The latest ONS data shows inflation at 4.2% – the highest since 2011. This raises a number of issues in terms labour market and world of work dynamics. It also has implications for workforce management and for employer recruitment and retention plans.
Here are a few initial thoughts on what could play out:
- Potential impact on wages over coming months as employers recognise cost of living increases. In practice, many employers will not be in a position to significantly increase wages, which leads us to the next point…
- Increased labour market fluidity with more people feeling that they have no choice but to change jobs to earn more and cope with cost-of-living increases.
- Rising starting salaries as employers focus on pay as the major attraction tool in what remains a candidate-driven market.
- More people taking second jobs. As an alternative to changing employers, some people might cope through additional shifts and by taking on additional temporary or contract work.
Regular labour market data and analysis from organisations like the REC and CIPD will provide vital indicators over the coming months. It will be especially interesting to track trends in candidate availability and starting salaries as well as any increase in temp billings linked to more people taking up second jobs.
But what about the impact on broader recruitment and hiring strategies? There’s been a big focus on areas such as organisational culture, flexible working options and progression opportunities as major motivational factors for individuals looking for a new job. Pay is always another major factor of course, but it will be interesting to get feedback from recruitment professionals on whether pay/salary becomes more of a ‘deal-breaker’ for candidates in light of cost-of-living increases.
Lots for policy makers to consider in terms of potential responses to latest inflation figures. Equally, plenty of options for employers and business leaders to weigh-up as they pre-empt collateral impact on the workforce and on recruitment strategies.
