The impact of the recession in 2009 varied widely across the economy. The recession has been felt at it’s height mainly in the construction and manufacturing industries. Many people have experienced widespread pay freezes. Contrary to this ever-growing norm, employees in industry sectors such as energy, food retail and pharmaceuticals, continued to receive pay rises – as did, oddly, the finance sector. In order to ensure Job survival it is reported that a third of the Private Sector enforced such pay freezes, with around two-thirds of firms awarded minor increases, with the bulk in the 2 to 3 per cent range. In general it is easy to conclude that pay increases have been very minimum. So how do people see 2010?
5 Recession led changes.
1. Pay benchmarking. This method will in the short-term help to stabilise a standard Salary Market trends across all disciplines. Some pay freezes last year interpreted as decision postponement, while others were emergency reactions to a critical collapse in demand. At times trail of thought was “ We will resume talks when the market conditions improve”.
2. Bonuses make a return. Huge bonuses have made a return, especially in the Banking Sector. Elsewhere, bonuses also saw a reappearance in the Manufacturing Sector but no such luck in the Retail arena. The view that Bonuses are seen as variable is now being put on the back foot as more and more people are seeking guaranteed payment packages.
3. Career development. As a topic has been neglected as companies re-structuring plans continue to be uncertain. However it is expected that in 2010 that this view radically changes as to avoid such “High Potentials” seeking employment and career advancement elsewhere.
4. Employment relations. So far, German employment rates have maintained high levels throughout the economic downturn. The negative predictions that unemployment would reach a further 3 million by February has not been realised. But, in reality, was it not achieved by HR managers, Works Councils and union representatives in tough negotiations to save jobs, freeze pay and use shorter-time working to retain skills? Does this mean that the recovery can be built on firmer employee relations foundations? The jury is out….
5. Talent. Total reward and talent management may have taken a bit of a knock in the recession, which has seen recruitment freezes and redundancy as dominant themes. A culture of disengagement may have taken hold. After a period of instability in the German HR Jobs market, the last few weeks have shown that an increase is on the horizon. Most of 2009 has been characterised by a continuing slump in HR recruitment. Job volumes reached there lowest during mid June 2009, with an 85% decrease in HR jobs compared with 2008. Mid-Sep to mid-Dec signalled the lowest point, where the only positions being recruited for were incredibly specialist, such as learning & development roles, expatriate positions and comp & bens jobs. There were very few generalist positions available.
However, the last few weeks has seen a marked increase. There’s been an incredible bounce upwards. According to Antal International HR Team in Frankfurt the HR desks are now handling more roles than at any time since the recession was declared in 2008. And, more importantly, the sheer variety of firms recruiting is a strong indicator the market may no longer be in a downward spiral.
Conversations with clients indicate that departments are now so lean, even a small increase in business activity will necessitate increased HR headcount, with one HR Director admitting his team is so stretched, he might be back up to 2008 headcount levels by the spring of 2010. Another positive is that salaries for roles coming to market have remained very competitive. Despite this, candidates who previously earned €95,000 are now willing to look at roles at the €85,000 mark in order to return to the labour market. Job seekers are realistic enough to realise that whilst in the good times they may have seen their salary soar from €60,000 to €70,000, the market has re-aligned itself and they are happy to do the same.
Please contact Paul Inkpen – Partner and Head of Human Resources Recruitment – to discuss this further on +49 69 976 750 or PInkpen@antal.com
