According to the forecasts of the European Commission, our economy will start to shrink already in the fourth quarter of this year. In 2023, GDP will only increase by 1.5%, and the economic downturn will begin in the second half of the year. Such event will affect the situation of enterprises, and thus the plans for hiring new employees.
As Paul Kukołowicz from the Polish Economic Institute says in an interview for Spider’s Web, lowering inflation will probably come at the expense of the economic slowdown. However, it is difficult to determine the scale of this slowdown and its impact on the labor market.
In the US, as a result of massive layoffs in technology companies, workers are already complaining about a significant drop in confidence in the stability of employment in their industry.
What awaits us in the Polish labor market? There is no clear answer to these questions. However, the forecasts of specialists leave a shadow of hope for Polish workers.
Growing employee concerns
The deteriorating economic situation largely affects representatives of the IT industry, who only a few months ago held a high position among the most sought-after specialists. There are more and more publications in the United States that raise employee concerns. Job cuts are wreaking havoc, and news of massive layoffs from giants like Robinhood or Oracle prompts the question: Is there a tech job market meltdown?
According to Crunchbase, more than 32,000 people were dismissed from the technology sector in America in 2022. At the beginning of the year, the Coinbase cryptocurrency exchange laid off almost 20% of the workforce. Additionally, the company canceled job offers from newly hired employees. A few months ago, a similar situation occurred at Tesla, where more than 200 employees were made redundant in a short time.
Employees of companies that have recently announced layoffs feel particularly uncomfortable. Research shows that the percentage of people who feel more worried about their job security than a year ago have the worst results: Compass (95%), Twitter (91%), Robinhood (90%), Instacart (90%) and Coinbase (83%).
Business Insider recalls stories of surprised IT employees who suddenly got dismissed. One of them is the IT manager at Tesla, who talks about “warning signs” appearing even before the release. The article also cited a statement from a program manager at Coinbase, who was one of 1,100 employees laid off after the sharp decline in cryptocurrencies. The reaction of the company to the difficult situation and unfulfilled promises contributed to lowering the sense of safety of employees. In turn, the story of Quishon Walker (a Tesla recruiter), who was one of the first dismissed people after the company’s announcement of job cuts, shows how much the recession affects the professional future of HR industry representatives.
One of the key aspects of the stories mentioned is the employers’ reaction to a difficult situation. Unfortunately, the described stories do not end well, and large companies seem to be completely unable to cope with staffing problems, while losing the staff’s trust and long-created positive image as an employer.
How can the candidate be assured of the company’s stability? Discover our 9 useful practices in a separate article!
Will we face a collapse in the labor market?
The data from overseas are not optimistic. Will the job market come full circle and we suddenly wake up in a long-forgotten reality of the 90s? Forecasts vary. Fortunately, many economists spot a light at the end of the tunnel.
Experts estimate that although we can expect a decline in wage growth as a result of the recession, it is unlikely that the upcoming slowdown will trigger mass layoffs. According to the research presented in the Monthly Economic Index, reduction of employment is one of the least popular scenarios for coping with rising costs indicated by Polish companies.
According to Gazeta Wyborcza, most companies are still more focused on hiring and retaining employees than on layoffs. This opinion is confirmed by Piotr Bielski, the chief economist of Santander Bank Polska, quoted by Rzeczpospolita. In his opinion, assuming that the slowdown will be relatively shallow and short-lived, no sudden changes in employment should be expected. The expert predicts that, at least until fears of a permanent economic downturn arise, companies will first reduce new jobs, resist wage demands and cut working hours.
Of course, we will see negative effects on the labor market as a result of the recession. The slowdown in the economy may translate into lower wage growth and the bonuses offered. As a result of the lack or limitation of employment, problems may arise in finding the first job among people starting their careers and employees with lower professional qualifications. Wider consequences may also be felt by specialists working in industries that are directly exposed to the effects of the energy crisis and war, e.g. companies that use gas on a large scale in the production process.
Recession and the labor market
The good news is that although employees will not have as much strength in the labor market as was evident at the beginning of 2022, representatives of the technology industry are prepared to look for a new job or to quickly adapt after being laid off. This is the opinion of Rick Chen, head of PR at Blind. The situation in the technology market is still good, as confirmed by the results of the CNBC survey, according to which as many as 64% of the leaders in the technology industry claim that it is increasingly difficult to find qualified staff.
Chen says technology jobs are safe. However, she recommends rethinking your career and looking for ways to adapt to the new reality. It is worth considering what is most important for us at work (development, flexible work schedule, remote work or work-life balance) and trying to stay comfortably at the employer’s place for longer.
Regardless of the direction in which the situation develops, our professional world may change significantly in the coming months. It is worth preparing for it.
If you want to talk about the challenges related to IT recruitment, contact us. We will suggest what steps are worth introducing to effectively employ IT specialists.