Local hiring challenges set to soar in 2022 and 2023

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If any employer or recruiter thinks that the hiring challenges of 2021 are the peak of their problems then they have another thing coming; very soon.

Reports and data out of the UK and the US provide a harbinger of what’s almost certainly ahead for the Australian labour market.

Late last month UK fast food consumers were confronted with the news that due to a reported shortage of truck drivers, and other supply chain issues, McDonald’s was unable to stock bottled drinks or milkshakes and a chicken shortage led Nando’s to temporarily close 50 stores.

The British Retail Consortium says there’s a shortage of around 90,000 heavy goods vehicles drivers.

Last week British retailer John Lewis announced free food and drinks for both full-time and temporary workers from 4 October to 31 December as an employee benefit to assist with the recruitment of more than 7,000 temporary roles across the UK this Christmas season.

Earlier this week industry research and news service SIA reported

“Three quarters of hiring managers in the UK report that the cost of recruiting workers has increased since January this year, as businesses compete to secure skills amid acute talent shortages.

The research also supports Office for National Statistics data which shows average pay growth also jumped 8.8% across the UK for the three months between April and June 2021, representing the highest rise since records began 20 years ago.”

The REC (RCSA –equivalent) last week reported that 88% of recruiters in the UK nominate labour shortages as one of their biggest concerns for the remainder of 2021

According to the REC, British recruiters have a significantly higher number of roles to fill than before the pandemic, with 58% having at least a third more vacancies than pre-Covid. Almost every respondent to the REC survey (97%) said that it was taking longer than usual to fill those vacancies, compounding the problem. Half, or 50%, reported that it now takes more than a month to find suitable candidates.

Meanwhile in the US similar challenges face American employers.

Three years ago retail giant Amazon made headlines when its minimum wage was lifted to $15 per hour.

Amazon has just announced new wage hikes with an average starting hourly rate of more than $18 and up to $22.50 in some locations. Hiring bonuses, for some roles in specified locations, of up to $3,000 are also on offer.

Amazon’s plans, announced across the past six weeks, to hire a total of 165,000 new roles across 220 US locations will be now easier to execute with a pay rate that exceeds most other low-skill positions.

The pandemic has dramatically increased the demand for nurses in the United States. The huge rates available for travelling nurses are causing a massive flow on within the sector with rural and regional hospitals losing their salaried nurses (typically earning USD 70,000 per annum) to temporary opportunities, typically paying the same nurses USD 5,000 to USD 6,000 per week.

Five weeks ago The Philadelphia Inquirer reported that local hospitals are offering big signing bonuses of up to USD 20,000 for experienced nurses.

Wages and salaries for private industry workers in the US rose at an annualised rate of 4.3% over the six-month period ended June 2021 — much higher than the average rate of 2% to 3% over the past two decades.

Low-skill and seasonal roles are attracting even larger wages premiums as employers struggle to attract enough workers back into the agriculture, hospitality and tourism sectors. Wages in the US leisure and hospitality industry have climbed at an annualised pace of 6.6% over the past two years, including a 9.6% wage jump for the twelve months to July 2021.

Even when organisations hire staff its proving difficult to retain them with employers experiencing a surge in employee ghosting as new starters simply stop attending work with no explanation. The extra work and accompanying pressure that flows onto existing staff just increases the likelihood that other employees will follow their colleagues out the door as well.

National data showed that labour output in the US across the second quarter of 2021 increased a huge 7.9 per cent while hours worked only increased 5.5 per cent. The 2.4 percentage point productivity difference represents existing employees working longer without a commensurate increase in their pay.

Most employees will only tolerate this additional, unrewarded, burden for a short time before resigning.

The US employee ‘quit rate’ was 2.7% for June (the most recent month for which data is available), the second-highest quit rate on record, behind April 2021’s rate of 2.8%.

This trend is the inevitable consequence of a labour market awash with jobs and employees being pressured to work longer in their current job.

As leading recruitment industry commentator Kevin Wheeler wrote in his blog last week;

In this seller’s market, the employer must now take the lead in building and maintaining the relationship to gain and keep good people. Employers have a huge responsibility to their stakeholders to do everything they can to hire and keep the most productive people. They are responsible for finding and keeping the balance between productive yet engaged and content yet challenged employees. There is a new harmony emerging.

These are hard, new skills for employers. To do this well will require many changes in how managers think and will challenge misconceptions and beliefs

Two changes to the way leaders think about recruitment were in evidence in Australia this week when a large local hospitality business and the local subsidiary of a famous global retailer announced their contrasting approaches to their respective volume hiring challenges of the upcoming Christmas and holiday season.

National hospitality group Australian Venue Co (AVC), owner of such venues as Melbourne’s Terminus Hotel and Sydney’s Cargohas, has an ambitious plan to recruit up to 500 workers from overseas (predominantly chefs from the UK) to work in their 170 venues by paying for their flights and hotel quarantine ahead of Christmas.

AVC has developed online training materials that newly arrived workers in hotel quarantine can complete ahead of receiving training on-site.

Yesterday iconic personal care retailer, The Body Shop, announced a completely different approach to recruiting the 400-plus casual required for the upcoming Christmas season.

The Body Shops’ new ‘open hiring’ policy means that staff applying for the seasonal positions are appointed on a first-come-first employed basis, after passing the four requirements of a seasonal role; their work rights; their capacity to lift 11kgs, work an eight-hour shift in one day; and are happy to work with customers — although this last one is not a disqualifier.

Candidates complete an online application and are then invited to meet with the manager of one of their preferred stores. A conversation is then had about the inherent requirements of the job to ensure the worker understands what is required of the job, most importantly the length and frequency of their shifts.

All ‘open hiring’ employees then undertake the standard company induction program.

The Body Shop’s open hiring pilot program for seasonal employment across its US stores was successful with metrics in retention and productivity exceeding benchmarks.

The originator of open hiring is New York’s Greyston Bakery which, since 1982, has a successful history of hiring from disadvantaged groups, especially many formerly incarcerated and homeless people of colour. Over 60 per cent of the company’s bakers were prison inmates, according to Greyston managing director, Mike Brady.

The Body Shop in Australia is targeting potential candidates in four key groups: people experiencing homelessness, single parents, young carers and Indigenous Australians.

It’s this sort of thinking about talent challenges that will have employers come out ahead in the increasingly difficult times looming.

Difficult times will only become more challenging in 2022 and 2023 if company leaders’ thinking about recruitment remains stuck in the last decade of the previous century rather than coming to grips with the new talent reality they confront in the third decade of the new one.

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Posted in Recruitment