The last 12 months has been a whirlwind on the labour market to say the least. Many businesses were forced into mass layoffs and even closures. With the economy re-opening and many businesses starting thrive again, employers are now facing a whole new battle.
With labour shortages across the board and employee burnout rates at an all time high, it's no secret that employees have access to vast array of new opportunities. Companies around the country are finding it hard to find skilled people to fill their open vacancies. "Data from Indeed.com show that as of May 7 job postings were seasonally adjusted 23% above their Feb 1, 2020 level" says Justin Lahart in the Wall Street Journal.
There are many factors at play here when it comes to finding the 'WHY' in regards to the pay hikes and labour shortages. These factors include:
Lack of childcare options for parents
Reluctance toward in-person roles
Increased alternative employment options for employees
Continuous subsidized government income
The key to this equation reverts back to a basic economic principle, Supply vs. Demand.
So what do we do?
One way to overcome this issue is to make the jobs more attractive to candidates by simply paying them more. Retain your existing, likely burnt out, top talent by providing a pay increase outside of their annual review and create a competitive overall compensation package for the talent you are trying to recruit.
Many people will argue that a pay increase is not the only selling feature here and to that, I will agree. There are several other additional factors you can consider examining such as the total employee benefit package, workplace flexibility, hybrid working models, opportunities for growth and advancement, and the list can go on. All that to say, the top incentive here will still come down to the monetary incentives at the bottom line.
In summary, it is extremely important to maintain pace within the market. If an increase in pay rates is the way the market continues to move, then move with it.
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