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24 February 2024

Employers still call the shots when it comes to hiring

By Cliff Single

It is always interesting to look at the questions we get asked as a recruitment firm. Back in 2007 and the early part of 2008, these focused on issues on inflation, skills shortages and salary increases in the market. It was a candidate's market where employers were increasingly concerned about the rising cost of recruiting and retaining talent. Applicants were in a position to pick and choose, sometimes even using other offers as negotiating tools with their current employers.

This picture changed dramatically in late 2008 and 2009 as the credit crunch hit home. The real estate and construction sectors, which had driven so much of the upsurge in candidate demand during the boom, were hit particularly hard. Redundancies, uncertainty and hiring freezes decisively shifted the supply-demand equation in favour of the employer: a fact that they were quick to recognise and take advantage of. This change in sentiment was made very clear by the results of a client survey we conducted in early 2009: 74 per cent of respondents anticipated an employer's market in the year ahead and only 32 per cent expected any skills shortages.

The results of this new dynamics in the labour market were dramatic. After years of rapid increases, salary levels in the various Gulf markets either levelled off or fell; some companies felt empowered to impose unpaid leave and new contracts on existing employees; and those companies that were hiring felt able to be more selective and to negotiate further.

So where does that leave us now? The general (although not universal) consensus is that the worst of the credit crisis is over, yet the nature of the recovery remains uncertain. U, V, W and L-shaped recovery scenarios have all been postulated and discussed ad nauseam and there is a sense that we are currently in the lull after the global boom and bust, waiting to see what happens next and not wanting to make the wrong move.

It was against this background that we conducted our recent annual survey, the results of which were released earlier this week. The general sentiment that emerged from employers was one of cautious optimism with a more positive outlook in relation to hiring and staffing levels: only 11 per cent of respondents ruled out hiring in 2010 compared to 27 per cent last year.

What I found particularly interesting about the results, however, was the overwhelming expectation that it will remain very much an employer's market, with less than a quarter of companies surveyed predicting either skills shortages or salary increases. There remains a perception that there is still a large pool of regional talent that remains readily available. It seems that many employers believe that the 'war for talent' is firmly in the past. Indeed, a majority of the respondents felt that in 2010 the market would shift even further in favour of the employer.

I, for one, am sceptical and believe that this perception is going to change over the course of 2010 and into 2011, especially if the pace of regional growth surpasses expectations. The large majority of the redundancies were made in the first three quarters of 2009 and due to the residency rules governing expatriate labour, it is unlikely that these people will remain unemployed and available in the market for more then three or four months before moving on to new destinations or returning home. The events of 2009 also mean that the inflow of skilled jobseekers into the region is also likely to be reduced. In addition, there is also the question of those expatriates already within the region who may be looking at new destinations in Asia and the West, further shrinking the talent pool. Countries such as Canada and Australia, for example, continue to be attractive long-term migration destinations for many professionals in this part of the world.

If the return to growth in the region is gradual then employers' perceptions are less likely to be challenged this year. Although we are starting to see signs of skills shortages in certain areas, this is still at manageable levels. However, when growth accelerates the 'battle for talent' could return with a vengeance. 

- The author is Commercial Manager, BAC Middle East. The views expressed are his own.


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