Q3 2018 | Employment & Economic Trends2019-01-04T21:54:58+00:00

EMPLOYMENT AND ECONOMIC TRENDS

EMPLOYMENT & ECONOMIC TRENDS

Employment and economic growth trends remain positive in 2018. As the New York Times reports, “a decade after the world descended into a devastating economic crisis, a key marker of revival has finally been achieved. Every major economy on earth is expanding at once, a synchronous wave of growth that is creating jobs, lifting fortunes and tempering fears of popular discontent.”

The following section takes a closer look at the impact and influence labor and economic trends are having on talent acquisition and workforce management.

Global output growth seems on track to reach 3.9 percent this year and next. Helping to drive this output acceleration is faster growth in the Euro area, Japan, China and the United States, all of which grew above expectations in 2017.

Source: IMF

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Q2 2018 Global Economic Snapshot

By DAVID BAROL

Very strong job growth and low unemployment were the headlines in many of the world’s leading economies in the second quarter of 2018. However, employers were faced with the increasingly difficult tasks of attracting and retaining talent in unprecedentedly tight labor markets and responding to impending wage pressures. Uncertainties in the labor supply created by Brexit and immigration restrictions were exacerbated by the introduction of tariffs by the U.S. and the threat of trade wars in the coming months.

Strong Job Markets

In the United States, the number of job openings in Q2 reached a record high. In the UK, the unemployment rate was at its lowest point in over 40 years. Canada continued to experience record low unemployment and Australia had consecutive months of job gains. Faced with the tightest job markets in recent years, employers are focused on effective strategies to attract and retain talent.

UK employment reached record highs in Q2. Government figures released also showed that the number of women in the workforce has reached a record high of 15.26 million, and youth unemployment has dropped by more than 40% since 2010.

Source: London School of Business & Finance

Wages–the End of Stagnation

Wage pressures have intensified in response to the robust labor market. In the U.S., the period of relative stagnation in wage growth is perceived to be ending. In the UK, salaries for new positions rose at their fastest rate in three years. Canadian workers experienced their biggest wage increase in nearly a decade. And even without significant inflation, the national minimum wage in Australia was slated to increase 3.5 percent on July 1, potentially impacting salaries nationwide.

Barriers to the Movement of Talent

Uncertainty over the availability of foreign nationals due to Brexit and immigration restrictions in the U.S. continued to raise concern. In the UK, sectors such as social care, technology and hospitality could be impacted especially hard. A recent survey found that one in ten hospitality workers are considering leaving the UK due to Brexit. The same survey found that 18 percent of hospitality managers are finding that recruiting new staff is more difficult due to the United Kingdom’s status change with the EU. In the U.S., restrictive immigration policies are blamed for the stall in IT job growth. Adding to the uncertainty of the U.S. workforce, the future status of the more than 600,000 U.S. residents granted permission to live and work under the Delayed Action for Childhood Arrivals (DACA) act was left unsettled by the U.S. Congress.

Data, Privacy and Sourcing

New regulations in Europe under the General Data Protection Regulation, or GDPR, went into effect on May 25. GDPR requires businesses to protect the personal data and privacy of EU citizens for transactions that occur within EU member states.

GDPR applies to any collection of data for those living or working in the EU, regardless of the location of the organization accessing this data. The new rules include notification requirements, up-front security measures and other privacy safeguards.

Addressing the Skills Gap: Apprenticeships

Employers that are struggling to find talent with the right skills can turn to a solution that pre-dates the industrial revolution: apprenticeships. Apprenticeships enable workers to gain valuable skills and experience so that they can be fully productive employees at a future date. In the United States, the Department of Labor announced resources for apprenticeships as part of a public/private partnership. For example, employers can apply for registered apprenticeships and create “on-the-job training contracts” and have costs reimbursed for up to 50 percent of wage rates paid to participants for up to six months.

Q2 2018 GLOBAL ECONOMIC SNAPSHOT

Key Takeaways

  • Historically strong job markets combined with the uncertainties brought about by restrictions on immigration and trade requires employers to be both intelligent and agile in attracting and retaining talent.

  • Organizations can expect to reap the benefits of a strong economy only if they have the talent to support the growth that can be generated by a prosperous environment.

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Wages and Recruitment: The Pressure is Building

By DAVID BAROL

Determining the right wages at a time of record high job openings and low unemployment can seem daunting. Offering wages that are too low can repel the best talent while offering wages that are unnecessarily high can impact a company’s profitability. Understanding the causes of current wage pressures allows employers to make informed decisions that will have a positive effect on their recruitment processes.

Cost of living: Inflation continues to remain at low levels in most major economies, but the cost of living is rising in many places due to high housing costs. Companies recruiting in these metropolitan areas need to factor in the current and potential future cost of living in these locations when determining their wage ranges as part of an effective recruiting strategy.

Competition from the gig economy: Employers that want to attract talent to fill positions need to know how their pay rate compares with those choosing to work as independent contractors.

Wage inflation: The United States and other leading economies have had sustained job growth and low unemployment, without experiencing a corresponding substantial increase in wages. However, leading economists believe that wage inflation is imminent. Wages are rising ahead of inflation rates in many world economies. In the UK, private sector pay increased 2.8 percent year-over-year in May (with the annual inflation rate at 2.4 percent). In Canada, average hourly wages advanced at a pace of 3.6 percent in June on a year-over-year basis (with the annual inflation rate at 2.5 percent). In Poland, wages surged in June with an annual 7.5 percent increase in its enterprise sector (with an annual inflation rate of 2 percent).

WAGES AND RECRUITMENT: THE PRESSURE IS BUILDING

Key Takeaways

  • Understanding the causes of current wage pressures allows you to make informed decisions about your recruitment processes.

  • Leading economists predict that wage inflation is imminent in many of the world’s leading economies.

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The Contingent Workforce Landscape: Trends and Strategies

By JAN POWELL-ROLLINS

For many organizations, contingent workers are the fastest and most effective way to augment their current workforce and respond to rising talent demands, staff large strategic projects, add new skills and expertise and accelerate growth.

The average organization has 18% of their workforce employed on a contingent basis. Globally, there are approximately 77 million formally identified freelancers in Europe, India and the United States. In the UK, there are an estimated two million freelancers, many of whom are ‘gig’ workers, who use digital platforms on a short-term, pay-per-task basis.

Sources: Deloitte and Financial Times

Freelancing as a Career

Based on projected current workforce growth rates, the majority of U.S. workers may be freelancers by the year 2027. Millennials — the largest generation in the workforce — are spearheading the rise in freelancing. Millennials are not the only demographic turning to contingent labor as a career option. According to a study published by the Freelancers Union and Upwork, baby boomers are the generation that’s most likely to make the choice to start freelancing.

According to a Deloitte survey, when asked to forecast the makeup of their workforce in 2020, 37% of survey respondents expected growth in the use of contractors, 33% in the use of freelancers and 28% in the use of gig workers.

Source: Deloitte

Contingent Workers are Becoming More Choosy

To attract contingent workers, organizations should be mindful of employer branding. Negative reviews are likely to dissuade talent who have more options when it comes to selecting an employer.

Organizations should monitor job boards and review sites to see what employees have to say about working for them and address common issues and complaints to improve their employer brand.

70% of job seekers consulted Glassdoor during their job search.

Source: Glassdoor

The New Role of Managed Service Providers in Contingent Workforce Management 

The role of the Managed Service Provider (MSP) has evolved. As MSPs are better able to leverage data, from workforce spend to supplier performance, they are able to help organizations strategically implement a contingent workforce model.

MSPs provide organizations with contingent workforce data, training and overall strategy. MSP providers have the infrastructure to optimize suppliers, improve productivity, provide administration and program management and, importantly, reduce costs of managing contingent labor.

MSPs are an increasingly influential and strategic partner in helping organizations better manage their contingent workforces.

Source: NelsonHall

Total Workforce Solutions

With the growing trend of blended workforces that leverage full-time, part-time and contingent labor, there is a demand to integrate MSP and RPO solutions into one talent program.

TWS can help organizations source full-time, temporary, statement of work, professional services or 1099 workers to meet hiring needs based on an organization’s business objectives. Integrating RPO and MSP talent management into one program provides organizations with a competitive edge when it comes to understanding their talent needs and their ability to fulfill them.

Total Workforce Solutions (TWS) allow organizations to streamline talent acquisition for all categories of labor by integrating RPO and MSP programs.

THE CONTINGENT WORKFORCE LANDSCAPE: TRENDS AND STRATEGIES

Key Takeaways

  • Across generations, freelancing is becoming more popular as an alternative means of employment.
  • Having a reputable employer brand is essential for attracting contingent talent.
  • MSP providers are being more consultative in their approach and are increasingly using data and analytics in MSP solutions.
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