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Whilst the cost-of-living crisis may garner more media attention it is little secret that businesses are also struggling with rising costs. Eurozone inflation hit 10% in September, a new record high, highlighting the increasing cost of materials and energy.
Workforce costs are also set to increase. The Manpower Employment Outlook Survey reports a Net Employment Outlook of +30% globally for Q4 2022. Despite global economies, hiring intentions remain strong and will exacerbate existing talent shortages, with 75% of companies surveyed by ManpowerGroup already reporting difficulties hiring – a 16-year high.
This is a contributing factor to wage inflation reported in the EU at an hourly wage increase of 4.1% for Q2 2022 compared to the prior year quarter by Eurostat. In certain sectors and countries this could be as much as 20% says Jaroslava Rezlerova, MD of ManpowerGroup, Czech Republic.
With a number of large public layoffs already this year from the likes of Cazoo, Made.com, and Klarna, companies are eager to reduce costs in the workforce, but is downsizing the best approach?
Alternative workforce strategies to reduce cost
1.Remote Working
With the high cost of office space across Europe’s major cities − reaching €1500 per sqm per year in London – it’s easy to see the potential savings by encouraging remote working in your workforce. Amazingly a Capgemini study found that remote working could slash businesses' operational costs by one-third.
Combine this with productivity gains of 13% - 24% on average compared to in-office counterparts, and it becomes a no-brainer to assess the capacity for remote working within your organization.
2.Nearshoring/Offshoring
As indicated by the cost of office space above, there are huge differences in business’ operational costs, the cost of living, and subsequently, wages for workers across Europe. For instance, the cost of living in Bulgaria is estimated to be 75% less than that of Switzerland and 65% less than in the UK.
Businesses with flexibility in where they hire workers can take advantage of these economic differences and remove costs from their workforce.
3.Increase Contractor Workforce
With constantly increasing costs and economic uncertainty, budgeting becomes more difficult. Now may be the time to introduce flexibility in your workforce by increasing your ratio of contract workers.
Contractors are often thought of as more expensive than permanent staff but with tax burdens on labour in Belgium, Germany, and Austria as examples at 52.6%, 48.1%, and 47.8%, respectively, as well as other factors such as increased productivity, reduced training costs, etc., contractors, have a well-earned place in the workforce and could be used to the advantage of your business.
Experis Cross-Border
Experis Cross-Border Solutions helps businesses to take advantage of the rise in remote working. By using global market intelligence, gathered from our 75-country footprint, we help our clients make the right strategic decisions in global hiring.
Utilizing our global network we source, onboard, and deliver the best borderless workers at the best value. By invoicing to a single cost centre in a single currency, we help lower headcount costs, improve access to talent and reduce hiring times and attrition.
Are you contemplating whether Cross-Border is for your business and do you need more information? Get in touch with our Cross-Border Team and one of our advisors will respond to you soon.
