Fraser Gough couldn’t believe his luck. Earlier this year, the 23-year-old, who works in digital marketing in London, was contacted by a recruiter on professional networking site LinkedIn to see if he would be interested in a job with Clearpay, a payment. It was an offer he couldn’t refuse. He secured a 40 per cent pay rise to £35,000, a stake in parent company Square and a host of benefits. This included a free gym membership, money for bills to help manage his work-from-home expenses, and opportunities to work in San Francisco.

“I don’t even have a degree. I’m self-taught,” says Gough, who joined the team in March and has worked long hours and gone to great lengths to learn more about the industry. “I’m now trying to get another raise, and I think I’ll get it.”

Despite soaring inflation and fears the UK was heading into a prolonged recession, unemployment remained low and businesses continued to hire, often paying bumper wages. Even though some observers expect companies to cut spending and recruitment in response to an impending slowdown in demand for goods and services, all sectors – from tech to hospitality to construction and life sciences – are still experiencing a talent shortage.

“It doesn’t look like anyone is preparing for a recession. The benefits are still there and nothing seems to have changed,” says Gough.

The recovery in the UK labor market from the height of the pandemic has led to unemployment at its lowest level since 1974. Labor shortages have forced many businesses to raise wages, hand out bigger benefits and to offer enormous flexibility, which reinforces inflationary pressures.

A recent survey of 1,043 managers by the Chartered Management Institute (CMI) showed nearly 90% said their organization would be hiring in July 2022. Looking ahead to the next six months, nearly 40% said they would increase hiring, while a third said their company would continue to hire as normal.

“In the UK, we’ve lost a lot of our workforce,” says Christin Owings, managing director and partner at Boston Consulting Group, noting that it was still a demand market. employment.

Over the past two years, a decline in the self-employed labor force has coincided with many people taking early retirement and others quitting their jobs after being forced into unemployment benefits. unemployment due to long-term Covid-related health issues. The pandemic has also changed perceptions of work, with many employees embarking on new careers, often drawn to more flexible work that can be done from home. All of this has led to more than 1.2 million job vacancies in the UK, according to government data.

Fraser Gough was poached by a recruiter for a job at Clearpay © Daniel Lynch/FT

“We are emerging from an unprecedented period with the pandemic. But we still face a lot of these issues,” says Owings, speaking about the climate that hiring managers face.

The trend is global. The number of unemployed people in the eurozone fell below 11 million for the first time – a historic low of 6.6% of the labor force. Meanwhile, Australia has said it will allow tens of thousands more immigrants into the country to ease labor shortages. In the United States, while the unemployment rate has increased slightly, there are still about two vacancies for every unemployed person. Wages rise as companies compete for staff, prompting companies to charge more for their products, leading workers to demand wage increases.

Employers pay bonuses, offer greater flexibility and career development opportunities while giving employees more influence over the management of their workplace, in recognition of the time and money needed not only to recruit new employees, but also to train these people to fill frequent vacancies. The pressure is so great that one recruiter said 15% of his fee was at stake, as many people who take offers don’t end up accepting them, while adding that others only “hide” the offers entirely. employers if they choose to work elsewhere.

The rise of remote working has impacted so-called “deskless” workers – those who must be physically present to do their job – who make up more than three-quarters of the workforce in most countries. According to BCG, more than a third of these workers are at risk of quitting in the next six months, according to a global survey of 7,000 officeless workers. This has potentially disastrous consequences for sectors such as construction, manufacturing, healthcare, retail and transportation.

For Chris Timmins, managing director of property developer Jessup Partnerships in the East Midlands, the shortage of surveyors, property managers and appraisers is a continuing problem despite the construction industry predicting a market downturn.

“For each individual, there seem to be 10 roles available. They have a choice of jobs and we all try to hire the same people,” says Timmins. Not only are they hiring to fill vacancies, they are also hiring to fill positions they may need in the future. “When the right person is there, we have to try to get them. Even in a downturn, we expect to work as we do now, because a lot of our work is about building local authorities. In fact, we will grow as a company through any recession.

Of the promoter’s 96 employees, 13 are apprentices. “That’s a lot for the size of our company. But that’s the market we’re in and that’s the struggle we have to find talent. We have to create our own. During the cost-of-living crisis, companies such as Jessup are improving the benefits they offer employees – from retailer discounts to company cars and allowing employees to charge electric vehicles at work.

Companies that increase workers’ wages pay an ever-increasing bill. Rahul Sharma, who runs Indian restaurant The Regency Club in north-west London, said the 15 per cent wage rise had put added pressure on finances already strained by rising food prices. meat, grain, fuel and commissions for delivery applications. The restaurant has removed high-end items from its menu to save as much as possible. “This [increasing wages] was to defend the position we already have and the staff we already have,” he says.

Sharma says he weathered turmoil after the Brexit referendum and then again when the pandemic forced universities to close, prompting many part-time students – the backbone of his industry – to return to their countries . In recent months, he says, men have waited outside his premises at closing time in the hope of luring staff to work at other restaurants. “Our staff were followed to their homes. They wait outside in their cars, and then the same cars show up in front of our staff’s houses,” Sharma explains. Staff are also attracted to less physically demanding and better paid jobs, such as virtual assistants, which they can perform from home.

“The current situation is worse than during Covid, and this time there is no help from the government,” he says.

However, some observers have pointed to a time lag and an inevitable reduction in labor market tensions.

Liam Reynolds, who runs Silicon Milkroundabout, a biannual job fair for tech professionals in London, said a correction was underway in parts of the sector. Big tech companies were hiring less while funding was not flooding start-ups. “For a lot of these companies, there was so much money that they over-hired,” Reynolds says. “For the future, there is more uncertainty.” In the United States, many of the big Silicon Valley tech companies that have grown rapidly over the past decade have already implemented hiring freezes and cut jobs.

Yet Alistair Cox, chief executive of recruitment firm FTSE 250 Hays, says widespread digitalization in other sectors means companies will continue to hire for jobs they never needed before, from the automation to cybersecurity. He points to the lack of qualified candidates for the existing vacancies.

“There just aren’t enough good skills to match the jobs that are being created today,” says Cox, adding that demand has been growing steadily for the past few years. “Businesses continue to digitize, even as the macro backdrop worsens.”