In early 2020, the COVID-19 pandemic forced millions of workers to leave the office and find a way to work from home. More than 2.5 years later, many have still not returned.
But the rise in remote work is far from the only significant change to the workplace that we’ve seen over the past few years. In May 2021, employees began quitting their jobs in droves, in a trend that many called the Great Resignation. This quickly created a candidate-led market, where companies had to fight an increasingly difficult battle to attract and retain the best talent.
And the last decade also witnessed the birth of the gig economy, with hundreds of digital labour platforms popping up around the world. For a small fee, companies and individuals can now hire a freelancer to do anything from delivering a meal to translating a legal document in just a few clicks.
Naturally, this has led to a huge rise in the number of freelancers and independent workers in the workforce. It has also prompted repeated attempts to regulate the gig economy through local, national and international laws and directives over the past ten years.
The point is, the last few years have seen some of the most seismic changes to the global labour market that most of us have experienced in our lifetimes. And with 2022 coming to an end, all of us at CXC are curious to learn what the next year will bring to the world of work.
In this article, we will dive into 5 trends that will shape the labour market in 2023.
5 trends that will shape the labour market in 2023
1. Increasing regulations will add extra complexity to the gig economy
To meaningfully talk about the gig economy, we must split platform workers into two categories. The first are independent workers who perform ad hoc, often “unskilled” tasks, like delivering groceries, driving for a rideshare platform or providing cleaning services. The second group are freelancers who work through platforms to provide companies with more long-term, more in-depth support.
Speaking of the first category, these workers can be described as ‘low choice, no choice’ workers. Typically, they’re less well-paid than their permanent counterparts. They’re on precarious contracts for services when they should be under some form of the employment agreement.
For those workers, then, the legislation could provide some much-needed protection, as it effectively forces the platforms they work for to treat them as employees.
2. Remote work could create a divide between knowledge workers and deskless employees
The increased prevalence of remote work is often cited as one of the biggest changes to the way we work that we’ve seen over the past two years — although it’s a trend that was already on the rise even before the pandemic.
But, while there are certainly benefits to remote work for both employees and their employers, it doesn’t affect everyone equally. Around 80% of the global workforce is made up of deskless workers, who can’t perform their roles remotely.
In a way, it can be potentially an exclusionary thing, or it can create potentially a two-tier society between those that have remote work and those that do not have remote work.
You could make the argument, ‘Well, why don’t we just retrain or give those people that are deskless the ability to work remotely?’ But that isn’t an option with the way society is structurally set up at the moment. So in short, there is a two-tier society emerging.
And this divide may become even further entrenched the more remote work is seen as the norm for knowledge workers. As we move into 2023, organisations that employ both desk-based and deskless workers should take care to account for this divide and find ways to ensure their deskless workers feel valued and included in the company culture.
3. The global labour shortage will continue to impact the market
Labour shortages are another huge factor that’s currently impacting the market, particularly in industries like aviation, health and social care and construction. The main reason for these shortages is a demographic one:
Pretty much every western economy is experiencing a population decline. A smaller population means fewer workers, and fewer workers mean a labour shortage.
Of course, there are also structural factors at play:
That relates to how we’re educating our younger people and also educating or upskilling or not upskilling our older people that can do different jobs.
Happily, this does suggest that the problem could be solved — at least partially — by investing more in the right education for young people and training and upskilling for those already in work. But this is not a quick fix — which means we’ll continue to face shortages in 2023 and beyond.
4. The HR Tech bubble probably won’t burst… but it may begin to consolidate
HR professionals to do their jobs, we’ve seen an explosion in more employee-centred “work tech” tools as well.
It was a useful bubble because a lot of the applications have really good uses, but many platforms came onto the market at the same time doing similar things. The economic headwinds that many organisations are experiencing have burst that bubble. The funding regime and access to capital have changed considerably.
So what does this mean? Essentially, while the HR tech bubble may not be ready to completely burst in 2023, we’ll likely see some consolidation of the market in the next few years.
5. Millennial and Gen Z employees will shape the workplace of the future
A recent Deloitte survey found that 44% of millennials and 49% of Gen Z have made decisions about the organisations they’re willing to work for based on their personal ethics. And according to a recent Forbes article, work-life balance is a particular focus for Gen Z — and the 9–5, 40-hour work week no longer appeals. Some data also suggests that younger workers are gravitating towards gig work, perhaps in an attempt to maintain control over their schedules and achieve professional fulfilment on their own terms.
Clearly, these younger workers are coming into the workforce with very different expectations than those of their parents and grandparents. Gen Z and millennials often get a bad rap:
They are often unfairly maligned and criticised. There are a lot of stereotypes that seem to be in the popular discourse and the received and conventional wisdom.
Younger people in their twenties bring a degree of vitality. They bring a fresh perspective on things. They’re definitely much more concerned about social issues, around diversity, respect, good manners, and looking at different things to improve well-being instead of just focusing on outworking the competition.
So, younger workers are different from their Gen X and Baby Boomer counterparts — but that doesn’t have to be a bad thing
Want to start hiring globally in 2023?
Hiring international employees is no easy task — especially if you’re in the early stages of your global expansion. If you need some extra support with managing compliance risk, tax reporting and payroll for your overseas employees, CXC can help.
We have over 35 CXC offices and solutions in over 100 countries, and we’ll help you eliminate any unnecessary risk exposure through our network of labour law attorneys and HR specialists worldwide. Our experts understand the particularities of each country’s employment laws and payment customs — so you don’t have to.
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