Director of the firm said this was prompting “desperate attempts to hold onto talent” and “wild counter offers of up to £40,000 extra”.

He explained: “Inflation and the cost-of-living crisis has had no real effect on our clients in terms of hiring. While some sectors may have experienced recruitment slowdowns, we are seeing clients in the tech sector hiring ever more aggressively.

“Meanwhile, the effect our current economic situation is having on candidates is that they are reading about it and hearing about it in the press and they are going to market in huge numbers to get a pay rise, especially if they believe they are not in a position to get one in their current role, maybe because they think they haven’t been there long enough to get one or are in a structured role where they know they are not due one yet.

“In turn, employers who are determined to hold onto talent in a market where talent is highly prized and in short supply, are counter offering really aggressively into the tens of thousands.

“In the last week, I have seen one employer go up by 40k on someone’s salary to hold on to them when they were offered a role elsewhere because they were clearly so desperate to hold onto them. This sort of offer is phenomenal and can only be counter-productive.”

Barnes, who co-founded Hamilton Barnes, with Nick Barker in 2014, said the market had already been brought to “boiling point” by a post Brexit talent shortage:

“Salaries in tech have risen massively since Brexit – most have doubled at least with a typical salary we might have seen pre-Brexit of around £54k is now around £100k,” he said.

“Salaries were previously diluted by the influx of European workers into UK tech – for example when the Greek economy collapsed and lots of Greek specialists relocated here, happy to work for 25% less. It was a similar story with talent from Portugal and Spain.

“So, the market pre-Brexit was far more competitive talent-wise with more candidates competing for the best jobs so salaries were kept down and employers never counter offered. We have seen a complete reversal of that. We are firmly in the grip of a counter offer culture and we need to calm this down.”

Barnes said he believed agencies like Hamilton Barnes, which saw record growth during the Pandemic, had a responsibility to clients and candidates to “take unnecessary heat out of the market”, and said he was “steering some candidates back to their current employers”, explaining:

“Of course, we want candidates who are genuine candidates looking for their next role but we are not interested in people who are moving solely because of a kneejerk reaction to press reports of a cost of living crisis.

“My advice to candidates who are only moving because the current market conditions have triggered them into wanting a payrise is that they should not need to look externally but if they think they are stuck because they don’t meet the criteria to hit the next threshold where they are and are worried about pay, speak to their current employer. Employers in tech want to hold on to their talent and are open to conversations.”

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Millions are looking for higher-paid roles or pay rises

According to a recently published national employee survey showing trends and insights into the UK job market, 52% of UK employees say that the cost-of-living crisis is impacting their career by pushing them to look for a new role or a pay rise from their current employer.

The survey by CareerWallet, went on to reveal that 27% of UK employees are already looking for a new role to earn more money to survive the cost-of-living crisis. A further 25% have either asked or are planning to ask for a pay rise from their current employer.

The cost-of-living crisis has driven up the costs of food, petrol, and energy bills. Of the employees surveyed, those under 30 have been most impacted. Thirty-five percent of these are in the process of looking for a new role. Regionally, the North East is most affected, with 40% of all employees changing roles.

The survey revealed how many employees are impacted by the increased cost of living. It highlights that current salaries and pay rises need to cover these costs to retain their staff and prevent them from looking for opportunities elsewhere.

Craig Bines, CEO at The CareerWallet Group, commented:  “At CareerWallet, we process millions of jobs a day and this allows us to quickly see how the job market is being impacted on a daily basis.

Our national employee 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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Cost of living crisis is taking hold

Research from jobs and careers site, Reed.co.uk has shown that 33% of workers have applied for or have considered applying for a new job. In addition, 65% of workers have changed job-seeking priorities in response to the cost-of-living crisis. A salary increase is becoming a common priority for 34% of workers.

The survey, which looked at the opinions of over 2,000, revealed that 22% have said they intend to look for a new job soon and 55% of workers are actively seeking or considering a new one. A further 17% admitted that the increasing cost of living made better work-from-home opportunities more of a priority.

Amongst active jobseekers, the data revealed that 30% of women are more motivated by a salary increase than men (27%). Furthermore, younger workers – between 18-34 – are more likely to consider changing jobs to secure a salary increase than other generations (45% compared to the 29% average).

Fifty percent of workers said that a salary increase is the most meaningful action an employer can take to retain employees, while 47% said that a low salary was the reason they’d want to leave their current employer. Forty percent of workers indicated that they would stay with their current employer if a better salary counter offer were made.

In terms of amounts, the survey showed that employers could retain some workers with moderate increases. For workers aged 55-64 and 65+, most (32% and 38% respectively) agreed that salary increases of less than £1,000 would be sufficient to convince them to stay. For workers aged 18-34 and 35-44, a salary increase of between £2,500 – £4,900 was required by most (33% and 30% respectively) to continue with their current employer.

James Reed, Chairman of Reed.co.uk, commented: “Due to runaway inflation currently at 9.4% and outstripping wage increases across many industries, millions will be on the move from this September onwards to secure a pay bump.

“Although the current economic landscape is challenging, amidst warnings of a looming recession from the Bank of England, UK workers should feel empowered to capitalise on the current labour market which continues to show high volumes of jobs being created.

“However, with inflation potentially rising to 13%, it could increasingly feel like workers are chasing after a galloping horse, with some workers having to take on a second or third job to keep up with the soaring cost-of-living increases. This could lead to a two-speed workforce with workers in some sectors falling behind others.

“It’s a tough situation where very few are benefiting, including employers who are facing a higher turnover of candidates than you’d typically expect in August with over 50% of workers considering a move.

“For employers, a failure to proactively ensure salary packages reflect current inflationary increases will have a significant impact on their business’s ability to attract and retain staff. Understandably, many may not feel in a financial position to deliver significant increases in pay. However, offering desired pay rises costs less than replacing workers and our research shows that the vast majority of candidates (87%) are poised to accept a counter offer from their current employer provided it meets expectations.

“During these challenging times, it’s clear that many workers – particularly those feeling the pinch from the cost-of-living crisis – deserve a pay rise. For most, the best way could be to secure a new job.”

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Government and healthcare workers amongst the most concerned

With the cost of living constantly increasing and real UK wages falling at the fastest pace on record, making ends meet is a priority for many workers.

Research from Glassdoor reveals that 22% of UK workers are concerned about finding a job that supports the cost of living at the moment and that anxiety around this issue is on the increase.

An analysis of words used on Fishbowl by Glassdoor showed that mentions of “cost of living”,

“inflation”, “rent”, “petrol”, “accommodation”, and “bills” have increased by 67% year-on-year.

Over 700,000 Glassdoor reviews by UK-based employees were examined. The data revealed that negative mentions of “salary”, “pay”, and “compensation” increased by 16% since 2020.

The biggest increase in salary complaints was among government workers – up 26% from 2021. In the past, these workers were less inclined to discuss salary negatively. But, with public sector wage growth falling far behind the private sector, this is no longer the case, indicating a possible future exodus of government workers. Similarly, complaints about salary have also increased among healthcare workers.

On the opposite side of the spectrum, employees in the hospitality industry(restaurants, food service, travel, and accommodation) have seen unusually high pay growth, and salary complaints have dropped.

Lauren Thomas, Glassdoor’s EMEA Economist, said: “The only constant in 2022 is change -and skyrocketing prices. Even with high wage growth and a tight labour market, workers are feeling the pinch as inflation emerges as the biggest winner. With real wages falling a record 3.0 percent thanks to inflation, the cost of living is a priority for many job seekers.

“Job vacancies, which have hit record highs month after month, have started to fall but even now employers can’t rest easy. Hiring will remain difficult, particularly in industries like hospitality and healthcare where employees’ Glassdoor reviews show they feel overworked and underpaid.”

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A recession should not have any impact on staff turnover or retention

Predictions of a spiralling economic crisis will be another blow to businesses’ hiring headway but according to Steven Jagger, founder of tech recruitment firm Maxwell Bond business leaders should “revamp” their culture in order to weather the looming recession and avoid a Great Resignation 2.0.

The arrival of the so-called Great Resignation this year hit the headlines and saw UK businesses’ staff turnover and attrition rates hitting record levels. But experts are forecasting another blow once the impacts of inflation, the cost-of-living crisis, and the recession come into full force.

Steven Jagger, Founder, Maxwell Bond commented: “An economic crisis shouldn’t leave you clutching at straws and panicking. Staff will always be loyal – if you give them reason to be. Employees don’t leave workplaces and colleagues – they leave bad leadership, toxic culture, or a lack of vision for your team and business. Ask yourself, when was the last time you looked at these and revamped your vision?”

Jagger was quoted saying that while a recession would be another blow to businesses when they’re already down, it shouldn’t have any impact on staff turnover or retention if your business’s culture is right.

The founder of the award-winning tech and digital recruiter whose clients include the BBC, Reckitt Benckiser, Barclays, TalkTalk, and Mastercard, believes talent retention “is a skill in itself” and that many leaders “fail to see the importance of it in times of adversity”.

Jagger continued: “By industry standards, we should have experienced higher attrition rates than we have to get to these numbers, but we founded the company on the values of prioritising people, especially our staff, above anything else.

“A recent Deloitte report shows only 56 per cent of employees think their company’s leadership cares about their wellbeing – contrasted to 91 per cent of leadership believing their employees think they care. This disconnect is a big player in staff turnover.

“Companies need to go the extra mile to attract and retain candidates if they want to hit their hiring aspirations, stay ahead of their competitors, and weather the incoming storm. In times of adversity, it’s understandable that survival instincts are to slash headcount and starve spending – but this short-term logic leaves firms bare once the turmoil is over.

With that being said, he understands employers can be afraid of the “T word” (turnover), wrongly perceiving that it reflects their leadership and values: “Some level of turnover, whether facing economic hardship or not, is part of any healthy organisation. If you train people up, they may leave to progress further and take on a higher role or they may be poached by another company for their skills and talents.

“Either of these scenarios means that as their employer, you did your job properly. Remember: running water never goes stale.”

But Jagger says to take heed: “Retaining someone who doesn’t fit the company values can easily make the whole infrastructure fail,” he says. “Put a bad apple amongst good apples, the good ones will eventually turn bad and leave.”

Maxwell Bond has grown by 4,000 per cent since its inception five years ago, despite weathering numerous economic crises, and has seen a further 45 per cent increase just in the last six months. The firm took no financial support from the government during the pandemic.

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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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