The recruitment boom has ended, but talent shortage remains an issue
If 2020 was globally afflicted by Covid, and 2022 by geopolitical unrest, then 2023 looks to be the year in which the world wakes up to AI. The exponential take-off of Chat GPT (0-100 million users in two months) suddenly opened our eyes to what lies in store for society. Alex Shteingardt, the new regional director CEE & managing director Poland at Hays, talks to the BPCC’s Michael Dembinski about the new challenges facing the labour market in Poland and the region.
Michael Dembinski: When Poland joined the EU in 2004, it had the highest unemployment rate of any member state; today it has the second-lowest, according to Eurostat. Emigration and demographics but above all a successful, dynamic economy have turned the Polish labour market around dramatically. For several years now, BPCC members’ biggest business challenge has been recruitment and retention. Are we still looking at an employee’s job market where skilled candidates hold all the cards?
Alex Shteingardt, Hays: I believe the current situation would be best described as a skills-driven labour market. It’s a candidate’s skills that truly define their career prospects nowadays. It might take a while longer to find a job than a year ago – even for people in IT. But those with transferable or highly sought skill sets will still have plenty of opportunities. However, people with less marketable skills may find it challenging to find and secure a job than they used to in the past few years.
Our research shows that despite the economic downturn, the majority of employers in Poland are planning to recruit this year. However, this doesn’t necessarily mean that they’ll be expanding their workforce. Instead, higher turnover rates make it a priority to replace those who do decide to leave. Some people are reluctant to move jobs because of the current economic outlook. Still, if their current employer can’t meet their financial demands, the rising cost of living will force many to look for new opportunities.
Talent is needed; I’d like that to resonate. In some cases, and especially in tough crises, some experts are even more important. It applies to finance and payroll experts, lawyers, and efficient sales and marketing specialists to name a few. Experts in fields like technology, engineering, and automation are also in high demand. However, employers are aware that such talent is hard to find and hard to attract. Our latest research shows that 72% of employers expect recruitment challenges in 2023. This is only slightly lower than in the previous year – and bear in mind that the turn of 2021 and 2022 was the peak of the recruitment boom here in Poland.
In summary, despite changing economic outlook we can’t call the current situation “an employer’s job market” because of the recruitment challenges that employers are facing. Instead, it’s important to focus on the value of skills and talent in the job market of today.
Poland’s demographics are worrying – there were 700,000 Poles born in 1982, but only half that number in 2002. It’s that age cohort – just 350,000 of them – that’s entering the labour market now. And it will get worse; last year only 305,000 Poles were born. With demand outstripping supply – what’s the answer for employers – innovation or immigration, or both, or maybe something else?
There’s no simple answer to this question. Of course, we also see a lower number of employees entering the labour market than those retiring. The situation could have serious consequences for the Polish social security system and also contribute to the widening skills gap. It may initially seem beneficial to job seekers as their skills will be more valued, but in the long term, shrinking talent networks may make Poland a less attractive investment proposition. Investors could think twice about establishing offices here if it’s difficult to hire the right talent at volume.
So what needs to be done to solve this problem? The most pressing issue would be policies and laws put in place to encourage and truly support raising a family in Poland, which would help increase the number of births. Secondly, a well-planned and coherent immigration policy should be established to attract more foreign workers and fill the talent gap. While sourcing candidates from abroad is a growing trend among employers, it mainly applies to blue-collar workers. Attracting white-collar workers is more difficult due to generally lower salaries in Poland compared to Western Europe and in some cases also to some other CEE countries.
Still, demographic and immigration policies are beyond the direct influence of employers. So in the meantime, they can take steps to address the issues by buying services, outsourcing business processes, investing in automation and AI, and upskilling and reskilling their employees. I think that the future in Poland holds a mix of all, with the growing openness of policymakers to planned immigration.
Although salaries in Poland are still growing at a double-digit rate, they are falling behind consumer-price inflation, leading to a deterioration in employees’ standard of living. Are salary expectations among candidates realistic in terms of what potential employers are willing – and able – to pay?
Even one year ago, when we were at the peak of recruitment activity, the financial expectations of some candidates baffled employers. However, the need to hire was stronger than the hesitation about growing salary levels. In the tech industry, it wasn’t out of place for developers to receive 30-40% raises when changing jobs. Our research shows that last year, 62% of specialists and managers received a pay raise – whether or not they changed jobs. On the other hand, among them only 15% experienced a salary increase of 20% or more.
Essentially, the majority of the white-collar workforce can now afford less for their salary than one year ago. This leads to frustration and increased salary pressure. Are these demands unrealistic? From an employee’s perspective, it’s understandable they want to earn more. However, the economic situation has changed, the recruitment boom has ended, organisations sell less of their products and services, processing fewer contracts, and are facing significantly higher business costs. So employers are often unable to meet the financial expectations of existing employees and potential candidates. In turn, workers seem to be aware of the situation, and are more likely to recognise the economic realities and adjust their expectations accordingly.
AI has the potential to revolutionise every area of business. Companies will be able to do what they’re currently doing with much smaller teams – or do vastly more with the same-sized team. Do you feel they will be looking to cut back on employment costs – or leverage the power of AI keeping existing staff to dramatically increase productivity and profits?
AI, and precisely ChatGPT, has been a hot topic in the past few months. It’s astonishing to see in practice how much – and in how short of a time – can be accomplished by artificial intelligence. We hear instances of functional code generated by AI, graphic designs, marketing campaigns, sales content, business strategies… The opportunities seem endless.
I believe that the growth of AI could impact people’s jobs sooner than we thought. Some jobs might disappear, and organisations may opt for high-end technology solutions instead. Technology is efficient, doesn’t get sick, go on holidays, have personal needs or ambitions. Even though in many instances it’s expensive to implement, ultimately it’s still cheaper than the cost of employing human workers. It’s the harsh truth. Hence, throughout the years we will see organisations cutting headcounts and investing in tech transformation. But, as we’ve seen with automation and other industrial evolutions, technological progress creates demand for new professions. It’s also unclear whether products generated by AI will be of human-made quality. Only time will tell.
What new skill-sets will be in greatest demand when the AI revolution hits the labour market? As well as maths skills, a strong theoretical understanding of language will be required (grammar, syntax, parsing etc). Will our high schools and universities have to adapt both in terms of what they teach and how they teach?
Definitely, with the breakneck pace of tech progress, curriculums in schools and universities often seem outdated. This applies to many developed countries, not only to Poland. Young people are still expected to learn by heart, while in adult life much of this information they couldn’t retain, wouldn’t need, or could easily find online. Useful lessons would be where to find verified knowledge, how to critically assess sources, and how to make life easier thanks to technology while doing so ethically. It seems that the education system hasn’t yet tackled this issue. So apart from the skills you’ve mentioned, like math, linguistic proficiency, and strong digital background – an AI-driven labour market will be heavily reliant on soft skills. Analytical competency, communications skills, and the ability to assess risk – including the legal risks related to copyright and intellectual property infringements – and make informed decisions once everything has been accounted for will be highly valued.
I hear that by the end of 2023, companies will all be looking to recruit prompt engineers. Are you already seeing demand for this particular job? Are there any other AI-specific positions that many employers are seeking candidates?
At the moment it is difficult to make a clear forecast, but we expect that due to the dynamic development of artificial intelligence, it seems a natural step that the demand for prompt engineers will increase. At present, we do not see a high demand for prompt engineers in the Polish market, but there is a chance that we will see this change in the near future. It’s worth emphasising that prompt engineering is not a brand-new field in Poland. It actually started migrating from the strictly academic environment and into the commercial sector about 10 years ago. Currently, prompt engineering is growing both academically and commercially in Poland, and most experts work in the R&D centres of tech companies.
There is a constant demand for AI and machine-learning (ML) engineers, as well as experts specialising in voice recognition and space recognition, with the latter working on projects related to autonomous vehicle development.
How is Hays itself planning to leverage technology and innovation to streamline your recruitment processes and improve your services to clients and candidates?
Our business is ultimately about people. So we need to make sure that any tech advancements won’t result in the loss of our human touch. We use tech innovation to streamline processes and eliminate tiresome, repetitive work and administrative tasks. The aim is always to improve the experiences of our customers, and to free up the time of our consultants – time they can focus on finding and talking to the best talent in Poland!
We’re currently working on a range of digital tools to improve our processes. For example, we’re developing internal tools to help the talent-matching process at the initial stage of recruitment. We’re also using external reporting tools to make sure that our services are on top of their game, and we maintain our customer satisfaction levels. Additionally, we’re improving our online presence, with a global project that will roll out new websites that are better optimised, informative, and user-friendly. Our end goal is to make it as easy as possible for our customers to find us and get the help they need. That’s what’s on the horizon for us.
ESG has become an extremely important issue for most corporates. How does Hays ensure that its clients hold the same ethical standards as you do, and that they comply with the demands of the environment, society and corporate governance?
ESG is critical to Hays and we’re committed to taking responsibility for our environmental and social impact, both locally and globally. Our approach to this topic is constantly evolving, and we continuously strive to make it more structured and prioritised. In the past few years, we launched our Net Zero journey and developed policies for Diversity, Equity, and Inclusion (DE&I) and Corporate Social Responsibility (CSR), which aim to support underutilised and underrepresented talent, such as the mature workforce and young people. As part of our Helping for your tomorrow programme, each of our employees can devote one day per year volunteering to a cause that is close to their heart. Doing the right thing is one of our core values and we do treat it seriously in our everyday work. It’s also important to us to work with organisations that have a similar commitment to ESG.
However, the nature of our business means that we are more often a service provider than a service recipient. As a result, we are more likely to be vetted by clients, and sometimes having a robust ESG policy is a requirement for collaboration. ESG is no longer a nice-to-have, reserved for the largest corporations, and is an increasingly integral part of business strategies. Organisations’ commitment to CSR and influence on the environment is also becoming more important to candidates. They care deeply about how their potential employer shapes and influences the world we live in. But that is probably a topic for a separate story.