Recruiters are often considered the “canaries” of our economic coal mine. We tend to see the writing on the wall before others, especially when it comes to developments in the Canadian job market.
For instance, we saw the current economic slowdown coming long before it was declared, and we’re now seeing hints of a recovery on the horizon. Not that things will roar back to the heady days of 2021, but the activity we’re seeing suggests that brighter economic days are on the horizon for the Canadian job market in 2024.
We’re now a month into 2024 and I wanted to share some of the key things you should know about what is going on with the job market. But first, I wanted to share my perspective (a recruiter’s POV) on what’s happening.
A Recruiters Perspective On The 2024 Canadian Job Market
Long before economists call a recession, recruitment firm clients begin pulling back on their hiring. Nothing tells them to do so – it may be their gut, or their Spidey sense of market malaise, but each firm independently slows down, reduces or pauses their hiring plans. On an individual basis, most of the companies don’t even notice the change, but when taken in aggregate across 50-100 clients you can see a clear trend – we’re heading for an economic slowdown.
The same goes for economic recoveries. Months before the press is posting positively, recruitment activity starts to pick up slightly, clients begin asking about the market, and searches once put on hold get renewed. It’s not a guaranteed positive indicator, but 29 years of experience as an executive search professional suggest it’s accurate – and these “canaries” see an economic recovery coming in 2024.
Protracted inflation, layoffs, and lagging economic doubts made for a challenging labour market in 2023. But brighter days are ahead. But a word of caution – it won’t be the charging economy of the last few years. The next few years in the economy will still be muted, but it will be way better than it’s been!
Interest rate cuts are expected and companies that have right-sized their organizations over the last year are starting to slowly hire again. There are still some economic hurdles to overcome – wars in Ukraine, the Middle East and an unpredictable American election top the list – but things are getting better and there’s a general optimism about 2024. With this being said, let’s talk about the top labour trends our recruiters are predicting for 2024.
What Are The Main Labour Trends We Can Expect In 2024?
There are three main labour trends we can expect to see in 2024. They are:
- Wages and raises will continue to slow
- Hiring will slow, but companies still plan to hire
- Layoffs are not expected to be significant
Keep in mind that how things change in the labour market will be different in the US than in Canada. The US market is more robust, and Canada will be slower to recover. But, both are headed in the right direction. Now, let’s look at each of these trends in more detail.
The Money Question – Will Wages And Raises Continue To Slow?
Expect wage increases and raises to slow in 2024. During the pandemic and the Great Resignation, employers offered substantial pay raises and bonuses to retain employees. Now that the Great Resignation is over, the balance of bargaining power has shifted back in favour of employers. So, workers should not anticipate the same level of pandemic-era pay raises this year.
Quit rates are decreasing and employers are scaling back efforts to compete for workers already in the labour force. With reduced competition, the rate of wage growth is also diminishing. Additionally, the pace of merit increases might be on the decline. Employers are now aiming to limit the increases that occurred outside of regular pay reviews during the pandemic to keep budgets down.
Will Hiring Slow Down In 2024?
Hiring will slow down but companies still have plans to hire in 2024. Many companies scaled back on hiring toward the end of 2023 and this will continue in 2024. After a period of extensive recruitment, they are focusing on right-sizing the organization and labour budgets. Economists project that this hiring slowdown will extend into the next year, anticipating a plateau in growth by mid-2024 before witnessing a recovery in 2025. Even though companies are slowing down their recruiting efforts, many maintain optimistic hiring plans.
What does this mean for candidates?
If you are thinking about making a move and entering the job market, it’s best to do it sooner rather than later. Opportunities are expected to diminish further over the next year amidst an overall slowdown in the job market. While the current timing may not be as favourable as it was a year ago, it still presents a more advantageous scenario than what is anticipated a year from now.
Will We See Significant Layoffs In 2024?
Some layoffs are inevitable during uncertain economic times. However, economists expect them to remain low in 2024. Analysts anticipate that the frequency of layoffs will likely remain consistent in 2024, but there is a looming concern that they could suddenly escalate if the Canadian economy experiences a downturn.
A key reason to not expect large-scale layoffs this year is employers still have an ongoing challenge to find talent. There is a strong inclination for employers to retain existing employees. Companies are hesitant to make further workforce reductions, especially given the recent experience with labour shortages. Looking ahead to the coming year, there appears to be a tendency among companies to engage in labour hoarding, reflecting a cautious approach to staffing in anticipation of potential uncertainties.
A Final Word On The State Of The Canadian Labour Market
The state of the labour market is tied to the Canadian economy. The good news is the economy appears to be stable in 2024. This means the labour market will also stabilize.
What does this mean from a recruiter’s perspective? The best people always move at the start of an economic recovery. As the economy comes back, companies that want to retain/secure the best talent may want to start talking to their recruitment partners sooner vs. later. Now is a great time to reach out to IQ PARTNERS to capitalize on your recruitment strategy this year.