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What to expect in the staffing industry in 2023

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It’s an interesting time to be in recruitment, particularly if you work for a staffing agency that manages skilled jobs or an HR department in the rapidly evolving fields of manufacturing, construction, or natural resources. With a worker shortage causing ongoing job vacancies and the effects of the pandemic continuing to impact a range of sectors, recruiters will face a diverse set of challenges and opportunities this year. 

What skilled labour trends should staffing agencies expect in 2023? 

As 2023 approaches, staffing industry leaders can expect familiar concerns to crop up, as well as new issues to emerge as the result of economic, social, and demographic pressures. 

Skilled labour shortages expected to continue

Despite the slowing economy, experts expect labour shortages to continue in 2023. Statistics Canada reports that nearly two fifths of Canadian employers expected hiring challenges in the second quarter of 2022, with particular issues in construction, manufacturing, accommodation, and food services. 

The shortage continues to be driven by a low ratio of available employees to the number of total job vacancies, which appears to be the result of demographic changes in the workforce. As baby boomers retire, there are less workers available to fill their jobs, resulting in the worker shortages we’re seeing now. Forecasts expect this trend to continue into 2023 and beyond. 

For workers, this trend may result in unprecedented bargaining power. Workers in the skilled trades will have the opportunity to choose from many open positions and demand changes in their workplaces. To attract and retain skilled workers, employers will likely need to offer higher pay and other perks in the coming months. The labour shortage is also an incentive for companies to train and promote current employees to fill open jobs. 

Inflation and recession fears loom

Although inflation is expected to peak in the last quarter of 2022, a “mild” recession is still expected in early 2023 in the US and Canada. With consumers slowing their spending, most industries can expect to take a hit throughout the first half of the year. 

In response, employers have already begun to slow hiring. However, most projections show that companies will likely avoid mass layoffs, primarily because they recognize that the talent shortage will make it tough to rehire. Most skilled workers can take comfort knowing that their jobs are safe, even amidst the current economic uncertainty. 

Pandemic effects continue

Years after the initial downturn in 2020, the effects of the pandemic continue to resonate throughout the labour market. As a new labour report from GlassDoor and Indeed explains, one of the greatest impacts of Covid-19 is that it made workers aware of their bargaining power, especially amidst the demographic changes in Western economies.  

In response to the dual challenges of the pandemic and the cost-of-living crisis, employees and contract workers have begun to ask for higher pay, better safety standards, paid sick days, and other benefits. Companies can expect these trends to continue in 2023, regardless of the state of the business cycle. 

Renewed focus on training and development

In the skilled trades, companies have begun to focus on training and development of new workers in response to the labour shortage. The lack of skilled workers has the potential to dramatically slow growth, and if companies aren’t willing to invest in their employees, they can expect profits to decline. 

As a result, employers are starting to integrate more training, apprenticeships, and mentoring into career paths within their companies. Not only will such programs help to retain workers and fill open positions, but they will attract new talent as well. 

More companies may also begin to foster partnerships with vocational schools, offer tuition reimbursements, and provide flexible working hours to enable workers to upgrade their skills while holding down a job. Additionally, some employers in the skilled trades may need to increase their pay to align with white collar jobs if they hope to avoid losing workers to other sectors. 

Diversity, equity, and inclusion more important than ever 

One of the top ways that employers can differentiate themselves in this new labour market is by embracing diversity, equity, and inclusion. According to GlassDoor and Indeed, 72% of workers aged 18- 34 surveyed say they would consider turning down a job offer or leaving a company if they did not think that their manager (or potential manager) supports DEI initiatives. As the oldest workers retire, the younger generations are expecting their workplaces to be improving racial, ethnic, and gender diversity and ensuring that the work environment is inclusive for everyone.  

What does that mean for the staffing industry? You can expect clients and hiring managers to be requesting more diversity in candidate lists in the future. 

The bottom line

2023 is expected to be a year of tough challenges in the labour market, but it also presents new opportunities. By anticipating changes in the industries that rely on skilled workers, staffing agencies and HR departments can edge out competitors and stand out. 

Searching for a software solution that will give your staffing agency an edge in 2023? Developed with the unique needs of Human Resource departments and staffing agencies in mind, Labourly™ can save your team time and resources this year. Book a demo call with our team to discover what the right solution can do for your team.

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