Companies are giving up on hiring due to recession fears: Mercer

It was an “employee market” – a third of Asia-Pacific companies offered higher salaries to attract talent, according to Mercer. But the tables may turn as recession fears grow, the consultancy said.

“Companies are starting to be cautious, especially [in] in the second half of the year,” said Puneet Swani, Mercer’s commercial director for Asia, the Middle East and Africa.

He told CNBC’s “Squawk Box Asia” on Thursday that one in five companies in Asia-Pacific had frozen hiring, with 40% hiring for critical positions only.

“There are still 30% of organizations that say hiring decisions require another layer of approval,” Swani said.

“With all the recession fears… the tide could turn [for employees].”

However, companies are still facing talent shortages. According to Mercer’s global survey in July, 70% of 181 companies in Asia Pacific were struggling to attract talent, especially those from Japan and China.

This has pushed companies to get “creative” in attracting talent, Swani said, through attractive salaries to counter the rising cost of living and inflation.

Mercer found that salary increases for 2022 are higher than those for 2021 across all industries and markets in the region, with some even exceeding pre-pandemic levels.

To retain talent, 42% of companies are also offering retention bonuses, up from 31% in 2019, Mercer said.

Combat employee disengagement

However, competition for talent on pay alone will not be sustainable, Swani said.

“Organizations will have to treat this as a marathon rather than a sprint… [and] look at the broader employee experience.”

He added: “If you look at the top three drivers of employee disengagement, part of that is the ability to flexibly work remotely or hybridly.”

Training opportunities are another way for companies to differentiate themselves from the competition.

“[That’s] has been a very strong program, especially as companies have come out of the pandemic, their business models have changed,” he said.

Swani added that companies have increased automation and outsourcing, which leads to skills gaps within organizations.

“This is [on] the spirit of the employees too, how do you help me to develop and retrain myself? »

In another study, Mercer found that 95% of employees in Asia said they had recently acquired a skill. Despite this, according to the study, 97% of companies reported significant skills gaps in their organization.

Increased mobility

For countries that rely much more on foreign talent, increased mobility as pandemic restrictions ease will help manage talent shortages, Swani said.

“For these countries, the whole dynamic of supply and demand has really changed. [during the pandemic]and that also triggered a lot of pay raises because you have very limited talent.”

He added: “A lot of countries are open… and business visas are in process. [issued]. And I think that’s going to help deal with some of those talent shortages from that perspective.”

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