The global economic prospects are currently gloomy. However, this is hardly noticeable on the labor market: the shortage of skilled workers will probably continue in principle. Switching to temporary powers is reaching its limits.
Colleagues are not only wanted in Germany. The shortage of skilled workers is causing average wages worldwide to rise in the mid-single digits.
The situation is extremely unusual: Concerns about the economy and fears of recession are clouding the mood worldwide. And although companies are expecting a weaker order situation, many are still desperately looking for new staff. The shortage of talent is a trend that will persist – this is how Denis Machuel, CEO of the recruitment agency Adecco, commented on the situation on the occasion of the publication of the results from the third quarter.
The happiness of the workers clouded over
However, the happiness of workers will not remain untouched forever. According to Adecco, the extent to which the shortage of skilled workers will continue in the future will be influenced by economic developments. The number of companies announcing layoffs and restructuring is currently increasing. At Adecco, this development is already reflected in a slight decline in sales in October compared to the previous month.
The labor market usually reacts to economic developments with a delay of around six months. If the economy picks up as it did after the pandemic, this is only reflected in a tighter labor market six months later. Conversely, the forecast, which has now clouded over, is only likely to have an impact from the first quarter of 2023.
At present, however, in many parts of the world there is still a “labour market” in which workers are in good hands. The situation varies greatly depending on the country and industry. According to the Adecco CEO, job growth is very strong in Asia and Latin America, and less dynamic in Europe, despite signs that are still positive. In Switzerland, demand from companies was so robust that Adecco was able to increase sales here by 13.5 percent in the third quarter.
In the US, the picture is mixed. While many tech companies are considering layoffs, the automotive, industrial and healthcare sectors continue to do very well. On the other hand, logistics is currently bringing up the rear worldwide. Supply chain problems and increased freight rates are weighing on companies. After the corona pandemic has subsided, the industry still has to find a new balance, according to the Adecco CEO. But he doesn’t see the situation too pessimistically. The activity is still above the pre-corona level of 2019.
Limited pool of temporary workers
In view of the uncertain prospects, many companies could be inclined to fill new positions primarily with temporary workers. They can reduce these again more quickly if the business situation deteriorates. In fact, however, this is not the case. Switching to temporary workers is reaching its limits in the tight job market. Those who would have accepted a temporary position in the past now have more opportunities to get a permanent position. The reservoir of candidates is therefore limited. According to Machuel, companies continued to be very dynamic in terms of both temporary and permanent positions in the third quarter of 2022.
Wages are increasing in the mid-single digits worldwide
If employees nevertheless decide to take up a temporary job, they can often push through wage increases. The current wage inflation is a reflection of the tight labor market. Globally, it is in the mid-single digits, according to Adecco, with Asia and Latin America trending upwards and Europe tending downwards.
In addition to higher wages, employees are also using the situation to push through other demands, such as the possibility of hybrid working, with a division of working hours between the office and home office and the possibility of flexible working hours. “It’s very clear that the way we work has changed permanently,” Machuel said. If something doesn’t suit them or if they see new opportunities, people move. The labor market has become very dynamic and fast.
Against this background, Adecco was able to increase sales in the third quarter by 16 percent to 6.04 billion euros. Adjusted for exchange rate effects and the different number of working days, organic growth was 6 percent. Values of 5 and 4 percent were reported in the two previous quarters. After investments in the development of newer business areas, profit fell by 19 percent to 108 million euros.