Specialist HR, finance and accountancy recruitment head, Dominic Wade, has urged employers to resist “kneejerk reactions” and lay off staff despite inflation hitting a 40 year high at 9.1 per cent.
Amid Bank of England predictions inflation will rise to 11 per cent by autumn, Dominic, co-founder of Wade Macdonald, says firms should “buckle up and ride the storm”, recognise and protect their most valuable asset – their staff – or they will suffer as times improve.
But the veteran recruiter also warned against triggering wage price spirals with sudden inflationary pay rises. As management consultants PwC announced a 9 per cent pay rise for thousands of staff to offset the costs of living, he said they were setting a ‘dangerous precedent’ and could trigger such a spiral if other businesses followed suit and put up salaries to match inflation: “Be wary of giving inflationary pay rises as this is inflationary in itself – the Bank of England has warned about this – and companies will only raise consumer prices further – it becomes a vicious circle.
“PwC may well have the best intentions at heart,” he adds, “although remember they are also trying to win the battle for talent – but they are a major player and where they lead, others are sure to follow.”
He conitnued: “Inflationary pay increases also contribute to the depletion of cash; remember that cash is king in a recession.”
Dominic, who co-founded Wade Macdonald in the early 90s and since has weathered three financial crises and a pandemic, says firms should also seize the opportunity to look for talent during tough economic times even if this seems a counter-intuitive move.
“Businesses may survive the tough times but if they have laid off too many staff or taken slimming down to the extreme, they are in a poor competitive position as markets regain momentum,” he said. “Just look at what is happening to the airline industry now! They are now desperate for staff and even if they meet their recruitment needs, the lag required for training and experience will damage some airlines beyond repair.”
He added: “As much as staff retention is a priority during rocky times, my advice is also to take the opportunity to look for available talent during bad times – this will help when good times return.”
