Looking Ahead – Key HR Issues for 2022

Written by our partners at ViewHR

The Covid-19 pandemic has shown us that none of us can predict for certain what the future holds. However, as we approach the end of 2021, in this blog we will explore some of the key HR issues that employers are likely to face as we move into 2022. Labour Market Challenges Research by the Chartered Institute of Personnel and Development (CIPD) has found that one in four organisations expect the number of ‘hard to fill vacancies to increase over the next six months[1], and Office for National Statistics (ONS) data shows a sharp rise in job vacancies across the UK, currently standing around 1.2 million[2].

The CIPD also cite factors such as Brexit and the Covid-19 pandemic leading to over 200,000 EU citizens leaving the UK in 2020, reducing the labour pool. Sectors including care and hospitality have been particularly hard-hit, and there are also regional variations, with vacancies in the Northeast of England increasing by 73% over the past two years, in contrast to London which experienced a 0% increase in vacancies in the same period. What can employers do to help ensure that they have the talent they need to succeed? Of course, the rules of supply and demand mean that rates of pay, and benefits are important factors, and we discuss these further below. The heightened appetite for hybrid and flexible working is also a leading factor. However, it is also important to remember that (as with customer service), retaining your current employees can often be more cost-effective than trying to recruit new ones.

Tools such as “stay interviews”[3] (also known as retention interviews) may be beneficial – these are an alternative or addition to the exit interview, where rather than waiting for an employee to resign, employers focus on understanding what could motivate an employee to stay or leave and can help to inform the management of that individual employee, as well as a wider HR strategy. Flexible Working The Covid-19 pandemic has led to an increase in people in suitable roles working from home, and in England, the government have reintroduced guidance for those who are able to work from home to do so from Monday 13th December 2021, due to the Omicron variant[4]. Flexible working can include many different types of working arrangements, such as a reduction in hours, job sharing, flexi-time and compressed hours.

However, it is understandable that currently, working from home is getting a lot of media attention as a form of flexible working, given these circumstances. At present, employees are entitled to apply for flexible working if they’ve worked continuously for the same employer for the last 26 weeks[5], unless their employer allows them to submit an application earlier on a discretionary basis (some organisations will have a policy). However, in September 2021 the UK government launched a consultation called “making flexible working the default”[6]; feedback for this is now closed and is being reviewed. The CIPD has launched a campaign titled “Flex From 1st”, to make the right to apply for flexible working a day-one right. The CIPD’s research has found that[7]: “Those without access to flexible working are around twice as likely to be dissatisfied in their job, compared to those who do. CIPD research has also clearly identified the benefits of flexible working arrangements for employers and employees, from improved wellbeing and work-life balance to greater productivity.” Whilst employers are legally only required to abide by the current statutory rules, within this context, employers are likely to face more questions (and possibly even challenges) from employees on this topic.

Benefits such as enhanced flexible working entitlements can be helpful in attracting talent to your organisation, and some reports also highlight that this can improve accessibility for a diverse workforce[8]. As such, we recommend having a clear flexible working policy in place and publicising this amongst your employees. Rising Inflation In November 2021 the ONS released the latest UK inflation data, showing a 3.8% change over the 12 months to October 2021[9]. In October 2020, this figure was just 0.9%[10]. Rising energy bills, the cost of fuel and higher prices in restaurants and hotels are all factors in this, alongside the cost of raw materials and finished goods[11], with Brexit and the Covid-19 pandemic amongst contributing factors [12]. One of the measures that the Bank of England can use to control inflation is an increase in interest rates, however, weaker Gross Domestic Product (GDP – the measure of the overall performance of the national economy) growth than expected in October make this less likely at the time of writing than previously thought[13]. If inflation does continue to climb into 2022, what does this mean for employers? As we have seen above, it is already a challenging labour market for employers.

A rise in inflation is not just an abstract economic concept; it means that employees are likely to be facing an increase in day-to-day living costs, and so their salary will not be stretching as far as it used to. As such, employees may be more likely to see a pay rise; either from their current employer or by going into the market and seeking a new opportunity with better pay. Committing to paying employees an inflation-based pay rise can be risky for an employer, as a dramatic wage in inflation could impact several of your business costs as well as leave you with an unaffordable pay bill (which could in turn affect job security for employees). However, we do recommend that employers undertake regular benchmarking and keep abreast of market data, to inform their payment policies. On the topic of pay, it is also worth remembering that the National Minimum and Living Wage rates are set to increase in April 2022 – the latest rates are available here: https://www.gov.uk/national-minimum-wage-rates.

This blog has been written by ViewHR.

The ViewHR team are on hand to support employers with talent and recruitment strategy, alongside other HR matters. If you are an employer and would like support in this area, please contact a member of the ViewHR team today for an initial discussion: hr@viewhr.co.uk | +44(0)1425 205390 | viewhr.co.uk. ViewHR is UK based and provides flexible HR support and guidance combined with employment law consultancy. [1] People Management Magazine, December 2021/January 2022 [2] https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/timeseries/jp9z/unem [3] https://www.indeed.com/career-advice/interviewing/stay-interview-questions [4] https://www.personneltoday.com/hr/omicron-working-from-home-set-to-be-announced-in-england/ [5] https://www.gov.uk/flexible-working/applying-for-flexible-working [6] https://www.gov.uk/government/consultations/making-flexible-working-the-default [7] https://www.cipd.co.uk/news-views/campaigns/flex-from-first#gref [8] https://www.linkedin.com/business/talent/blog/talent-strategy/women-gen-z-more-likely-to-apply-to-remote-jobs [9] https://www.ons.gov.uk/economy/inflationandpriceindices [10] https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/l55o/mm23 [11] https://www.independent.co.uk/news/business/uk-inflation-rate-news-2021-b1959178.html [12] https://www.theguardian.com/business/2021/sep/03/inflation-set-to-surge-this-autumn-as-brexit-and-covid-combine [13] https://www.theguardian.com/business/2021/dec/10/uk-growth-virtually-stalled-in-october-even-before-omicron