Inflation and the Job market
How inflation affects the job market
As of June 2022, Forbes lays India’s inflation rate at an incredibly high 7.01%. And so, employees have more expenses to deal with, whilst companies need to reduce expenditure to ensure they make a profit. These are issues that all companies face, no matter how large or small. So, how does inflation affect the job market, especially in India?
Before that, let’s understand what inflation is.
What is inflation?
In simple terms, inflation is the increase in the cost of purchasing goods and services over time. In other words, the value of money reduces. As such, businesses will need to either increase the rates they charge for their goods and services; or they will need to cut back on expenses to maintain the margins they require.
Inflation and Hiring
William Phillips, a New Zealand economist, hypothesised a correlation between unemployment and inflation. He observed that as inflation rose, unemployment reduced. Monster.com’s economist Giacomo Santangelo added to it when he said, “The problem that this creates is that to fight inflation, unemployment has to go up.”
Should companies be worried?
Not entirely. Unemployment will indeed need to increase as we combat inflation, but hiring doesn’t necessarily need to reduce. If you are a company looking to cut down on expenses, there are other ways to deal with it. Santangelo says, “Firms aren’t going to slow down hiring; they’re going to change the way they hire.” He predicts companies will start moving toward the ‘gig’ market - hiring part-time contractors rather than full-time employees. In that way, they can reduce expenses such as Health Insurance. Plus, they are often cheaper to hire than a full-time employee.
Looking out for part-time contractors requires a slightly different skill set than hiring permanent staff. And at times when you may be looking at many changes, it may be wise to consider partnering with an HR Recruitment company. CLIQHR specialises in contract recruitment, finding the best candidates for your company.
Will this change be overwhelming?
You may feel that this change would create many new obstacles for companies to overcome as they try to adapt to the new culture it creates. Yet, research shows that taking that step toward the gig market can be easier than expected.
Most of the workforce is already beginning to move in that direction. A recent survey found that 85% of the workforce has started, or is looking to start, increasing the amount of gig work they do. The main reason is inflation.
With a workforce open to contractual work and with expenses that reduce, it could be your best move to adopt changes to your hiring.
Inflation and Pay
Indeed, salaries have not increased as much as 7% since last year. Yet, expenses have risen by 7%. Therefore, it’s only natural that employees seek more compensation for their work. Although, Monster’s Future of Work report highlighted how “financial compensation beyond salary” and “fair wages” were what truly mattered for job seekers right now. So, companies must get creative in dealing with their workforce if they wish to hold on to them.
One of the best ways to cut expenses is to outsource. You could consider hiring remote teams in India - at an incredibly competitive cost, which may help you ride the wave of inflation that is to come. At CLIQHR, we have teams of dedicated, tried and tested recruiters who deliver on time, every time. If you are looking for an HR Recruitment Company to help with contract hiring, outsourcing or permanent recruitment, then CLIQHR may be worth considering. With a network of over 1,00,000 possible employees, we can tend to all your needs.
To know more about what we have to offer, reach out to us at www.cliqhr.com and connect with our team of experts.