The cost-of-living crisis and why now might be a good time to move jobs03 Mar, 20225mins
UPDATE NOVEMBER 2022:
With interest rates raised to 3% last week as the Bank of England tries to control spiralling inflation, and the UK heading into what now looks like an inevitable and long-term recession, this seemed like an appropriate time to revisit whether now is still the right time to be moving jobs.
Sadly, the cost-of-living crisis shows no signs of easing, with grocery inflation reaching almost 15% at the start of November. Experts suggest that households are likely to see a £682 rise in their annual food bills, and reports this week show that the economic downturn is starting to affect the job market for the first time since Covid.
Over the past two years, workers have enjoyed employment levels close to record highs with far more job vacancies than candidates available to fill them, thus creating the 'war for talent' and, along with it, some very attractive packages on offer from companies looking to entice the best employees.
However, the ONS reported this week that, although unemployment is still relatively low, the number of vacancies has fallen by 46,000, suggesting that as recession hits, many firms are starting to put hiring freezes in place to protect their business. Job losses could follow if budgets are tightened further to keep companies profitable.
This all brings us back to the question of whether now is a good time to move jobs. As with many things in life, the answer is not entirely clear-cut.
There are risks to changing jobs during an economic downturn, such as 'last in, first out' rules which often see new employees losing their jobs first in cases of redundancy or if you quit your current role without a job to go to, you may struggle to find new employment at all.
Yet, there can be some advantages to a career change at this time, with the main one focusing on your happiness. Suppose you are unhappy in your job and consider quiet quitting to avoid a job move in an uncertain market. In that case, this can be detrimental to your mental health, relationships and sense of self-worth. It is generally better to move jobs (where financially sustainable) if you are unhappy in your role, regardless of the market conditions.
Secondly, it can be an excellent time to seek alternative employment if the industry you work in is likely to be impacted more by the recession than others. You can avoid wage freezes or redundancy by moving to a more stable sector.
Finally, some companies will still be looking to employ new staff regardless of the economic conditions. Having top professionals on board can help companies work through tough times more effectively and ride out the financial storm. There may still be opportunities for talented individuals seeking a new role with wages to match as some businesses opt for a 'speculate to accumulate' approach.
Overall, it is essential to consider what is suitable for you as an individual and know that there are still opportunities available for those keen to move jobs.
Inflation in the UK has hit its highest level since 1992, with a rate of 5.4% recorded in December 2021. A mixture of post-pandemic consumer spending coupled with supply chain issues and a rise in gas and oil prices has pushed up the cost of goods and energy, causing inflation to increase to almost record levels, and The Bank of England predict that interest rates are likely to continue to rise further to around 7% by April 2022.
This wouldn’t be such a problem if wages were rising at the same rate or better, but the latest official data shows that wages fell by 1% from November 2020 to November 2021, and when you adjust for RPI (Retail Price Index), average wages today are lower than they were at the time of the 2008 global financial crisis.
This combination of high inflation and relative reduction in wages is causing a cost-of-living crisis in the UK. Many people are finding that they are simply bringing home less than they are spending on essential goods, food and bills, with costs only set to rise in the near future.
However, another factor at play could mean that it’s the perfect time to look for a new job to combat the cost-of-living issue. Unemployment is low, companies are hiring, and due to various economic factors, including the after-effects of Covid, the job market is experiencing a war for talent.
While average wages for those already in-post are lower than they were a year ago, and although money isn’t the only tool companies are using to attract candidates and retain staff, there is a recent noticeable increase in wages being offered to new starters across many industries as businesses vie to secure the best talent.
According to recent reports, wages for white-collar professionals are likely to increase by as much as 25% during the early part of 2022, with the most significant pay rises reserved for new starters. In the past year, wages for new starters grew by 6-8%, and those professionals who moved into ‘hero industries’ such as technology or health care saw pay hikes as high as +15-20%.
Of course, as any responsible recruiter will tell you, a new role has to be the right career move for you in the longer term and not just based on financial gain. Still, there is perhaps no doubt that one way to stay ahead of the rising cost of living is to start looking for a new role sooner rather than later. At the same time, the market remains candidate-led, and the financial rewards on offer are greater, assuring a secure position for when the war for talent eases, and inflation starts to fall again.
If you’re looking for your next career move or want to find suitable candidates for your vacancies, talk to our expert recruitment team who specialise in a range of professional services, including technology, marketing & HR and find out how McGregor Boyall can help you.