How will a recession change the way we work in 2023?

Thursday, 22 December 2022

Hamilton cafe struggling due to corporate employees working from home. (Video first published August 24, 2020)

As the new year approaches, experts say recessionary conditions and a tight labour market will be a major influence on the way we work in 2023.

Read this story in te reo Māori and English here. / Pānuitia tēnei i te reo Māori me te reo Pākehā ki konei.

Workplace expert Gillian Brookes said the biggest change in 2023 was the looming recession widely predicted in the latter half of 2023. She said many businesses would tighten their belts in response.

While economists were concerned a recession would cause thousands of job losses, reduced income would force businesses to think creatively about the ways they worked, Brookes said.

“If constraint is the mother of creativity, then it’s going to be an incredibly creative year,” Brookes said.

* Employers vie for jobseekers at expo

* Union: Pandora's anti-sick leave sentiment not unusual

A looming recession and a tight labour market means businesses will have to create new ways of working to retain and attract staff.

Inflationary pressure and low growth combined with a tight labour market would mean many businesses would not be able to afford large pay increases for staff, she said.

Workplace expert Gillian Brookes says a four-day working week was likely to grow in popularity in 2023.

Because of this it would become crucial for businesses to think about the positive non-financial elements offered by their workplace, such as flexible working and a four-day week.

In particular the four-day week would become a popular option for businesses, as research showed it created stronger productivity and better mental health, while providing no immediate extra costs for the business, she said.

“Businesses will scramble to gain a comparative advantage by adopting the four-day week ahead of their competition. Once that tipping point is reached, it will ultimately become a new default,” she said.

Dr Zoë Port, management lecturer at Massey University, said retention of staff should be high on the list of business owners to keep in mind in 2023.

While workers might not have as much bargaining power as they had in 2022, a tight labour market was expected to continue with labour shortages in certain sectors as young workers went on delayed overseas experiences, she said.

Because of this businesses might need to tap into new, or underutilised, labour sources, such as attracting parents back into the workforce with job-share arrangements, or looking to promote from within by developing existing staff, she said.

“While 2022 has been a year of pay increases for many, if we enter a recession, 2023 may be the year of ‘conditions’, as employers attempt to make their workplace attractive to employees in other ways,” Port said.

Employment Hero chief people officer Alex Hattingh said the flexible working trend would continue to rise in 2023, especially when it came to remote working.

“The traditional days of the nine to five, clock in and out are gone. So too, is the idea that an employee needs to be chained to their desk at all times to be productive.”

In a survey of over 1000 New Zealand employees, Employment Hero found 61% of workers worked remotely part-time or full time.

More than 48% of those workers said they would consider quitting their job if their employer directed them to return to the office full-time.

“From the data you can see that organisations that fail to embrace remote working styles will lose high performers to organisations that have implemented newer work models,” Hattingh said.

But in a remote working environment businesses might need to consider social inclusion strategies to ensure all workers, particularly those from marginalised groups, were not disadvantaged in the long term, she said.

Jonathan Dixon, chief executive of employee assistance programme Raise, said with a recession on the cards, mortgage rates rising, and inflation showing no signs of slowing, it was crucial for business owners to prioritise employee mental health.

“I think in this environment it is really important to do the basics well. Look at different options for staff retention but always remember your role as an employer is to help people to work,” Dixon said.

While many employers had done well managing staff concerns during Covid-19 and successive lockdowns, it was important to think about fostering community, and support in a workplace, particularly in what had the potential to be a stressful year, he said.

Because of this, Dixon predicted a downturn in remote working situations next year as businesses went back to their old ways of creating team culture through face to face communication.