How a looming recession is forcing businesses to reassess their staffing

Is a decline in permanent placements a signal that businesses are changing their workforce strategies? In November of 2022, reports began to...

Indeed Flex

20 January 2023

4 min read

Is a decline in permanent placements a signal that businesses are changing their workforce strategies?

In November of 2022, reports began to show that permanent hiring had declined for the first time in 20 months. This was followed by the softest increase in 21 months – and then another month of declining numbers. Driven by a combination of employer caution and ongoing candidate shortages, these numbers have caused difficulties in many recruitment circles. However, It may not as bad as predicted. While permanent placements have declined, temporary staffing has continued to grow – suggesting that businesses may adapt to the recession by embracing a more blended workforce.

Strategic changes are long overdue

While the cost of living crisis and recession are hot topics, they are just the latest manifestation of familiar challenges for procurement teams. Since COVID-19 first hit, it has been clear that the traditional staffing model is no longer fit for purpose; it lacks flexibility, efficiency and it puts both employers and employees in a weaker position. As far back as 2020, surveys suggested less than half of all executives believed their workforce was fit for the future of work. While the pandemic and staffing shortages have had some effect, the coming recession may finally tip the scales in favor of alternative models.

Why a blended workforce is the answer

The concept of a blended workforce is simple: by combining a core full-time workforce with a pool of flexible temporary staff, employers can keep their costs down while increasing agility and accessing vital skills at short notice. 

Here are three reasons that model will benefit businesses during a recession:

1. Temporary talent pools are growing

The number of candidates available to take on full-time roles continues to shrink, and those that are available continue to demand more. But there is a growing demand for temporary work. 

Half of workers (52%) are already doing or planning to do temporary work, while 32% are planning to do temporary work on top of their existing job, to deal with rising costs. That’s on top of the 19% who already do temporary work – 11% of whom plan to take on a few more shifts and 8% intend to do a lot more shifts. As a result, temporary staffing offers a much bigger pool of available talent. Accessing this pool will help organizations adapt to economic turmoil, responding to short-term, short-notice staffing needs with genuine agility.

2. Workers are looking elsewhere

With consumer prices rising, workers want more from their employers. By June 2022, more than 30% of workers were considering quitting their jobs for better pay. With conditions worsening, that number is only likely to have gone up. Employers are struggling to hire and retain. What happens if you are suddenly left with a diminished workforce and no way to replace them? Especially given that understaffing is cited by 75% of employees as their reason for dissatisfaction in the workplace. A blended workforce will prepare organizations for such events. Even if you are suddenly short-staffed, you will be able to adapt and fill rotas without shutting venues or sacrificing revenue. 

3. The recession will be long

Some businesses appear to see the recession as a brief speed bump, but this may prove to be wishful thinking. According to the World Bank Group, the odds of a recession in Europe, the United States, and China are significant and increasing. That means hiring freezes may be band-aid solutions that hold businesses back in the long run. A better response may be investing in temporary staffing to drive growth without committing more than they can afford financially.

A recent Indeed Flex survey found that 55% of employers plan to use temporary staffing to reduce costs during hiring freezes. Ultimately, this will also prepare them for the end of the recession; building the processes necessary to make a blended workforce thrive can take time, and the sooner organizations start the sooner they will start to see the benefits.