In January this year, Eloise and I stuck our necks out and made 10 predictions related to the UK workforce. We promised to revisit these at the end of the year to see how accurate our crystal ball gazing had been, and – well, we didn’t exactly knock it out of the park, to mix our metaphors. Our score at full-time was 4-6 which means we definitely have room to do better next year and to that end, we’ll be publishing our 2023 predictions early in January. In the meantime, read on to see where we read the tea leaves well, and where we didn’t.
- Despite a huge focus on D&I reporting in the UK in 2022, ethnicity pay gap reporting still won’t get the attention that it should, with no draft regulations forthcoming.
This seems to have been largely born out in the UK. Many more forward-thinking companies have continued to publish their ethnic pay gaps on a voluntary basis, in the belief that this improved level of transparency will help create momentum for change. The FCA also published new listing rules aimed at improving board-level diversity disclosures. But in terms of formal legislation related to ethnic pay gap reporting, this was not forthcoming, 1-0. - Momentum from COP26 will drive investors to pressure Boards to incentivise their CEOs to work towards Net Zero. There will be at least one significant vote (at least 20 per cent against) on CEO pay in the FTSE 100 because the carbon reduction incentive criteria proposed are not sufficiently robust.
Well, this one feels like we were right in spirit, but wrong in the specifics or as our colleague and head of reward consulting Chris Barnes said “I think you were just a bit ahead of the market.” Clearly, investors are ramping up pressure on companies around their net zero obligations, and the link between CEO pay and climate targets is one route to this. A number of investors are actively signalling they will become more activist on this point next year (see this article for a good mid-year summary, including a link to some KPMG research) but if we’re holding ourselves to the specifics, this prediction was a miss for us, 1-1. - HR functions will see their remit extend to cover individuals working further down the labour supply chain, and an increase in ‘obligations’ to this workforce.
We decided to take this one as a win. Whilst we don’t have any significant data to present on this point, many of our clients are tuning in to the workforce experience within their broader supply chains and ramping up their focus on the modern slavery, 2-1. - Cryptocurrency is becoming increasingly mainstream. In 2022 we will see a major organisation in the UK offer cryptocurrency as an alternative to equity for long-term incentivisation.
This one we have to put down as a significant miss. It was always a bit of a punt (some might say a bit like crypto in general!) but with the well-publicised woes of various currencies, tokens and exchanges, predicting that we were all going to get paid in bitcoin suggests we (well, Tim..) was getting a bit carried away, 2-2. - As the ‘Great Resignation’ trend continues, and the various forces acting on labour availability in the UK continue to bite, the overall UK job vacancy rate will break the 5 per cent barrier before 2022 is out.
According to Statista the job vacancy rate this year peaked at around 4.3 per cent, so again we missed that prediction. The ONS stated that job vacancies fell by 3.6 per cent between July and September, resulting in three months of steady decline. That said, the ONS reported that July to September 2022 vacancies were 450,000 (56.6 per cent) above the January to March 2020 pre-coronavirus (COVID-19) level, and nearly 117,000 (10.3 per cent) above the level of a year ago, contributing to a very tight labour market with record low numbers of unemployed people per vacancy. It remains to be seen whether recessionary headwinds will reduce pressure on the vacancy rate, 2-3. - Building on their momentum in 2021, Microsoft will move decisively into the recruitment technology space in 2022.
Linked to vacancy rate, recruitment has continued to be an area of focus for most organisations this year (although there are some early signs in, for example, the tech sector, of an abrupt pull back from hiring and recruitment teams). Microsoft has continued to invest heavily in their Employee Experience platform Viva, expanding further into goal setting, listening, leadership engagement, communication and connections. But unfortunately for us, not directly in recruitment software (as far as we know) so that’s another miss, 2-4. - The workforce will become more fluid in 2022, and may be made up of a core employee base which can be flexed-up should demand require it, but also flexed back down. Uptake of the four-day week will increase, as will the provision of generous work-from-anywhere policies.
Despite the various changes in tack around IR35, our sense is that contingent workers are as core to most large organisations’ workforce strategy as ever, with one survey finding that over 80 per cent of executives reporting expansion in leveraging contingent, seasonal, intermittent or consultant employees. The announcement of the large scale 4-day week pilot also provided additional momentum to this – and preliminary results are looking positive. For example, productivity has improved for nearly half of the companies (34 per cent said that productivity has “improved slightly,” and 15 per cent say it has “improved significantly”) while many (46 per cent) think it has stayed the same, despite everyone working one day per week less. 86 per cent of respondents said that at this point in the trial, they would be “extremely likely” and/or “likely” to consider the idea of retaining a four-day week when the pilot ends - So we’re banking this one, 3-4. - The division between companies preferring staff to be physically in the office, and those being more comfortable with remote working will continue, with no clear winner in 2022.
Again, we think this is largely how the debate is playing out. We’re still seeing some organisations or sectors strongly pushing for employees to be back in the office (See Elon Musk’s well publicised instructions on this when he acquired Twitter). We’re also seeing other organisations taking the opposite view, or finding out that getting staff back into the office full time is not always so easy (again, see Elon Musk’s softening on this policy). Microsoft’s latest research coined the term ‘productivity paranoia’ to describe the split they were seeing in their data between senior leaders who on average are much more pro-office, and everyone else, who seem to prefer flexibility. Another win, 4-4. - Companies will begin to address the inconsistency in pay created by those moving out of London, yet still paid London weighting. The London weighting will begin to unwind.
Our reward team tell us they don’t think this one has held true, as despite some increase in home-based contracts, most people are still tied to an office location and therefore we will continue to see location premiums with London being the highest of those in the UK. If anything (and this is purely anecdotal) we are starting to see companies pay London salaries for those based remotely in other locations. This is an area we would most love to hear your views on, 4-5. - Action on ‘Furlough Fraud’ will intensify and companies will be forced to defend their actions through the first and subsequent lockdowns.
HMRC’s £100 million Taxpayer Protection Taskforce of 1,200 HMRC staff was set up to combat fraud, and targeted to recover up to £1.5 billion from fraudulent or incorrect payments by 5 April 2023. Our expectation, of a proactive and targeted campaign on CJRS claims to test the calculation process for inaccuracies, hasn’t happened. Our experience is that the bar for ‘furlough fraud’ has been set very high, including action against claimants that were part of organised crime gangs or where employers asked workers to work during periods of furlough, 4-6.
So, as we close out another calendar year, many of our predictions for 2022 weren’t quite on the mark. However, I think we can all agree the last 12 months since the start of year have been a bit of a whirlwind and highly unpredictable - it will make forecasting the next 12 months a tricky challenge too, but one we’re going to give a good go! So do keep an eye out for our 2023 HR predictions in January.
Hope you all have a wonderful time over the holidays and see you all in the new year.
