As the cost of living soars and demand for talent shows no signs of slowing down, how employers and job seekers handle talent acquisition is crucial.
We are now entering another period of uncertainty. And unlike the early days of the pandemic, when many were left perturbed about their job security, this time around the job market is hot. Instead, it is concerns surrounding the cost of living that are causing some to reflect on whether their wage is sufficient. For hiring managers, this too can impact successful job offers and bringing in much-needed talent in the first place.
In a nutshell, wage growth hasn’t kept up with the cost of living in the UK. Statistics show that average weekly earnings grew by 4.3%, with regular pay climbing to 3.7% in the same period. In the same month inflation swelled by 5.4%, outstripping wage growth despite an increase.
A combination of factors have resulted in the cost of living growing sharply, and inflation is only one part of the puzzle. Retail price annual inflation accelerated to 1.8% in February, up from 1.5%, the highest rate ever recorded since November 2011. What the figures indicate is that shop prices have rapidly risen, and at their fastest rate in over a decade.
Food prices have been on the rise due to the pandemic and supply chain disruptions, but the Ukraine-Russian conflict has highlighted how many major exporters of grain and oils around the Black Sea could be affected as shipping worsens. According to the UN, nearly 30% of the world wheat supply is from Russia and Ukraine, with 80% of the world’s sunflower oil also coming from the two countries. The crisis is therefore having acute ramifications on agricultural production, causing a spike in food prices as production is halted.
The price of gas and electricity too have soared. They are set to rise more than 50% come April 1st after Ofgem increased the cap on unit prices. Russia is one of the biggest suppliers of UK and European energy, and geopolitics could directly impact supplies. Estimates suggest UK households could end up paying £3,000 a year for heating and lighting. Prospects of an oil embargo on Russia are also increasing, meaning the cost of petrol is pushed up, which adds another higher expense into the mix.
While what is happening in Ukraine is unimaginable and our thoughts are first and foremost with those directly affected, the crisis is already starting to have far-reaching consequences, as do the other factors pushing up the cost of living and pulling households into more financial discrepancies.
What does this mean for hiring?
When professionals are seeking a new role, they will be considering the above factors in their pay negotiations. Often, they will be very aware that, a few years prior, their wages would have got them more bang for their buck, and therefore in particularly candidate driven markets, they often have multiple job offers on the table. While monetary gains might not be a defining principle in the hiring landscape, we are recommending to clients that when offering a role to a candidate, to simply go with the best and final offer.
When competition is high for a candidate, clients don’t need to be getting into a set of potentially long and arduous negotiations. Prove to a prospective candidate that you want them, and go in with a realistic offer to reflect that the cost of living has changed. An attractive and timely job offer will help you secure high caliber candidates and avoid the costs and wasted time of starting the candidate search over again or hiring a less experienced candidate.
Read our guide on how to make the perfect job offer, from making the initial call to negotiating counter offers from your dream candidate.
WANT TO MAKE THE PERFECT JOB OFFER...
What does this mean for job seekers?
While it is very much a candidate driven market for many industries, this doesn’t mean that knowing some negotiations skills won’t come in handy. And while you probably are well aware that your salary might have been squeezed due to the cost of living going up, it doesn’t always mean that every employer has yet managed to make any decisions on changing set salaries, especially if the role you go for is to replace your predecessor.
When you’re looking for a skilled role in a busy job market, it’s important to be in a good position to negotiate. Hopefully you don’t have to, but if so, you don’t want to lose interest yourself or have to take time and energy out to barter over money. Therefore it might be in your best interest to ensure the negotiations are fast and clean.
Read our guide to help you navigate the sometimes tricky process of salary negotiations to come to a mutually beneficial agreement between yourself and a new employer.
WANT TO NEGOTIATE YOUR SALARY?