UK businesses and the labour market alike are facing a series of complex challenges in the current economic climate. This, in turn, is having a direct impact on employees’ attitudes and behaviours towards their employer.
According to the Office for National Statistics (ONS), the UK unemployment rate recently fell to its lowest rate since 1974. Plus, the number of employees on payrolls for August increased by 71,000 on July figures to a record 29.7 million, while the number of job vacancies decreased by 34,000 in the period June to August 2022 – the largest quarterly fall since June to August 2020. Such statistics paint part of a complex picture.
It’s unsurprising that employees are looking to their employers for support
Diving into the labour market
Much of the decline in the unemployment rate was in fact driven by a contraction in the size of the labour force, with the economic inactivity rate (the share of the population who are not in work or seeking work) rising 0.4% to 21.7% for the quarter – the highest since 2017.
The Bank of England has expressed concern over this increasingly inactive labour market, suggesting it could contribute to inflationary pressures with a lack of candidates to fill jobs. In an extremely tight jobs market, companies are struggling to hire the people that they need. And to make matters worse, they’re also at a growing risk of losing the talent they do have as staff seek better pay.
What’s more, wage growth accelerated faster than expected this year, rising 5.5% (including bonuses) in the three months that ended July 2022. Yet such increases still significantly lag behind soaring inflation.
As a result, people are struggling to cope with rising food prices, as the cost of living continues to rise. In fact, according to recent Visier data, Brits are concerned about paying their energy bills (75%), rent or mortgage (53%) and paying for food (57%) as the cost of living continues to rise. Brits are yet to curb the worst of the peak in inflation and wages are still unlikely to keep pace with rising costs.
Staff seek better employment packages
Taking all of this into account, it’s unsurprising that employees are looking to their employers for support.
According to our recent survey of more than 2,000 full-time employees at organisations employing more than 250 people in the UK, 94% agreed that household incomes simply aren’t adequate to keep up with the rising cost of living, with 79% of the opinion that employers have an obligation to support staff in managing the crunch.
Bosses will need to generate a clear view of how their employees feel, and what kind of support will likely resonate before any effective action plan can be created
Unfortunately, however, many feel employers are falling short of the mark. Indeed, 71% of employees revealed that they do not believe their employer has adequately kept up with the cost of inflation. As a result, we’re witnessing a growing trend of ‘reverse retention’ tactics, with employees threatening to leave their current roles in the hope of securing improved employment packages. Interestingly, while nearly four in five respondents (79%) have never done this before, many would not have reservations about doing so.
The importance of data in driving effective action
In what has become arguably the most competitive recruitment market in a generation, employers should recognise the impact that reverse retention techniques and a potential loss of staff could have on the overall effectiveness of their organisations.
Indeed, it is important for them to recognise that employees are expecting action and support. To get ahead of resignation letters and/or negotiation tactics before they arise, it is critical to start thinking about how to align with staff expectations.
To this end, bosses will need to generate a clear view of how their employees feel, and what kind of support will likely resonate before any effective action plan can be created. To improve this insight, firms should look to leverage the people data the business is operating with.
Analytics technologies can support this process. By pooling and analysing the people data within a business across a variety of key metrics, actionable insights can be unlocked that can then drive smart decision-making.
By empowering line managers and HR teams with critical insights, businesses will not only be better placed to improve their retention strategy
Using insights to drive strategy
By empowering line managers and HR teams with critical insights, businesses will not only be better placed to improve their retention strategy. Equally, they will be able to support employees with the things they need during this period of economic uncertainty.
It could mean offering flexible or hybrid working schemes. Equally, it might involve the provision of more learning or development initiatives, or perhaps a bonus scheme.
Every business will be different. Yet by taking the right action and positioning themselves as figures of support and stability, employers can build trust and loyalty – something that could prove vital in navigating the fierce competition for talent.