Record Low Unemployment Rates Create New Challenges For Employers
Canada has officially reached pre-pandemic levels of employment (in fact, better than).
So what does that mean for the digital workforce and employers?
Canada’s employment has now surpassed pre-pandemic levels. As of March 2022, the unemployment rate has fallen to 5.3% - which is the lowest rate since comparable data became available in 1976. While most provinces saw this improvement, gains in employment were more concentrated within Ontario and Quebec.
Canadian Unemployment Rates (as of March 2022)
Source: Statistics Canada, Unemployment rate continues downward trend, falls to record low in March 2022
Overall this is good news for Canada’s economy - however, it does create some new challenges. Canada has now moved into a tight labour market, meaning there are more job openings than workers available or willing to do them. Below are trends we can expect arising from this shift:
More Competitive Markets
Virtually all industries are expected to wrestle with labour shortages and the most in-demand role functions are set to become exceptional challenges. With fewer job-seeking candidates, and more companies hiring, employers need to consider how they can continue to be competitive. In a recent survey, 90% of companies cited an upwards trend in bidding wars during hiring, reflecting that the imbalance of supply and demand has already started taking effect during recruitment.
Moreover, companies need to consider how they can stay competitive in the eyes of their existing employees. According to an ADP Canada survey, 1-in-5 Canadians have been approached by a competing employer in the past six months offering better work conditions (i.e. better salaries or the same salaries with improved benefits). The cost of losing an employee has potentially never been higher - as recruitment gets tougher, salaries rise, and companies layer on additional tactics such as signing bonuses. Check out our article on the cost of losing an employee here.
Below we’ll go into more detail on how the two main levers - salaries and benefits - are expected to change.
Salaries Expected To Increase
During the pandemic, many companies had salary freezes. This year employers were predicting overall salary increases of 2.9% in response to inflation, but this has now jumped to 3.3% with the new labour shortages. A Salary Budget Planning Survey by Willis Towers Watson (WTW) found that top performers continue to be rewarded the highest raises, with a planned average of 4.4% for management and professional employees.
“There’s a great reprioritization of work, rewards and careers under way, and it’s putting significant pressure on compensation programs for many employers,” says Catherine Hartmann, North America rewards practice leader at WTW, “Many employers are targeting certain segments such as hourly workers, digital talent and workers with in-demand skills to receive higher pay.”
As the current labour force tightens beyond predictions, the reality is that companies may need to revisit their salary budgets for the year. Whether you’re recruiting new talent or responding to turnover, the cost will likely be higher than anticipated.
The silver lining is that salary, though still a top motivator for employees and job seekers, has fallen second to another key influencer: worklife balance - and the benefits that improve it.
Benefits Become The Ace Card
Since the pandemic, there have been significant shifts in what employees value within their workplace and employers. Employees are now prioritizing work-life balance over salary.
The ADP survey asked Canadians what they looked for in a new role and found:
32% of working Canadians said an organization that respects their work-life balance is most important (This number jumps to 39% for remote workers and 42% for workers ages 35-54)
25% said they are looking for a better salary
When asked why employed Canadians had transitioned to a new position recently, the reasons were:
Personal life changes (33%)
Need to reduce their workload and stress (29%)
Desire for more flexible hours (28%)
Where there is a gap, there is an opportunity. As companies rescope salary budgets behind finance doors, they should consider what benefits could be low hanging fruit. The survey revealed that 9-out-of-10 remote workers want to continue working remotely some or all days during the week. Ensuring that your company offers remote or hybrid options is essential to retention and recruitment going forward. Furthermore, offering remote options widens your candidate pool for recruitment, giving you a volume advantage over localized competitors.
Still on the nose of worklife balance, flex hours and additional paid time offer have become huge levers for attraction and retention. These are all benefits that could help curve the rise of salaries while still helping you remain competitive. Read more about the most in-demand benefits in our previous article.
Our take
During the pandemic’s peak, employment rates plummeted and salary freezes were abundant. We’re happy to see the economy bouncing back - as in the long run this will help strengthen spending and revenue across the board. However, the growing pains to get there cannot be overlooked.
This is a moment in time where companies stand to lose their top talent if they’re not careful. Salaries are rising and competitors are sliding into your employees’ DMs with offers that turn heads. If you can’t compete on a salary basis right now, make sure you are leaning into their new top-priority: worklife balance. Employees who feel their current companies are respecting their worklife balance will be less likely to jump at a flashy number. Worklife balance starts with employers asking and paying attention to the stress levels of employees. Do you know what the needs are of your employees? Do you know what is causing them stress? From what we’ve heard, most companies are not asking these questions. If you haven’t, this would be a good starting point. Health and personal wellness needs to be part of your culture, and companies who are taking action and supporting employees will have a greater chance of retaining their people.
The same notion rings true for recruitment. If your company’s transition to the new normal includes forcing employees to return to the office full-time, it will be incredibly difficult for you to attract new candidates, even with a high salary. While people are excited to collaborate with coworkers in-person again, they’ve realized the massive benefits of remote work, some of which are hard to put a price on (like time with family). So as your marketing manager would say, know your audience - and adapt your new normal to their new priorities to stay competitive.
At Ari Agency & Ari Executive, we’re committed to helping organizations find (and attract) their greatest hires. We specialize in the most in-demand talent across digital, marketing, and innovation-focused functions including executive leaders. Check out our recent launch of Ari Executive that focuses on future-ready leadership and digital transformation. Contact us today to learn more about how we can help you improve your talent acquisition strategies and find your next all-star.
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