Change has been the only constant over the last two years. With that in mind, what can we expect to see in the UK, French and German workplaces in 2022? If 2020 was about crisis response amid a global pandemic, 2021 has been about adapting to challenges ranging from employee burnout and remote work to hiring and retention in a job market defined by labour shortages and unprecedented employee turnover in all three countries.
Looking ahead, we believe 2022 will centre on navigating the new normal and employees’ elevated power in this tight labour market. Companies that succeed will be those who embrace the opportunities to rethink old ways of hiring, employee engagement and how business is done.
At Glassdoor, we have a unique window into the experiences of employees and employers. Our insights draw from a rich database of millions of employee reviews, salaries, applications and conversations, which can help distil how employees are feeling and acting. At a time when European job markets and workplaces are undergoing unprecedented change, we present this report to highlight those emerging trends we believe will come to the fore in the UK, France and Germany in 2022.
Trend 1: Hiring won’t be easy in 2022
Labour shortages defined the 2021 job market. As customer demand roared back to life, employers faced acute hiring challenges as workers trickled back into the labour force. The increased competition for workers has made it exceptionally difficult to both hire and retain employees. Employers may be ready to write off the tight 2021 labour market as a pandemic-era anomaly, but they shouldn’t. Instead, 2021 should be a template for what to expect in 2022.
Unlike past recessions, unemployment has stayed low throughout the COVID-19 pandemic, largely thanks to the furlough schemes implemented by the UK, French and German governments, which compensated workers a portion of their pre-pandemic wages. This kept the pool of available workers relatively small throughout the pandemic. The chart below shows the number of unemployed people divided by the number of job vacancies in the UK, German, and French labour markets, showing that there were 1.3 UK, 8.4 French and 2.4 German unemployed workers for every job vacancy as of the latest reporting. Although the French labour market has traditionally been more rigid than either the German or the UK markets, all three markets are historically tight. When the quicker-than-expected rebound in worker demand arrived in spring 2021, the pandemic-wary workforce caused the ratio of job openings to available workers to near or even drop below pre-pandemic levels.
At this point, it’s unlikely that we will return anytime soon to an earlier point in the recovery where it’s easy to hire. Instead, we are now in the expansion phase of the recovery where employers should expect a slow grind of trying to pull workers from the sidelines back into the labour force rather than snatching up available laid-off workers.
What made hiring difficult in 2021 is unlikely to disappear in 2022: (1) A lingering pandemic that will not disappear overnight, (2) reduced availability of retirees, and (3) a quicker-than-expected recovery in customer demand. The imbalance between labour supply and demand is large enough that even a moderate improvement in conditions would not be enough to make it easy to hire again. There simply is no silver bullet to fix labour shortages. Even previously touted changes such as withdrawing the furlough programmes or implementing new visa programmes are unlikely to make a sufficiently large dent to return the job market to a period of easy hiring. Combined with structural shifts shrinking the workforce like an ageing population or disruptions to UK immigration post-Brexit, it will be just as hard to hire and retain workers in 2022 as it was in 2021.
So what lessons of 2021 should employers take into 2022? First, incentives matter. If difficulty in hiring will persist for years, then employers need to think long-term—for example, shifting from offering temporary hiring bonuses to permanent wage increases. Second, not only is it difficult to hire, but quits are on the rise. A record number of UK workers are leaving their jobs, and the rest of Europe is likely to follow. Employee engagement, therefore, is critical in retaining the workers that employers do have. Last, the late 2010s taught us that employers who think creatively can unlock new talent pools by seeking out overlooked workers like remote workers, recent retirees, workers with previous experience in a different field, workers with a disability or impairment or those previously incarcerated. All-in-all, employers should expect a long period of tight labour markets and it will be the most creative employers who are best able to hire and retain in this environment.
Trend 2: Remote work will boost access to top talent but at a higher price point
Before the pandemic, remote work was a secret superpower for employers who could offer it, enabling access to a wider talent pool, especially for workers in traditionally overlooked regions. But the pandemic released the remote work genie out of the bottle: it’s now an almost-necessary tool for many employers, which in turn has diluted the recruiting advantage remote employers previously had. Now, many more employers are looking at how to expand their talent pools through remote hiring.
This increased competition means employers need to provide more attractive offers, with many turning to boosting salaries. But this need to raise salaries runs headlong into the location-based pay policies many employers have established. For instance, London-based employees in the UK and Paris-based workers in France have historically seen much higher wages than their compatriots located outside these cities . As competition for talent — remote or not — increases, will employers stick to their guns? If Amazon and Google are competing for the same software engineer in a lower cost-of-labour market, will they insist on paying a location-adjusted salary or will they offer a higher salary to prevent top talent from going to a competitor?
This also has implications even for employers not offering remote work. Workers who may previously have been plentiful locally now may be swept up by the wave of remote opportunities, which tend to be at larger companies that can afford to offer higher salaries. Just as many smaller cities and villages experienced a surge in housing prices with the influx of cash-rich remote workers during the pandemic, the labour market could experience a similar phenomenon, with local employers having to pay more to compete with major companies coming in to scoop up local talent as remote workers.
Already, employers are seeing an increase in competition from companies hiring remotely. Based on Glassdoor data, 11.1 percent of UK employers hiring locally between January and October 2021 were competing against remote jobs, up more than eightfold from 1.4 percent in the same time period in 2019. Similar trends can be observed in France, where 5.3 percent of employers in each country hiring locally in 2021 were competing against remote jobs, up from 0.4 percent two years prior, and Germany, where 15.2 percent of employers were competing with remote jobs, up from 6.3 percent in 2020 (2019 data is not available).
While the consequences of this increased competition will take time to play out as remote work spreads, two tangible implications should start to show up in 2022: First, more employers (especially in tech) will walk back or reduce location-based pay adjustments for remote-friendly work as they compete against other employers for top talent, meaning pay raises for workers outside of London, Paris or Munich. Second, local employers are likely to see rising competition for workers in jobs that can be done remotely, as far-flung employers compete more aggressively for local workers.
Trend 3: Employers will prioritize DE&I action and accountability
In 2020, we saw a swell in calls from employees, job seekers and society at large demanding substantive action from companies on diversity, equity and inclusion (DE&I). While many companies set ambitious goals in response, DE&I efforts now stand at an inflection point as we enter 2022, as employees increasingly expect to see progress from companies and the goodwill engendered by goal-setting or pledges begins to wear thin.
UK companies with more than 250 employees must already report their gender pay gap information, with many choosing to add additional information on why their gender pay gap exists or what actions they’re planning to take to rectify it. Though no other demographic reporting is mandated by law, many companies are choosing to do so voluntarily. Big tech companies like Apple were early leaders in reporting out workforce demographics, and now, we’re seeing more companies headed in that direction. 2021 saw Google’s first workforce demographics report outside the US. Major companies like AstraZeneca and Sainsbury’s have begun sharing DE&I reports for the first time. And more companies, Glassdoor included, are delving deeper, offering both statistics on workforce demographics along with goals and progress.
While employee dissatisfaction may make some employers more hesitant to share DE&I metrics and goals, increased DE&I transparency is a powerful way to highlight progress and incentivise accountability. The shift from transparency to accountability can also help “level up” the conversation. For example, conversations around the gender pay gap have become significantly more sophisticated over the last decade, as more employers and workers become aware of nuances such as the differences between unadjusted and adjusted pay gaps, disparate impacts on women of color, and the ways unconscious bias can feed into unintended discrimination. While transparency alone cannot solve challenges to DE&I, heightened transparency can deepen the conversation, helping to establish, analyse and track gaps while also providing the tools to discuss and learn more about challenges and solutions.
This desire for more transparency is shared by employees and job seekers. A September 2020 Glassdoor survey shows that nearly 3 in 4 UK employees and job seekers (72 percent) report a diverse workforce is an important factor when evaluating companies and job offers. Companies that don’t invest in DE&I thus risk losing out to competitors—both in terms of failing to communicate commitments on DE&I to employees and job seekers and in developing their ability to meaningfully engage in conversations on solutions. Ultimately, company investments in DE&I efforts are both a social good and a critical part of a company’s workforce management strategy—a particularly salient consideration at a time when finding and retaining talent is so difficult.
Trend 4: Workplace community will expand beyond company walls
The employee-employer bond has intensified over the last decade. Employers increasingly compete for talent by emphasizing employee engagement and the workplace experience. The pandemic, however, has made staying connected with increasingly dispersed coworkers and peers more difficult. Many companies previously leaned on the physical office to facilitate this sense of community, offering attractive in-office perks. But what most employees miss now is not the office. At a time when the flexibility offered by remote work is valuable for employees, maintaining and enhancing employee connection and community requires special attention from employers.
As the chart below demonstrates, discussions of physical aspects of the office have fallen since the onset of the COVID pandemic in the UK, France and Germany, while mentions of onboarding – an essential part of feeling like a part of a company – have grown in the UK and France. Similarly, recent Glassdoor research showed that mental health and wellbeing have grown more important in employee discussions, with mentions of both words more than doubling over the last few years in the UK.
One in four employees has felt less connected to company culture (26 percent) and their boss (25 percent) during the pandemic, according to a recent Glassdoor survey of UK workers. Younger workers are particularly feeling this loss, with 40 percent of employees aged 18-24 feeling less connected to company culture and 45 percent less connected to their boss. This desire for community stretches beyond the company, reaching others in the industry and profession. The advent of social media has enabled deeper connections with professionals from around the world. This is highlighted by the rapid growth of platforms like Fishbowl by Glassdoor, where the rate of new user growth has tripled during the pandemic.
As the pandemic drags into 2022 and more employees, especially new ones, navigate a remote or hybrid workplace, employees will increasingly turn to coworkers or industry peers to seek out community and get more transparency into their companies and industries. This means recognising that employees may seek out professional communities outside their employers, or ask their employers to do better in supporting them. Supporting, engaging and retaining employees in the new pandemic era will require being nimble, keeping a pulse on employee needs and responding to feedback in a quickly-changing environment.
While the pandemic is not over, 2021 provided the first glimpse into permanent shifts in the workforce and labour market that we’re facing. The tight labour market is likely to stay with us for some time, empowering employees to demand more from their employers. Employees will use their newfound power to seek out more information about their companies and their industries and use that information to push their employers to do better.
Employers have little control over what employees want. But they can get ahead of the curve by recognising that many employees are looking not just for a job, but for a career and a community. Whether it means investing in DE&I, offering career development opportunities or building community across company and home offices, in the new year it will be more important than ever to focus on employee engagement and the workplace experience.
These investments are critical to empowering employers as they navigate uncharted waters. While the public health situation will hopefully improve, the trajectory of the economy and labour market is uncertain. But it is clear that building a strong playbook for hiring, retention and fostering a more dynamic workplace culture will help companies better navigate turbulent times.