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As predicted several months ago, the pandemic has stayed with us for longer. In the extended term, in various areas of our lives, we are getting used to the 'new normal'. With the passage of time, it seems that the pandemic has not so much made fundamental changes in how the labour market works as accelerated certain trends that were predicted a few years ago.
PwC's report "Workforce of the future. The competing forces shaping 2030" in 2018 identified 5 megatrends shaping the labour market in the long term:
Accelerating pace of innovation in technology
Demographic changes related to the declining working age population
Accelerating urbanisation
Changes in the global distribution of power and negative social consequences in developed countries
Limited access to resources and climate change.
At first glance, we can see that the COVID-19 pandemic has greatly accelerated the development of technology and, consequently, employers are being hit by labour market constraints and the availability of suitable specialists. The rest of the trends we have to be observed in the long term, but the general direction does not seem to have reversed.
What has shaped the Polish labour market in 2021?
Technology. The incredible boom in tools that have helped us overnight to reformulate the way we do our jobs as individuals or run entire businesses remotely continues. From the initial proliferation of instant messaging allowing us to meet remotely, we have moved on to the revolutionary development of the e-commerce industry, unattended shop formats, tools allowing us to monitor and improve the efficiency of individual business processes.
The transformation of the business model of entities in the retail industry also involves changes in the human capital of the organisation. The progressive strengthening of new channels and innovative solutions in sales requires more extensive building of new competencies among employees. An innovative approach to sales requires having the specialists able to develop and implement solutions. It also demands care for the development of digital competencies among all employees, who will work with these new solutions or, having daily knowledge of the sales process, will be able to propose solutions building positive consumer experience in new sales channels.
War for talent. Pandemic has launched a wide range of remote working opportunities. This presents a number of chances and even more challenges. Thanks to a mental shift that has shown us that doing work doesn't have to be tied to a specific location, an office presence or regular face-to-face meetings, we are competing with the whole world in the war for talent.
Registered unemployment rate in Poland in the period November 2018 - November 2021
Source: own study based on the current data of the Central Statistical Office and Ministry of Labor and Social Policy
Despite initial expectations in 2020 indicating that the pandemic would be a strong reversal of the " employee market" trend, the anticipated uncertainty in the labour market and the rise in the unemployment rate were temporary. Currently, we are returning to a pre-pandemic " employee market". Due to the changes that have taken place in the way we do our work, where automation and digitalisation have become a necessity, the employee the market is looking for is a skilled person with new competences. Employers are once again having to fight for people in specialist positions, people with unique competencies in the labour market, ones that are necessary to create new solutions that respond to changing market and consumer expectations.
What can we expect in 2022?
In the rush to adapt to changing situations, flexibility, in the broad sense of the term, has gained importance, and this is expressed in the hybridisation of the way we work. This is why the so-called gig economy - the economy of sharing - continues to grow in importance. This phenomenon, which is of interest to companies and employees alike, is expressed on the labour market in the increasing prevalence of flexible forms of cooperation. Where the rigid framework set by an employment contract is no longer adequate, the resulting gap may be filled by other models of cooperation involving the freedom and independence of the employee. In the sharing economy, trust and the opinions of other users play a key role, which is why a professional approach to work is so important.
Naturally, we see the flexibility inherent in this way of working when we use home delivery of food and shopping or think of IT workers. However, the pandemic pulling workers away from open-space offices and from a familiar, time- and place-structured way of working has led to flexible working being an alternative for many professionals. The changes to personal taxation being introduced from 2022 will not be without impact.
At the same time, greater flexibility is a challenge for employers, because it involves the need to build an offer tailored for people working in a flexible manner. Dynamic changes on the part of the business and the demand for adequate human resources management is quite a challenge for HR departments.
According to PwC's "Future of Work and Skills Survey" conducted in 26 countries on a group of nearly 4,000 people, only about 28% of HR leaders strongly believe that HR in their organisation is able to effectively respond to the requirements of HR strategy. Even less, only 15% of business function leaders in these organisations share this perception.
The second element of the coming months is wage pressure. In 2022, at least two main elements will overlap with rising employment costs: inflation and changes in employment taxes. According to the CSO, consumer inflation in December 2021 was 8.6%, while wage growth was 11.2% y/y. The galloping increase in shelf prices naturally translates into rising salary expectations of employees. This phenomenon affects people in lower positions as well as middle and senior management. We cannot forget about changes in the taxation of salaries, resulting from the introduction of the Polish Deal. According to the government, the regulations are to be neutral for people earning up to PLN 12 800 per month. Nevertheless, it is above this amount that salaries of people who, from the business perspective, are the most sought-after on the labour market often rank.
Add to this the aforementioned return to the employee market, and the inevitable consequence will be rising salary pressure, which by overlapping several factors will particularly affect senior and specialist positions.
According to a survey conducted by PwC among a few hundred entrepreneurs who took part in our meetings on the changes related to the introduction of the Polish Deal to the binding legal regulations, more than 40% of Polish entrepreneurs and HR decision-makers admit that the effect of the tax changes will be a revision of salary budgets.
The Polish Deal is intended to stimulate the development of innovation in the Polish economy. The introduced solutions foresee the introduction of special tax reliefs. The proposed allowances are addressed to entrepreneurs investing in development, in particular of new products and automation and robotisation of their production. However, the potential tax benefits also include the issues of employment costs and remuneration of employees dealing with these tax-promoted areas of entrepreneurs' activity. Therefore, at least in these areas, employers will have the opportunity to have an influence on the negative effect of ongoing phenomena.
The final issue that will be coming back to us in the near future in a business context is corporate sustainability. In everyday life, we know these issues under the acronym ESG, which refers to environmental, social and corporate governance reporting. In the public mind, these issues have so far often been reduced solely to environmental matters. In the near future, this perspective should change.
One reason for this will be regulatory pressure in the 'S' area. On the one hand, it will result from the clarification of the understanding of the issues covered by the area of social impact through the issuance of the so-called Social Taxonomy. Additionally, at the national and European level, we observe a number of regulatory initiatives concerning issues related to this area, e.g. the matter of equal remuneration of women and men, participation of women in company authorities or leave entitlements related to maternity introduced by the so-called work-life balance directive.
A second dimension that will give prominence to issues in the social impact area of organisations is that companies are beginning to recognise the tangible business benefits of taking action in the social area. In particular, this relates to the closely related social issues of equality and inclusive organisational culture.
For example, Eurofound research shows that employment in the EU has increased significantly over the past 20 years, with ⅔ of the 20 million new jobs created being filled by women. In addition, middle-aged (30-49 years) and older (50+ years) women accounted for the largest group among them.
It is a challenge to create a working environment that creates opportunities for the professional activation of groups that have been temporarily outside the labour market. The "reward" for this extra effort may be a broadening of the labour market, reduction of recruitment problems and better employer value proposition.
In the future what would your ideal work environment look like?
Base: 18,541, all respondents excluding students, who said they could work remotely.
Source: “Hopes and fears 2021” PwC Report
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