The Snapshot: 2023’s forecast combination of economic shrinkage and low unemployment has rarely been seen. There’s no simple playbook for employers.
The Bigger Picture: As growth prospects diminish, economic forecasts point to a likely global recession in 2023. Recessions come in many shapes and sizes, but in this instance, high levels of joblessness are not widely expected. Instead, inflation combined with ongoing skill shortages are likely to put pressure on wages. Employers will still need to work hard to hire and retain the best staff, even despite the economic headwinds.
Whilst we can’t predict the future, here’s what various sources are suggesting about an oncoming recession and the labour market…
Vanguard – The investment firm explains that today’s job market doesn’t match 70’s-style ‘stagflation’, which was characterised by “an unpleasant mix of double-digit inflation, declining economic activity, and high unemployment.” They predict “unemployment will rise from its very low 3.7% rate, but perhaps not by much.” (Read More)
James Reed, Chairman of Reed.co.uk - “Reed.co.uk’s job vacancy data suggests that, if there is a recession, it is unlikely to be one that will lead to high unemployment,” says Reed. “The predicted economic downturn is unlikely in the short term to eradicate the skills shortages felt by many industries." (Read More)
REC & KPMG – The UK’s Recruitment & Employment Confederation figures show the jobs market’s “weakest rise in 19 months.” Whilst unemployment remains low, there’s signs of subtle change. “Overall vacancy growth softened for the sixth month in a row in September, to mark the slowest rise in demand for staff since February 2021.” (Read More)
Financial Times (John Williams – FED) – Top FED official John Williams warns that the US enemployment rate “could hit 5% next year,” rising from its current level of 3.75% as interest rate rises take effect. This would represent a significant increase, but still well below the highs of ~10% around 2010. (Read More)
The Washington Post (David G Blanchflower) – In 2014, Professor Blanchflower created a “misery index”, showing that unemployment causes 4x more ‘misery’ than inflation. Even a 1% increase in unemployment makes a big impact on wellbeing. Policy-makers who are concerned about high inflation will therefore be even more fearful of rising unemployment. (Read More)
Here’s what our consultants recommend as we prepare for a “full employment” recession.
1) Continue To Address The Skills Shortage “The market’s not shifting from candidates’ favour any time soon, and employers need to push to remain competitive. Seeking new talent pools is key. That could mean hiring and training graduates, exploring new geographic areas or adapting to provide more flexible employment.” - Anthony Watters (Profile)
2) Prepare For ‘Profit Over Growth’ “Investors are increasingly pushing iGaming, payments and tech firms focus on profit over growth. This can reduce demand for talent in certain areas – particularly commercial and marketing roles. However, with the space continuing to evolve and expand, we expect to see ongoing employment growth overall, particularly in areas such as tech, product and professional services.” – Andrew Cook (Profile)
3) Protect Staff Wellbeing “Whilst this recession may not be characterised by high unemployment, there are many other ways that employees’ wellbeing can be negatively affected by harsher economic conditions. Employers need to consider what they can do to support employees through tough times. It’s not just about altruism – it makes good business sense to maintain high productivity and minimise staff turnover.” - Cinta Soler (Profile)
Key Takeaway: Don’t assume that recession times will result in a significantly looser labour market. iGaming and payments employers will still need to work hard to attract and retain talent.
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