Economic slowdown and coronavirus vs. the labor market
The coronavirus has an extremely strong impact on the economic situation in Poland, significantly deepening the economic slowdown in the country that has been observed for several months. How will the current situation affect the labor market? What conclusions can employers draw from it? Katarzyna Dąderewicz, Regional Director at the LeasingTeam employment agency, will talk about it.
Labour market before coronavirus
The fastest consequence of the economic slowdown for the labor market is a reduction in the number of jobs, which could already be seen last year. According to the data of the Central Statistical Office, at the end of the third quarter of 2019, the number of vacancies in entities of the national economy or their local units employing at least 1 person amounted to 148.6 thousand and was lower than at the end of the second quarter of 2019 by 3.2 thousand, i.e. by 2.1%. On the other hand, compared to the end of the third quarter of 2018, the number of vacancies was lower by 8.5 thousand, i.e. by 5.4%1
Does the above data mean the end of the employee’s market and wide access to specialists? Although the number of jobs is decreasing, it should be remembered that at the same time the demand for labor is not increasing. The economic activity of the Polish society is low. There is even talk of professional inactivity. This applies in particular to women, but also to young people2. According to Eurostat data, about 17% of Polish citizens aged 20-34 in 2018 were neither formally employed nor studying. This is one of the highest rates in the European Union. The proportion of young men who are not in education or employment was 9.6% compared to 23.5% of young women.
Although it can be assumed that the statistics are underestimated and some of the above-mentioned people work illegally, the Polish labour market is struggling with additional unfavourable factors, such as the ageing of the population and low fertility rate, as well as social programmes that do not encourage people to take up work. At the same time, the closure of vocational schools reduces the number of employees with this profile
Labour market in the face of coronavirus
The coronavirus pandemic has a strong impact on the global economy, the negative effects of which are also visible on the labor market. As an employment agency, we observe several of the most common phenomena.
- Manufacturing companies (e.g. automotive, household appliances/electronics, electronics) are running out of components, so they limit or suspend their operations for 1 month, and therefore send employees on vacation or on the so-called downtime. If the situation does not change, there is a high risk of redundancies.
- Companies are suspending recruitment processes, both mass and single. On the one hand, employers in such an uncertain situation do not want to decide on additional fixed costs, on the other hand, not everyone is prepared in terms of equipment to provide remote work.
- Paradoxically, some companies have a high demand for employees (e.g. grocery stores) due to the increase in demand for their services/products, but also due to the departure of a large part of the permanent team on holidays or sick leave. These companies urgently need temporary workers, but in the current situation, they are very apprehensive about taking up work and often give up employment options.
- Currently, many companies in Poland rely on employees from abroad (mainly from Ukraine). In the context of closed borders, such a business model may prove to be a huge threat to companies, not only due to the lack of availability of workers, but also due to the increase in labor costs when it is necessary to hire domestic employees.
As you can see, the situation on the labour market is very diverse. We are dealing with both the release of human resources on the labour market and the short-term, greater demand for them. In both cases, a safe solution is to use a temporary employment service and/or outsourcing services. The greatest value we gain is the transformation of a fixed cost (salary) into a variable cost (a VAT invoice from an employment agency). An employer can reduce part of the staff relatively quickly in the event of an economic downturn or such an unforeseen situation as the coronavirus pandemic. In fact, he pays for the hours he actually earns, which provides him with greater financial security and comfort of running his business. However, this is not the only advantage of working with an employment agency. When the situation with the coronavirus calms down, companies will most likely have to “catch up” with production, and thus rapidly expand their teams. In order for this process to go smoothly and quickly, it will be necessary to use a temporary employment agency with large recruitment resources. Internal HR departments, which are not numerous in most companies, will not be able to cope with such a challenge and recruit people to work quickly enough.
In the face of a potential economic downturn, redundancy management is also a frequently arising issue. This is where the outplacement service is the answer. A well-conducted practice, taking into account the needs and sense of security of the employee, has a positive impact on the employer’s image and significantly reduces the risk of possible legal claims. Support and preparation of dismissed employees for the new professional situation is an important element of responsible business conduct, which translates into greater trust in the company, prevents the transfer of sensitive data and company secrets to the outside world, and also affects the level of job satisfaction of people who have remained in its structures.
The labour market has effective solutions
The coronavirus pandemic combined with the previously recorded economic decline have made employment issues a very difficult and sensitive area for employers. Business development requires hiring the right staff, but the spectre of an economic downturn or unforeseen situations, such as the current one, raises great fears of long-term commitments. However, there are solutions on the market, such as temporary work or employee outsourcing, which effectively mitigate risks, while providing access to the necessary number of employees. In the face of the current situation on the labor market, these solutions are gaining in importance.
1 https://stat.gov.pl/obszary-tematyczne/rynek-pracy/popyt-na-prace/popyt-na-prace-w-trzecim-kwartale-2019-roku,2,35.html
2 https://stat.gov.pl/obszary-tematyczne/rynek-pracy/pracujacy-bezrobotni-bierni-zawodowo-wg-bael/aktywnosc-ekonomiczna-ludnosci-polski-iii-kwartal-2019-roku,4,35.html
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