The first half of 2023 has seen big changes in the labor market, with reverberating effects on the workforce including signs of decreased engagement. Based on metrics from the Workday platform—which shows more applications for fewer jobs and voluntary turnover declining by 20% compared to the same time frame last year—we’ve pulled together key trends and insights to help HR leaders chart their course for the near-term future.
As we examine the first half of 2023, we see the hiring slowdown accelerating, with the gap between applications and requisitions growing. We are firmly entrenched in a market where employers are focused on the highest-quality hires possible, and recruiters will be managing significant candidate volume for far fewer roles. Meanwhile, there is stagnation in worker mobility, with employees neither moving up nor out. The latest sentiment data, which is trending down, holds cautionary signs for employers.
The bottom line? For businesses to meet their goals, they must recruit the right people with the right skills for their finite number of new hires, while focusing on bringing out the best in their existing talent.
To better understand the current landscape, we looked into metrics from Workday Recruiting, Workday Peakon Employee Voice, and the core Workday Human Capital Management (HCM) system. This is what we found:
Hiring slowdowns are becoming more pronounced. Looking at Q1 and Q2 2023 numbers, the slowdown in job requisitions (reqs) in Q2 (−20%) was more pronounced compared to Q1 2023 (which was −10%).
People are staying in place. Across all industries, the median 12-month voluntary turnover rate has declined by 20% year over year.
More applications are coming in for fewer jobs. We saw a 15% decrease in job reqs in the first half of the calendar year (compared to the same time in 2022), with a 30% increase in job applications during the same time frames.
Employees are finding fewer opportunities to advance, especially in tech. The 12-month promotion rate declined year over year in 13 of 16 industries we measure. The technology industry has the greatest decline, with median 12-month promotion rates declining 30% year over year.
We are firmly entrenched in a market where employers are focused on the highest-quality hires possible, and recruiters will be managing significant candidate volume for far fewer roles.
In May of 2023, the Bureau of Labor Statistics reported more than 9.8 million job openings in the U.S. Workday Recruiting processed 2.2 million U.S. job requisition transactions in May, representing nearly 22% of all U.S. job openings that month. If current rates hold, Workday is projected to process more than 36 million requisitions, 266 million applications, and 24 million offers/employment agreements (EAs) in 2023. The size and quality of our dataset allows us to have one of the most expansive, real-time views of global hiring trends playing out in the market today.
In the first half 2023, Workday Recruiting processed:
Looking at Q2 2023 in particular, we processed:
Even though applicant volumes have spiked, the number of interviews scheduled decreased in the first half of 2023 compared to the same period last year, another indicator that companies are being hyperselective from the very beginning of the hiring process.
Globally, we saw a smaller decline in requisitions and higher application growth compared to the U.S., indicating greater hiring resilience. While there is variability in hiring based on country, in aggregate, our customers outside of the U.S. did see declines in requisition volume but at a lower rate. Look for our full report coming soon with more details, including the five countries that saw the most volume in reqs and applications.
During a chaotic and fraught time, leaders leaned in with empathy, demonstrated vulnerability, and created authentic connections with their employees. Nurturing this kind of connection isn’t just the right thing to do, it’s also smart business.
In terms of the sheer number of reqs being created in different industries, only healthcare is seeing more reqs in the first half of 2023 than in the same time frame in 2022.
Industries that created the most reqs in the first half of 2023:
Although it is interesting to look at industries in terms of pure volume, for both employers and employees the state of an industry is best told in application-to-requisition (app/req) ratios: In other words, how many applications are coming in for every job posting. This data proves what many are already feeling: Job seekers should expect high competition for offers as the ratio of applications to reqs has increased across all industries.
On the top end, industries with the highest app/req ratio saw higher applicant demand for fewer openings.
Highest number of applications per requisition:
Lowest number of applications per requisition:
The industries with the lowest apps/req ratios are largely the same industries we saw on this list in the first half of 2022. But in the first half of 2023, they all saw significant increases in ratios. Of note were transportation, manufacturing, and public sector, which saw gains of 69% and higher in their ratios. Because these industries have a large number of frontline workers and have dealt with long-running staffing shortages and lower applicant volumes, it is encouraging to see healthy growth in applicant demand.
Healthcare, as observed above, is running counter to broader hiring trends. Of the top 5 industries that created the most reqs, it was the only industry to see an increase in their app/req ratio compared to the first half of 2022. Because healthcare has experienced persistent staffing shortages since the pandemic, it appears they are still aggressively hiring to fill gaps.
Workday Recruiting processed 2.2 million job requisition transactions in May, representing nearly 22% of all U.S. job openings that month.
The most successful organizations will take steps to engage and optimize their incumbent workforce while becoming laser focused on attracting talent with the best skills for the job. Here are some ideas on how organizations can achieve this.
Now is the perfect time for companies to shift to a skills-first talent strategy, which has been proven to expand talent pools and improve your quality of hire.
Use strategic workforce planning to design around those skills and other business requirements.
As recruiters navigate a sea of applicants, they can leverage artificial intelligence and machine learning capabilities to automate high-volume tasks, make data-driven decisions around talent and staffing, and create a better candidate experience.
As the nature of work changes, it’s important that we help employees adapt and do everything we can do to make it easier for them to do their jobs. With many returning to the office, employees are facing an “activity avalanche,” with more time in meetings and less focused time. This is an important moment for employers to revisit established norms, take a fresh look at processes, and make changes to company culture that will optimize employees’ time on the important and productive work that moves the needle.
Amid signs of disengagement, companies can draw on some of the leadership lessons gleaned from the pandemic. During a chaotic and fraught time, leaders leaned in with empathy, demonstrated vulnerability, and created authentic connections with their employees. Nurturing this kind of connection isn’t just the right thing to do, it’s also smart business. Our motto at Workday is that when you take care of your people, they will take care of your customers and your business.
Now more than ever, it’s time to listen to what your employees are telling you. By listening and then acting, we can successfully navigate this slowing, and somewhat stagnant, labor market.
Read the full report, “The First Half of 2023: Hiring and Talent Trends,” which goes deeper into hiring and recruiting trends around the globe, which industries are seeing the most voluntary and involuntary attrition, and how the current hiring landscape is impacting diversity and inclusion efforts.
We’ve seen the end of growth-based hiring for the foreseeable future. Learn the top trends in talent and acquisition and why Workday customers are prioritizing efficiency.
Senior leaders in people and technology at Southwest Airlines share the game-changing impacts of partnering with Workday.
At Workday Rising, you’ll find the technology, innovation, and connections you need to not only embrace change but also lead it. And it’s your chance to learn how we’re putting AI and machine learning to work in powerful, responsible ways.
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