The varying economic conditions create a tough road for employers to navigate. On one side there is both persistent inflation as well as layoffs. Countering that there is increased consumer spending and a 53-year low unemployment rate.
A study released on March 6, Employer Pulse Survey Report: 2023 Economic Outlook, from Littler, an employment and labor law practice, found that while employers are optimistic about their own business, they are concerned about broader economic conditions.
The majority of employers surveyed (76%) expressed a high level of confidence in the current state of their own businesses – and their upbeat assessment carries through to the year ahead, with 75% highly confident about the state of their businesses 12 months from now.
At the same time, however, respondents are worried about how the uncertain economic outlook and/or a potential economic downturn will impact their workforce management and planning. More than three-quarters (77%) of respondents expressed concern on that front – either to a large (22%) or moderate (55%) extent.
Technology industry respondents expressed more concern than any other sector, with 87% concerned to a large or moderate extent (30% and 57%, respectively) – results that come amid high-profile reports of layoffs and hiring freezes in the sector.
Healthcare and retail and hospitality respondents weren’t far behind, with 82% of both groups saying they were concerned to a large or moderate extent. Fewer manufacturing executives (70%) expressed such concern about economic conditions.
Caution in hiring, but layoffs are not yet widespread
While nearly a quarter of respondents (24%) say they have implemented workforce reductions/layoffs or are in the process of doing so, the more interesting finding may be the lack of layoffs: 6 in 10 respondents say they are not planning or even considering them, while 50% of respondents say they are either currently, planning on or considering growing their workforces.
The high percentage of employers avoiding layoffs could reflect lessons learned from the pandemic and a fiercely competitive talent market. “During the first few months of the initial COVID-19 outbreak, thousands of employers engaged in mass furloughs or layoffs due to business shutdowns,” said Terri M. Solomon, of Littler, in a statement. “Many employers have clear memories of being short-staffed and unable to hire up again quickly when businesses began to reopen in mid-2020.”
However, the survey data also reflects the prevalence of tech-sector layoffs in the headlines as 60% of tech industry respondents said their organizations have conducted, or are conducting, workforce reductions or layoffs. That compares to 29% in healthcare, 21% in retail and hospitality, and 19% in manufacturing. More tech industry respondents also say their organizations have instituted hiring freezes (29%, compared with 20% of all respondents).
With regard to company size, more large employers have conducted layoffs (36%) than their smaller counterparts (14%), as well as hiring freezes (28% versus 16%, respectively). Additionally, smaller businesses are more likely to increase their workforces (35% said they are currently looking or planning to do so, versus 28% of large companies).
The resulting picture is one of employers caught between the need for caution as they steer through economic headwinds and a need to retain talent and grow to position their businesses for future success. For instance, the vast majority of employers surveyed view both recruiting and retention (94%) and employee engagement (95%) as a medium or high priority for their organizations.