Emerging labor market trends for 2023

Yes, it is true, there is a lot of talk about Covid-19 and the pandemic times we lived through when it comes to the labor landscape, but how could we…

Yes, it is true, there is a lot of talk about Covid-19 and the pandemic times we lived through when it comes to the labor landscape, but how could we not? The pandemic changed our lives and how we work forever. So, we can say with certainty that Covid had a profound impact on the future of the labor market, especially regarding the work dynamics, employee expectations, and labor agreements.

But, although this topic is still evolving, let’s try to understand what trends will shape 2023 and the overall labor market.

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Remote Work and Hybrid work

Three years ago, people who were part of the tourism and food service industry were the most affected by the implementation of remote work, but although human beings are somewhat uncomfortable with change, eventually they have to adapt, and this is what has happened, many industries adapted and prospered; so much so, that the established 9 to 5 work routine was disrupted, as working from home became the new normal.

Gallup projects that about 75% of remote workers will be hybrid or fully remote in the long term. This projection was backed up by other different studies carried out by researchers from Stanford University, the University of Chicago, and the Instituto Tecnológico Autónomo de México, which state that enabling remote work is crucial to retaining talent since, as they concluded throughout many experiences, hybrid work boosted employee satisfaction and productivity and reduced attrition by 35%.

Lina María Correa, Director of Talent Solutions, ManpowerGroup, explained: “While there are conflicting views on hybrid and remote work, this, which began as a contingency measure during the Covid-19 pandemic, has been widely adopted by society. It will continue to strengthen as a predominant trend in 2023, as it has already been seen to bring productivity benefits, office cost savings, and improved quality of life to employees.

New labor market policies

The growing instability in the global economic climate, along with rising unemployment rates and a diminishing worker income share globally, has heightened the demand for labor market policy. Since the beginning of the COVID-19 epidemic to the end of 2021, the World Bank’s Social Protection and Jobs Policy Inventory has recorded 5,633 government labor markets policies such as wage subsidies, cash transfers, training, unemployment benefits, and financial responsibilities, among others.

The new labor market policies encompass several measures that aim to improve employment opportunities and working conditions. These actions focus on the emotional and occupational well-being of workers, it is no longer just a case of whether they perform perfectly in their field of work, they should also be happy and feel good in their job to ensure higher retention rates.

So, what measures have been taken to address this topic?

  • Salary raise.
  • Promote flexible work arrangements where hybrid work is possible.
  • Provide job security and unemployment benefits.
  • Support training and education programs for employees.
  • Implementing equal pay for men and women.
  • Promote an environment free of discrimination and harassment.
  • Offering benefits related to the emotional wage.
  • Support and facilitate work-life balance.

We have to acknowledge that these norms or labor policies are not fully complied with in many places. As recently as 2021, Mexico found a series of employment agencies that did not comply with the regulations. They were hiring and employing without respecting workers’ rights and without paying taxes and other mandatory contributions, which led the government to completely ban the sector instead of taking measures to curb dishonest employment agencies.

In 2023, it will be important to focus on giving greater attention to the effective enforcement of labor market policies that protect all forms of labor.

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Diversity, equity, and inclusion actions

Diversity, equality, and inclusion (DEI) are three concepts that are being placed at the core of businesses. Due to social, corporate, and government demands, companies are investing in developing more diverse, egalitarian, and inclusive environments.

Businesses that support DEI perform better in terms of responding to problems, attracting top personnel, and meeting the demands of various consumer bases. Therefore, it’s notable how more companies are analyzing how to include diversity, equity, and inclusion in their policies and employment procedures.

In a recent analysis on this topic, Mckinsey & company pointed out that companies desiring to build an inclusive workplace needed to invest in five areas of action:

  1. Ensure that a varied range of talent is represented.
  2. Improve leadership accountability and capability.
  3. Be fair and truthful, allowing for equal opportunity.
  4. Encourage transparency while addressing microaggressions, bigotry, and discrimination.
  5. Encourage belonging via unambiguous support for all forms of diversity.

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Better leadership to hold resignation

Both times and people have changed over the years, and many professionals won’t think twice about quitting their jobs if they don’t feel comfortable, fulfilled, and happy. Therefore, retention has become a significant challenge that leaders need to address to ensure the functioning of the business and lower staff turnover.

Nowadays, leaders are not only in charge of managing different processes and ensuring team performance, but they are also responsible for supporting their team and providing an environment where they can grow and feel fulfilled. Naturally, these are not easy tasks to handle, so leaders need specific skills and training to embrace these leading positions and the challenges associated with managing a team.

Burnout is a significant and constant risk in the workplace, especially among younger Gen Z professionals in their 20s. A survey of 30,000 workers conducted by Microsoft found that 5% of Gen Z workers are considering leaving their jobs. In the face of this trend, it is critical to make a deep analysis and changes in corporate management to improve leadership.

Well-being and emotional wage

According to Randstad’s Employer Brand Research 2021 report, although money is still the first factor in the list of priorities when choosing a job in Spain, many, especially since the beginning of the pandemic, have begun to pay more attention to the so-called “emotional wage”, that is, the one that depends on mental, personal and family health, which consequently affects work.

It is valuable to have a good salary, but is losing mental health worth any amount of money? For a lot of people, it is not. The labor salary is about achieving an emotional balance between personal life and work resulting in a mutual and shared benefit between the company and the worker.

Manuel Villalón, co-founder of opensalud explains that “Having adequate mental health is key to increasing productivity, improving physical and mental health, and maintaining a positive mind. Workers spend more than 30% of the day at work and therefore, it is increasingly important to be at ease in the work environment”.

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