An overview of the labour market for the next 12 months

Great Gatsby author F Scott Fitzgerald said the test of intelligence is an ability to hold two opposing ideas at the same time, and still retain the ability to function. As a nation our intelligence is being tested.

Having emerged from the pandemic into Russia’s war on Ukraine, an energy crisis, the return of inflation, and job losses in the tech sector, it could be seen to augur ill for the labour market. And yet unemployment stands at a 20-year record low.

“It is a confusing jobs market,” says Robert Mac Giolla Phadraig, chief commercial officer at Sigmar Recruitment. Employers have gone from a situation where recruitment and retention “were priorities number one and two” to a marketplace where “resizing, reduction, recruitment and retention are all joint number one”, he says.

While the war for talent may still be battling on, the dynamic has shifted. “The pendulum of power is swinging back to the employer now as people sniff the air and become more concerned about job security,” he adds.

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Flexibility is likely the first casualty. During the pandemic employers required employees to display it by working from home, en masse, at a moment’s notice, and to somehow make it work. They did. Coming out of the pandemic it was no surprise to find workers were very keen to hang on to this newfound, and now proven, flexibility.

“That has been a one-way system for the past two years,” says Mac Giolla Phadraig. The push was on “for employers to offer as much flexibility as was being sought by the workforce”. The issue became polarised, “almost a case of them versus us”, he says. “Now, however, it will be about reflex in that employers will have more power.”

That is being driven by the “tech wreck”, as he puts it. “Tech companies went to full-time remote working very fast in the pandemic but didn’t have the work practices or systems in place to really facilitate that move and, at the same time, demand for their services was growing,” he says. “So their response was to hire, hire, hire.”

That changed abruptly. “By summer of this year we started to hear the tech companies talk about how they were over-resourced and under-productive. The whole conversation shifted. Since then almost all have reduced headcount, and the ball is back in the court of the employer.”

This will have an impact on flexibility generally. “For two people with the same skills and experience, the person who offers the employer the flexibility to be in the office will get the job over the person who wants full-time remote,” says Mac Giolla Phadraig. “For the last 18 months I’ve been telling employers to show as much flexibility as possible. Now I’m saying the same to candidates.”

Job mobility surged post-pandemic as the so-called “great resignation” saw people take stock and make changes. “Now it is levelling off,” says Mac Giolla Phadraig. “There is still demand, but we are starting to see a correction.”

A strong labour market requires consumer confidence, business confidence, and GDP growth, all of which are falling.

“Last year there was a frenzy to keep and to hire people. People were getting offers and their employer was counter-offering. Now those companies are saying our cost of labour has increased, but we haven’t grown head count or productivity,” he says. “The tech companies saw it happen first, now it’s happening in other sectors too. But it is only a rebalancing.”

Helen Thomas, a principal at executive search firm Odgers Berndtson in Ireland, feels similarly.

“It is a strange time. We are still very much seeing a war on talent, particularly in finance and commercial functions. The softening in tech is not really being seen at the senior levels we work in, at c-suite level, but more on the marketing and recruitment side and on (mid-level) support roles like that,” says Thomas. “High-level skills in tech and engineering will always be in demand. There may be a softening in salaries, but overall the outlook for 2023 is very buoyant.”

She says demand for chief revenue and chief commercial officers will remain strong, and if employers are to secure top candidates they will need to have their “ducks in a row” in relation to salary expectations, with contracts ready to go to get them.

In the main recruiters are upbeat. “We haven’t seen a slowdown in recruitment at all. The tech sector announcements haven’t impacted our clients, which are not the big tech companies but SMEs to multinational companies with requirements for IT,” says Joanne Murray, recruitment and business director at Osborne.

“For our clients the biggest challenge to growth is getting staff. There are still a lot of IT and tech roles out there. Those skills are still in demand, and even those HR and marketing roles that have been lost in the tech sector are still in demand too.”

Tech sector layoffs are also the smaller, indigenous employer’s gain. “We need churn for a labour market,” says Mac Giolla Phadraig, who says the fall in value of tech stocks can have a silver lining for the labour market.

“Share options make people sticky because people see them as a savings pot. When stock values go down it makes people less sticky and encourages them to look for and ride the next wave of growth in relation to stock options, trying to figure out what’s coming next for web 3.0, and how they can benefit from it.” That can help start-ups too, who ordinarily struggle hardest for talent.

The shift to software as a solution and recurring revenue businesses generally will continue to need salespeople to maintain and grow customer bases, he says, while stalwarts like life science “are very solid, and will remain so”, he predicts.

“Yes, we are seeing a correction, but all the professional sectors will stay strong.”