In short: The diference between the salary which candidates for a position expect and the salary that employers offer has decreased by >1/3 in 2020, pointing to a shift in the labour market power balance in favour of employers. Meanwhile, half of all professional report a negative impact of Covid on mental health. Companies that made use of financial support from the government were less likely to grant pay rises to their employees.
When Covid-19 was declared a pandemic in March 2020, people around the globe started to understand the true scale and immensity of the problem that the virus entailed. The stock market plummeted and there was a huge sense of uncertainty for companies and professionals. We’ve come a long way since then – the stock market was back to pre-pandemic levels after a few weeks and governments have, for the most part, stabilised their economies to minimise the impact of the pandemic on the labour market.
But that doesn’t mean that Covid-19 didn’t have an impact on the labour market. For our upcoming work & pay report (get it here) we looked at some of the effects that Covid-19 did have on the labour market and came across some astonishing findings…
1. The power balance in the labour market has shifted in favour of employers
As a general rule, candidates are asking for higher salaries than employers offer. What ensues is a negotiation which brings the two sides closer and helps them land on a figure they can both live with.
We analysed >30k job applications and openings on Movemeon and saw that pre-pandemic (in 2019), the average initial difference between what employers offer and what candidates ask for was 27%. I.e. if an employer was to offer £100k for a role, the typical candidate would say “I want £127k”.
Things changed in 2020. The pandemic hit and candidates’ expectations lowered. Likely, there was a recognition about the increased level of competition for stable and well-paid jobs during the pandemic and hence, candidates negotiated less aggressively. The initial difference in expectations decreased by over ⅓ to 17% (vs. 27% in 2019). A clear shift of the power balance in favour of employers.
2. The pandemic negatively impacted mental health – ¼ of professionals are looking for a new job due to Covid-19
Between working from under-equipped homes, child care responsibilities and the general feeling of doom and insecurity, it’s unsurprising that the pandemic is accompanied by a mental health crisis. That doesn’t make the numbers less astonishing, though. 47% of professionals state that their mental health has suffered over the last year (35% say the same about their physical health).
Meanwhile, across industries and seniority levels, 25% of professionals want to make a change in their career because of Covid-19. Some look for more stability, some for a better work-life balance and others for a higher income. What all of them have in common is a pandemic-induced realisation that their current jobs are not aligned to their priorities.
3. Companies that received more government support were less likely to grant pay rises to their employees
Roughly 20% of corporates, startups and consultancies have received financial support from the government during the pandemic. At the same time, the pay rises that these companies granted their employees decreased substantially (only ~50% of professionals got a raise, compared to ~75% in 2019).
The opposite is true for PE/VC funds. Only 7% of them made use of government support and they kept the raises coming (still granting 75% of their staff a raise in 2020).
Intrigued? There are lots more insights around Covid, pay, working hours and job satisfaction in our report. To receive it, simply click here.
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