Three Ways the Impending Recession May Impact Your Position in the Job Market

Between mass layoffs within the tech sector, rising rates of interest and stubbornly excessive inflation, talks of a recession are all over the place. Economists say that the approaching recession will have an effect on the job market within the type of diminished hours, longer job hunts and layoffs. The good news? The current tightness in Canada’s labour market could end in fewer job losses than earlier downturns.

Royal Bank of Canada economists mentioned in October that Canada’s job market is the tightest it’s been in many years, however anticipate {that a} average recession will hit the primary quarter of 2023. This will possible push the unemployment price near seven per cent by the top of subsequent yr, up from 5.2 per cent at the moment. “An excess of job openings and a scarcity of workers will protect against a major spike in unemployment in the very near-term,” RBC mentioned.

So what does this all imply for you and your profession? We break down how the recession may influence you when you’re job-hunting, on the lookout for a increase or contemplating beginning your personal business.

If you’re on the lookout for a job

The job market is heading into the potential recession in a great place, says Brendon Bernard, senior economist on the Indeed Hiring Lab. Bernard highlights the present low unemployment price and still-high job posting ranges. The Bank of Canada’s most up-to-date business outlook survey discovered that whereas companies do anticipate a recession, the bulk don’t have any plans to sluggish their hiring simply but. 

Bernard says Indeed’s personal information reveals job postings stay 60 per cent above pre-pandemic ranges as just lately as mid-October. Postings within the tech, manufacturing and development sectors—areas of the financial system which can be significantly delicate to both rates of interest or the broader financial outlook—have cooled barely, however are nonetheless “quite elevated,” he says. Indeed discovered hiring for higher-wage occupations are slowing, however lower- and mid-paying job postings, like driving and meals companies, have seen modest will increase. While mass layoffs within the tech sector have made headlines, Bernard mentioned job losses haven’t but hit the broader financial system. 

Speaking of layoffs, Jim Stanford, economist and director of the Centre for Future Work, says regardless that he’s frightened a couple of “painful, long recession,” employers may assume twice about instant job cuts. “In the past, employers would have cut back employment as quickly as they saw sales declining in an effort to streamline costs and preserve profits,” he says. “But they might be worried, and with good reason, that it will be hard to re-hire those people [as the economy rebounds]. You may see more willingness to preserve workforces.”

But that doesn’t imply issues haven’t modified. In a latest briefing, RBC economists mentioned that within the near-term, we will anticipate job-seekers to expertise longer search occasions when on the lookout for a brand new gig, and for hourly employees to doubtlessly face a discount in hours.

If you’re on the lookout for a increase or promotion

One of the issues that may make this recession more difficult for folks searching for a increase is inflation. Stanford says we’re getting into a recession throughout a time the place the price of items is rising, and wages haven’t caught up. Statistics Canada reported common hourly wages had been 5.6 per cent increased year-over-year in October, however record-high inflation has eaten into these features. “Since inflation took off after lockdowns, wages have grown much slower than prices,” Stanford says.

He says that whereas unions with extra bargaining energy have had some luck negotiating wage will increase into collective agreements, he’s skeptical particular person workers can have success asking for raises as their employers face an financial slowdown.

Canadians trying to change jobs to enhance their pay or advance of their profession at the moment have loads of alternatives, however Bernard says it’s “a bit of a riskier proposition” in the present day than six months or a yr in the past. Then, job-hopping was among the best methods to get an enormous enhance in pay. Now, the stakes are increased.

“If things do turn south in the economy, those newly hired workers might be more vulnerable to getting let go,” he says. “Job seekers who are currently employed, but looking for another job, [are] in a bit of a tough situation if they aren’t getting the pay increases at their existing employer that they hoped for.”

If you’re beginning your personal business

The ranks of self-employed Canadians have grown by roughly 36,000 up to now yr to succeed in 2,646,000 as of October, in keeping with Statistics Canada. Dave Valliere, a professor of entrepreneurship and business technique at Toronto Metropolitan University’s Ted Rogers School of Management, says even throughout recessionary occasions it’s “never a bad time to start a business.” He provides that it has change into simpler than ever for budding entrepreneurs to arrange on-line shops and goal their supreme clients by way of tech platforms.

However, the financial local weather impacts what kind of companies will thrive. During recessions, it’s a great time to “provide things that are needs, not wants,” he says. Though he notes luxurious items, like brand-name clothes and accessories, are inclined to fall out of favour with cash-strapped shoppers, consumers are more likely to take pleasure in “small luxuries,” like a elaborate chocolate bar or a brand new lipstick. 

Valliere says many individuals view beginning a business as a back-up plan in the event that they’re laid off, which makes taking the time to grasp who your potential clients are—and what they need—particularly vital. 

“There’s a bigger risk of the market getting flooded with lots of start-up businesses,” he says. “The environment will be less forgiving of the ones who haven’t done their homework to figure out [if] their business model will work or not.”