The Cost of Living Crisis
by on September 7, 2022
‘Gloomy and More Uncertain’ reads the unflinching headline of an IMF report of July this year, which details the UK’s declining economy and predicts that UK GDP will fall to 0.5% in 2023, lower even than Mexico’s (1.2%).
There are a number of well-documented factors at play in this scenario, including the ongoing Brexit situation, the effect of Covid-19 and the subsequent lockdowns, and now the war in Ukraine. This has all pushed up inflation to 9.1%, its highest rate in 40 years, with warnings from economists that it could soon rise to 13%.
People in the UK have also had to deal with spiralling energy prices, with the price cap rising by 54% in April and predicted to rise to 80% in October 2022. It’s something that will affect both individual households as well as businesses all around the country.
It’s also being reported that HM Queen Elizabeth II’s recent death will exacerbate the situation and possibly be the straw that pushes the UK into full recession, due to businesses shutting, the closure of the stock market and banks, and sporting events being cancelled as a mark of respect, all of which will impact the economy.
Clearly our new Prime Minister has a lot to deal with.
What can recruiters in the UK do to counteract these issues?
If we think about recruitment businesses in the UK, there are some stark figures to deal with.
In its most recent report, the ONS reports that job vacancies fell from June to August 2022 by 34,000 to 1,266,000 – the largest quarterly fall since 2020. This leaves recruiters in the difficult position of competing to advertise vacancies, and an excess of people applying for the dwindling number of jobs available. It’s known as a candidate’s market, but creates problems for recruiters and employers alike.
Given that the jobs market doesn’t look like it’s going to pick up any time soon, and may well worsen in the coming months, recruiters are left with difficult choices about how they handle this crisis.
A survey by the British Chambers of Commerce conducted in November 2021, before the full effects of the worsening situation began to take hold, noted that 80% of firms had already increased their prices as a result of the rising costs of vehicle fuel and utility bills. Passing on rising costs is something that recruiters may have to consider, although if their contracts specify fixed fees, they may have to find alternative ways of keeping their margins competitive.
Some specific suggestions which will help to keep Britain’s workforce working:
- Hybrid working, where an employee works part time at the office and part time at home, as demonstrated during the pandemic, is an effective way to save costs. If the office is shut for a number of days a week, recruiters can save money on things such as heating, lighting and power
- Encourage your clients not to implement a recruitment freeze – when the economy picks up again they’ll need an agile and experienced workforce with which to hit the ground running
- Reach out to freelancers and temporary staff before you need them – their services will be in demand later
- Make sure that your clients have a strong equality, diversity and inclusion (ED&I) programme in place to ensure that they are attractive employers for talent
- Make a training plan so that your staff are upskilled and confident enough to fill in gaps within your own organisation should any arise
- Prepare to be busy – applications will rise during a recession due to increasing unemployment rates. Is your candidate screening process up to the job? Can you deal with a rise in the number of people applying for the roles you’re advertising? Could you benefit from some specialist software or an outsourced recruitment partner to enable you to deal with the anticipated volume?
- Build a talent pool now – the more people you have on your books before a recession hits the less you’ll have to spend on advertising and marketing when it does
- Make sure your own employer brand is as good as it possibly can be and that you maintain a social media presence during any looming recession – that way, you will be in the forefront of people’s minds when the economy picks up again
Get in touch
Of course, this advice might not apply to all recruitment agencies across the board. Individual circumstances will dictate what action you need to take in your own organisation’s best interests.
However, one sure-fire method of maintaining control of costs during a recession is to partner with an organisation that can reduce both your outgoings and your workload when it comes to payroll, such as Payme can provide for recruitment agents.
Negotiating the potential recession that we face will not be easy, either on a personal or professional basis, but there are steps you can take to ensure that its impact is reduced.
If you need more advice or information about the range of services that Payme can offer its professional clients to help weather the storm get in touch.