The labor market has become the public market for talent
The explosion of resignations by workers over the past three years could be the answer.
Many business leaders were surprised by the personnel costs in the first quarter of this year. The increases are significantly above inflation, affecting margins at a time of constrained demand. IBGE data indicate that, in the quarter from December 2022 to February 2023, the wage bill had a real increase of 7.5% when compared to the same quarter ended in February 2022.
There are several explanations for this, the 2022 collective bargaining negotiations being the most used. It is a fact that many base dates coincided with the peak of accumulated inflation and that repositions of 9% to 10% were common, with inflation having a strong reduction soon afterwards. However, there is something structural that deserves attention.
The transformation of the market after the Black Death and Covid
In the 14th century, the Black Death ravaged Europe, with estimated deaths of up to a third of the population. In an agricultural and feudal continent, the disappearance of labor stimulated new work relationships, which lasted in the following centuries. From a scenario of vassalage and servitude, the class of “employees” emerged, remunerated by wages, choosing where they would work.
Covid brought 4 important movements for employment in the 21st century: the closure of society ( lockdown ), government support, especially for lower classes ( Auxílio Brasil ), remote work (home office ), accelerated digitalization, and a very high level of job change ( great resignation ).
The “lockdowns” took many people out of the job market, temporarily or permanently. In sectors such as essential retail, the exit was temporary, but in entertainment and hospitality, there were many months of reduced activity. As a result, professionals working in these sectors had to look for other job opportunities in order to maintain their financial condition. As a result, upon the return of various activities, there were no qualified people to work, raising (re)hiring wages.
At the same time, those professionals who were dissatisfied with their activities, but who received the Auxílio Brasil, could wait for better job options upon their return. Better options mean not only wages but also better health insurance coverage, with rising costs.
Another group of professionals found themselves working from home and, after the initial accommodation, began to rethink their daily routine, the effort of commuting, the work environment. In some sectors, especially those linked to the digitalization of the economy (technology, data, infrastructure), the lack of resources to cope with the growth in demand was notorious. The home office facilitated virtual work interviews and, due to the lack of social relationships, reduced employee engagement with colleagues, a relevant factor for retaining professionals.
Finally, many professionals have awakened to “entrepreneurship”, whether offering their services on temporary work sites or directly to companies outside Brazil, or living partially from their passions, for example, restoring furniture and advertising on sites like Etsy. .
The costs of the great resignation
This scenario accelerated the change of jobs, the so-called “great resignation”, in a way rarely seen in low-growth economies. If in 2019 we had an average of 250,000 resignations per month, in 2020 the number exceeded 500,000 monthly requests. With each job change, a wage gain for the employee, but a future impact for the employer.
In addition, in 2021 and 2022 companies began to reflect on the impact that employee departures had on their business and began to reassess their benefit policies, whether monetary or improving the environment in general, all of which impacted costs of guys. Among the measures implemented, there was the protection of internal talent, with active or reactive salary increases to retain older employees, in some cases simply to match newcomers.
All of this movement was especially felt in the first quarter of 2023, as layoffs reduced enormously and companies found themselves with complete structures, salaries and benefits adjusted upwards and high collective bargaining. All this combined with stable revenues or with small growth, in addition to other inflationary pressures.
A new way of thinking about talent search and development
The lack of talent or the very high cost of rehiring has led several companies to rethink their talent search strategy. Criteria that were previously mandatory, such as language and even higher education, were reassessed in light of the specific needs of the vacancies. Added to this need was the opportunity to increase diversity in companies, focusing not only on gender but also on racial or social criteria.
Companies realized that, for the most part, they demanded (and paid for) unnecessary knowledge, especially if we think about the speed with which the business world is changing today. A look at constant training for the workforce, in addition to reducing initial hiring costs, can lead to greater employee loyalty and, of course, an increase in workforce efficiency.
This is a movement with no immediate impact on companies’ personnel costs, but it points to a promising path for the labor market, from a social and economic point of view.