How Recruiting Will Change Globally in 2020

Technology, IR35, modern slavery, skills shortages and legislation have all made their mark on recruitment practices in the past decade.

How will the staffing situation change for businesses who are looking to hire in the next year?

1. International Shift

The global recruitment market is predicted to be worth $334.28Billion by 2025. As advancements in technology open up new business possibilities and directors seek new and diverse perspectives, talent pools are going global. Many geographical regions are increasing their headhunting investment to lure candidates from overseas locations, and staffing is changing around the world at record pace.

Although the UK is currently the biggest European recruitment market, Germany is close behind. Britain’s unemployment rate has dropped to 3.8%, far below that of its European neighbours France (8.5%), Spain (13.8%) and Greece (17%), driving a candidate-led market in the face of growing skills shortages. Brexit may dissuade workers from other European countries, and when coupled with potential political and economic uncertainty, UK businesses could experience great difficulty in filling vital roles.

The United States is currently the largest recruiter in the world, however Japan is hot on its heels. Japanese companies are moving away from traditional recruitment methods of the past century and incorporating innovative methods into their hiring, such as changing relationships between unions and businesses, updating performance tracking and reward systems and advertising high salaries to top talent regardless of experience.

2. Salary & Pay Changes

April 2020 sees the beginning of significant changes to worker salary and pay in the UK. Increases to the Minimum Wage and National Living Wage are planned for Q2 of this year, and subject to parliamentary approval, workers across industries will earn more per hour:

· For those aged 25 years and over, Minimum Wage goes up to £8.72

· For 20-24-year-olds, £8.20 will be the new minimum

· For 18-20-year-olds, £6.45 will become the minimum hourly rate

· For Apprentices under the age of 19, the pay rate will increase to £4.15 per hour

As the EU’s unemployment rate reaches the lowest levels ever recorded, European wages have continued to rise on average. In 2020 wage growth will continue to be higher in Central and Eastern European countries.

3. Compliance

With the extension of IR35 tax legislation in April this year, any non-compliant workers on UK contracts face considerable fines. HMRC predicts that it will recover £1.3billion in additional tax from contractors by 2024.

IR35, and wider legislation around the world, could have a marked impact upon business leaders as well as the sector’s contractors. Compliance changes will require businesses to invest time and resources into processes and payroll, and global workforce management will see a period of upheaval whilst new ways of working are found. IR35 could also see significant changes to employment law, however the UK Government will unveil further updates to legislation with the new budget on 11th March.

In 2017, 65% of Middle Eastern business leaders believed there was a skills gap between the current skills and abilities of their workers, and the skills and abilities necessary for fast business growth. 2020 will see the skills shortage addressed in an unprecedented way, as ethics and sustainability in recruitment become more pressing. With more than 40million people believed to be working under modern slavery conditions around the world, governments globally, and particularly in the UAE with its high volume of expat and migrant workers, are warning of a crackdown on unethical and illegal recruitment practices. Large fines, strict prison sentences, stakeholder pressure and long-term brand damage will threaten companies accused of Modern Slavery in the Middle East, and ethical labour methods will become standard in the coming years.

4. Worker Entitlements

The UK’s Good Work Plan followed the Government’s Taylor Review into modern working practices, and its 2020 changes are set to overhaul workers’ rights.

The Swedish Derogation rules, which govern the use of agency workers, are being repealed in April in an effort to prevent employers keeping individuals on unstable, low-paid contracts for long periods of time. Individuals currently working on these contracts will be entitled to equal pay from April. This change is critical for businesses that utilise temporary workers and could see significant changes to workforce planning across industries.

The UK Government is also changing the rules that determine calculations of holiday pay. The process for calculating holiday accrual is changing from the current practice of using 12 weeks’ work to calculate average holiday entitlement, to 52 weeks (employers can disregard weeks where employee have not worked). These changes will affect both businesses and workers across the board.

This year the UK government are introducing the Parental Bereavement (Leave and Pay) Act. The new legislation will seek to provide financial support for parents with 2 weeks’ paid leave following the death of a child under 18 years old or after 24 weeks’ pregnancy or stillbirth. Parents who lose a child less than 16 weeks after starting a new job will still be entitled to this leave, although unpaid. Finland is leading the way with progressive changes to parental rights, by allowing fathers to spend the same amount of time with their children, with 164 days’ equal paid leave per parent.

5. Reasons Employees Change Jobs

The most popular motivations for seeking a new job have changed dramatically in the past decade. Whereas candidates previously prioritised salary above all else, the number one reason that individuals now choose to leave their jobs is a lack of development opportunity. Over 30% of people would leave a job they enjoyed in every other sense if it did not help them progress in their career. Freedom to learn new skills such as coding or languages, coaching on soft skills, tailored training programmes and personal development plans can help employees feel valued and inspired to maximise their potential in their current roles.

For the youngest generations in the workplace, millennials and Generation Z, the most appealing rewards and benefits look very different to those designed for a more traditional workforce. In response to the political uncertainty and climate change that has marked their first few decades of life, younger people are increasingly seeking stable professions. Those in their 20s and 30s want autonomy and the opportunity to be creative and enjoy what they do, rather than spending their time drinking and socialising every night.

Almost two thirds of companies worldwide now offer flexible working benefits – businesses increasingly understand the impact of work/life balance on employee happiness, and flexible working has been proven to increase productivity and staff retention. Flexible working hours, remote and home working and job sharing is becoming the norm, and those who do not offer it will lose out on top talent.

Read the Recruitment Strategy Guide to Brexit.

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