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How is the Cost of Living Crisis Impacting Recruitment of Temporary Labour?

23 November 2022

In the United Kingdom, the cost of living has been rising fast since early 2021. Consumers' affordability of goods and services was affected by the annual rate of inflation, which reached 9.9% in August 2022, close to a 40-year high.

A comparison of the Consumer Price Index (CPI) in August 2022 with August 2021 showed a 9.9% increase. One factor driving rising inflation has been strong consumer demand and supply chain bottlenecks as well as the War in Ukraine and Energy prices.

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How is the cost of living crisis affecting recruitment and wages?

According to a recent study, 48% of workers did not receive a pay raise in 2021 and of those who did, 42% received a raise of 5% or less, well below inflation rates. They also discovered that 17% of workers were forced to take on second jobs to make ends meet, and this figure rises to 20% of essential workers. They estimate that over 700,000 caregivers will leave the industry in the coming year.

Are people taking 2nd and 3rd jobs to pay bills?

Families are truly struggling with the cost of living and most organisations seem to be ‘focussing on the bottom line’ instead of helping their employees with pay rises in line with inflation. A survey by CV library found that most employees (around 75.1%) are now considering a new job, as well as second or 3rd jobs solely because of the rising cost of living and inflation. Furthermore, new vacancies advertised are just not keeping up with inflation, and many industries are in fact offering lower wages than the previous year.

A lot of workers are also taking up temporary work, with London workers more likely to do so with nearly a fifth (17%), while 12% are in North West England, 11% in the South East and 10% in the West Midlands. One in ten (11%) of those who are already doing temporary work or plan to do so say the ability to choose the days and hours they work is their top reason. Meanwhile, 6% say the pay they get as a temporary worker is higher than they would get in a comparable permanent position, and that this is the primary reason they do temporary work.

Labour shortages, low wages & low employee satisfaction

Many industries are currently struggling to recruit, particularly in hospitality, retail, aviation, construction, transport and healthcare. Many reasons have been offered as the causes of labour shortages. According to Chris Giles from the Financial Times, the labour shortages are “the most urgent problem facing the UK economy”. In total, there are 900,000 fewer workers today than the Bank of England expected before Covid struck.

Its governor, Andrew Bailey, has warned that labour shortages are driving up prices and wages (as employers feel obliged to concede to pay demands), thus contributing to his struggle to bring down inflation.

Many people have left jobs due to burnout, but many more have left or refused to apply for jobs in the above industries due to low pay and a lack of company incentives and perks. As a result, it is critical that organisations review their pay packages in light of the cost of living crisis, as this is clearly one of the primary causes of labour shortages and people refusing to take on low-wage roles in the long term.


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