Big Ideas to Cut Through the Uncertainty of 2023
While the first half of this year carried over much of what we saw in 2021 - a jobseeker’s market, a boom in hiring and record rates of professionals switching jobs - the second half revealed the beginnings of a shift in the tides, with hiring slowing and employers opting for caution. Although the impact of a likely recession remains to be seen, we expect to see three trends in the year ahead:
Big Idea 1: Power returns to employers as a recession becomes reality and hiring dips.
2022 was largely a jobseeker’s market. For most of the year, there was nearly one open job for every job seeker on Linkedin — which meant that professionals largely had the edge in commanding higher salaries, better titles and more flexibility. The job market was so good, in fact, that it led to an almost 10% increase in quick quitting - the rate at which professionals leave a role within the first year. As early as June, though, we began to see shifts in the labor market. We saw early signs of rebalancing between labor supply and demand, and the pace of hiring declined across almost every region globally. Across most U.S. industries, hiring declined 20.5% in November compared to November 2021. And while hiring has declined a notable amount, it’s important to note that it’s slowed from historic highs throughout 2021.
Going into 2023, amid ongoing economic uncertainty, we expect business leaders to be more judicious in managing their businesses, which will likely contribute to a continued deceleration in hiring and shift in the balance in power. An October survey commissioned by LinkedIn found that 29% of companies have slowed their hiring plans as a result of current economic uncertainty, and an additional 26% say they have paused or frozen hiring. Hiring declines will continue to be especially sharp in areas like real estate and tech, which saw significant booms during the pandemic and are now beginning to level out.
While hiring slowdowns don’t automatically signal the onset of a recession, they could coincide with a meaningful rise in unemployment, which could lead to a mild recession in the first half of 2023. It’s worth noting that economic downturns are a normal part of the business cycle (in the U.S., they happen on average every 10 years and last about 9 months). One bright light? We don’t expect this recession to be nearly as severe compared to what we saw in 2020 or 2009.
Big Idea 2: Skills will become the most important currency in a competitive job market.
In the historically tight job market over the last 18+ months, employers were more open to hiring new talent who didn’t necessarily check all the traditional requirement boxes as the “perfect” fit. But now, with unemployment expected to rise and hiring slowing, the job market stands to become more competitive for job seekers. With more people seeking job opportunities and fewer opportunities being offered, the power balance will shift back to managers.
For professionals looking for a new opportunity or who want to safeguard their careers, it'll be more important than ever to have targeted, up-to-date skills that closely align with the roles they’re looking to land. Across all industries, the skill sets for jobs on LinkedIn have changed by around 25% since 2015, and that number is expected to double by 2027.Having the right skills – both digital and business skills - and highlighting them will give job seekers an edge as applicant pools increase.
We’ve seen an increase in employers embracing skills-based hiring, too. Forty percent of hiring managers on LinkedIn use skills data to hire, up 20% from last year. The increased focus on skills versus traditional measures - like degrees - may lead to a more equitable workforce, too. In fact, on average, talent pipelines can increase by nearly 10X when using a skills-first approach.
Big Idea 3: Leaders will need to be adaptive, decisive and data-driven to weather an economic downturn.
We anticipate that a mild recession is likely to occur in the first half of 2023. As uncomfortable as uncertainty is, there are things leaders can do to prepare for the continued unknowns. For business leaders, this will mean 1. staying adaptive, 2. using all the data they have at their fingertips, and 3. being decisive in their decision making.
In times of upheaval, rarely do we have the whole picture of how all the pieces fit together, but leaning on real-time data can enable leaders to stay on top of what’s happening in their industry (and the business landscape more broadly) in order to make timely, informed decisions.
By the second quarter of 2023, we’ll likely have a clearer idea of when things will start to get better - though we may not return to relative economic normalcy for 6-9 months from that point. Even though it may feel uncomfortable in these uncertain times, utilizing data to drive decision making, opening up communication with stakeholders to ensure alignment, and doubling down on your strategy - rather than hunkering down in paralysis - can help bring some confidence during an uncertain time.
While employers and employees alike are facing continued economic uncertainty going into 2023, it’s no time to panic. For employees, focusing on skills growth and taking actions to career cushion - like tapping into their networks and making sure their professional profiles are up to date - can help them stay ahead of the curve. For employers, being adaptive, data-driven and decisive will enable them to quickly adjust to the changes in the market that may be heading our way.
What are your big ideas for the year ahead? What changes are you noticing in your own jobs, as well as what changes you hope to see in the new year?