HR Managers: The Great Stagnation is coming!
It seems like only yesterday we were discussing “The Great Resignation”.
This was a labour market phenomenon during COVID-19 where many employees voluntarily left their jobs, seeking better work-life balance, remote work options, higher wages, and improved job satisfaction.
According to PwC's 2023 Hopes and Fears Global Workforce Survey, during this time 26% of employees said they were likely to change jobs.
This caused an enormous shift in workplace dynamics, reshaping the labour market and prompting employers to reassess workplace policies and benefits to attract and retain talent.
However, things have shifted.
Nowadays, the economy has slowed and with it, the labour market has become increasingly tight. So begins The Great Stagnation.
The Great Stagnation refers to today’s tight labour market where employees are increasingly inclined to stay in their current positions rather than seek new opportunities.
Almost a polar opposite to The Great Resignation, this phenomenon can lead to decreased job turnover, limited mobility within the workforce, and challenges for employers when filling vacant roles.
As an HR manager or business owner, here’s what you need to know about the current state of the labour market, why this is occurring, and most importantly, how to resolve its negative consequences.
The current state of the labour market.
As the Australian labour market transitions from the instability of "The Great Resignation" to the stability of "The Great Stagnation," employee decision-making is taking a dramatic shift.
Employees these days are savvy when it comes to understanding the job market – they know it’s tough out there. This leads most workers to reassess the priorities they held during the pandemic, opting for job retention over seeking new opportunities.
This shift has been driven by historically low unemployment which currently is 3.8% in Australia and 3.9% in the US in seasonally adjusted terms which means there is very little spare capacity In the market.
It has also been brought on by rising cost of living pressures with inflation rising globally throughout 2022 and 2023 respectively, meaning workers are reluctant to take risks amid ongoing economic uncertainty.
This stagnation is characterised by decreasing job turnover, which after rising in 2022 has been stagnant since February of 2023, with female job turnover already beginning to fall an entire percentage-point in the last 12 months.
These statistics are clear indicators that the labour market is poised for a period of stagnation, but could this be a good thing?
After all, stability is a great thing for both employees and employers, right?
Not particularly. Here’s why.
The problem with a stagnant labour market.
A stagnant labour market may initially appear benign or even beneficial!
Many employers and HR managers may consider it advantageous as it encourages stability and reduces turnover costs for businesses.
Unfortunately, it’s not that simple.
When employees stay in their roles due to a lack of alternative opportunities, or fear of risk, rather than genuine satisfaction or opportunities for growth, it engenders a culture of complacency and stifles well-being and productivity.
During a Great Stagnation, like that which we are entering globally, boredom and disengagement become prevalent descriptions of the workforce, leading to decreased innovation and creativity.
This is largely motivated by the fact that in a stagnant labour market, career advancement opportunities become scarce, especially at lower employment levels, and employees find themselves trapped in positions with limited upward mobility.
After all, if the people ahead of you aren’t leaving for new opportunities, the chance to be promoted may never appear.
This culminates in a cycle where individuals lack the incentive to develop new skills, pursue career growth, or seek new opportunities elsewhere.
Ultimately, while the appearance of stability may seem appealing to you as a HR manager or business owner, the long-term consequences of a stagnant labour market can be detrimental to businesses and the overall economy, hindering adaptability, competitiveness, and sustainable growth.
But hope is not lost.
While external development opportunities may be too risky or limited, this presents the perfect opportunity for organisations to encourage a culture of internal talent mobility.
This allows organisations to leverage existing talent, facilitating new avenues for career growth to stimulate innovation and productivity.
By encouraging employees to explore different roles and departments within the company, businesses can mitigate the negative effects of a stagnant labour market and unlock the full potential of their workforce.
The proof is in this recent LinkedIn poll.
So, how do you establish Internal Talent Mobility within your organisation?
Well, with GoFIGR, it’s easy.
Here’s how it works.
An Internal Talent Marketplace platform, GoFIGR is a Software as a Service (SaaS) designed to collect and intuitively analyse employee skills data so you can supercharge your
Internal Mobility and truly embrace a streamlined model of internal career progression.
With valuable insights collected from your team, GoFIGR allows you to:
- identify your employees’ current skills
- align them with your business needs
- realise your team’s full potential
- reduce the cost of recruitment by upskilling from within
This way, you can open your employee’s eyes to potential career progressions and FIGR (Find, Inspire, Grow and Retain). talent with data-driven strategies.
Again, this is proved in a recent LinkedIn poll.
Your future team is already working for you – and a stagnant labour should encourage that!
Don’t let your talent go to waste – allow them to grow their career AND drive your business into its tomorrow in ways you never thought was possible.
It’s the ultimate way to build internal mobility and foster a progressive workplace culture to minimise your reliance on the hiring cycle.
It’s a great way to save crucial hours in your day as well.
Contact GoFIGR today to discover how we can help you foster a future-focused workforce using our Internal Talent Marketplace platform.
[Book a GoFIGR demo]
Helena Turpin spent 20 years in talent and HR innovation where she solved people-related problems using data and technology. She left corporate life to create GoFIGR where she helps mid-sized organizations to develop and retain their people by connecting employee skills and aspirations to internal opportunities like projects, mentorship and learning.
