Category: Contingent Workforce Management

Through The Grapevine: How to Create and Manage an Employee Referral Program

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A well-managed employee referral program may be the single most powerful weapon in an organization’s recruitment arsenal. In fact, employee referral programs continue to be a top source for hires. By encouraging employees to refer contacts in their professional networks for open positions you can reduce recruiting costs, improve candidate quality and increase employee engagement.

In this article, we explore the case for employee referral programs, some of the top considerations organizations should be mindful of and how to properly manage a referral program.

The Case for Developing an Employee Referral Program

employee referral program

Intuitively, developing a formal employee referral program makes sense.

After all, who better to refer great candidates and sell those candidates on why they should join your organization than your own employees?

Employee referral programs make good business sense. Some of the benefits your organization may reap from an employee referral program include:

  • Faster time-to-hire: A LinkedIn study uncovered that it takes an average of 29 days to hire a referred candidate compared to 39 days to hire a candidate through a job board.
  • Less impact on your talent acquisition budget: An employee referral program is an inexpensive sourcing strategy that relies primarily on word-of-mouth and internal communication. You don’t have to pay to advertise job posts. Due to the faster time-to-hire, organizations can cut internal costs as well, since recruiters won’t be spending as much time sourcing and interviewing candidates for open positions.
  • Top talent begets top talent: Another LinkedIn survey revealed that star employees tend to refer other star employees. Tapping into your top talent can help organizations source and hire high performers more effectively.
  • Better employee retention: Not only are candidates hired via an employee referral typically of higher quality, they also tend to stay at their jobs longer, with 46 percent remaining in their position for at least three years.

Employee Referral Programs as an Extension of Employee Engagement

With employee referral programs, saving time and money is just the beginning.

Employee referrals also add value through improved employee engagement.

Using employee referrals to hire candidates builds a more robust corporate culture by intersecting performance and engagement to drive business success through tapping current employees for qualified candidate referrals, thus simplifying the sourcing process.

Employees who recommend a new hire have a vested interest in onboarding and retaining that person, as many referral programs include a requirement that the referred employee must be with the organization for a specific period of time before the referring employee can get a referral bonus.

What’s more, employees who refer candidates will feel a sense of commitment to ensure their referral’s success because they recommended the position.

Moreover, employees who are involved in the recruitment process may feel a greater sense of purpose towards the future of your company.

By encouraging employees to submit referrals, you are letting them know you value their input and contribution.

What to Consider Before Implementing an Employee Referral Program

Set Program Objectives

Before implementing an employee referral program, organizations should outline objectives in order to set a clear goal.

Defining objectives early on in the process helps ensure your team is on the same page and knows exactly what is expected and when.

Setting objectives can be achieved by holding planning sessions with key stakeholders where you share the vision for the program, develop strategies to achieve success and find solutions that are mutually agreed upon.

Objectives for an employee referral program might include:

  • Improving quality-of-hire
  • Increasing new hire retention
  • Boosting employee morale and recognition
  • Lowering overall recruiting costs
  • Increasing diversity within the organization
  • Sourcing candidates with a specific skill set
  • Reducing the time-to-hire for external candidates
  • Better targeting and sourcing of passive job seekers
  • Deepening the pipeline of potential applicants

Leverage Technology

Technology can help make the employee referral process better for both employers, employees and referrals. Using your technology tools can streamline processes and minimize inefficiencies and missed opportunities in the referral program.

In an article with SHRM, Jennifer Newbill, Director of Global Employment Brand, Dell explains that Dell uses a combination of “white glove” and automated communications to manage its more than 40,000 annual employee referrals, making the process more manageable for the organization’s talent acquisition teams.

Social Media Referrals

Recruitment marketing technology can allow you to post jobs on your organization’s social channels in seconds. You can also leverage your existing employees’ social media networks – if your employees are willing to post on your behalf – to expand your reach.

Auto-Posting Open Roles

In order to get your employees more engaged in your employee referral program, you should consider sharing job openings on a regular basis. Instead of sending out emails manually every time a position opens, you can automate this process through your recruitment email marketing tools.

For example, gig-economy start-up Fiverr leverages employee referral software that gamifies the referral process by adding a competitive element to referring candidates. The software assigns points to employees and credit for all the actions they take. The software also keeps employees up-to-date on the status of their referrals.

Make Jobs Shareable Through Employee Portals

Make it easier for employees to share job opportunities through their social media accounts and email. Adding social links on job posts will allow employees to automatically share job openings with just a few clicks. The quicker and easier jobs are to share, the more likely your employees will participate.

Referral Tracking

Tracking and appropriately attributing a referral is crucial to the program’s success. To make tracking easier, a referral field should be added to applications. The referral field on the job application can be filled in with information about the referring employee, making referral tracking easier.

Managing an Employee Referral Program

When it comes to managing a successful employee referral program, there are a few elements to keep in mind. Ideally, every program includes the following:

  • Incentives
  • A simple process
  • Feedback

Below, we explain how your organization can manage each of these three elements within your employee referral program.

Employee Referral Incentives

According to a survey conducted by LinkedIn, 40 percent of respondents were motivated to refer candidates for a monetary reward. What’s more, 68 percent stated they submitted a referral because they wanted to help their organization. If you want to get the most impact out of your organization’s employee referral program, you should offer a combination of monetary and creative, non-monetary incentives for referrals.

  • Experiment with monetary reward amounts because there is no magic number that will motivate all employees. Periodically testing different amounts can allow you to optimize your financial incentives.
  • Employees who are more altruistic in nature may prefer the option of donating their referral bonus to a charity or cause close to their hearts.
  • An alternative to offering individual monetary incentives is to hold a quarterly prize drawing where every employee who has made a successful referral during the period is eligible to win.
  • While prizes and cash incentives can be great motivators, other perks can be just as effective. Non-monetary rewards can include reserved parking spots, extra time off or first choice of shifts and schedules.

For a PeopleScout client and multinational auto parts and accessories manufacturer, we encourage their store managers, area managers and team members to refer quality candidates, including friends and family, to current job openings.

Once the employee’s referral applies to a position, our client lets a member of our recruiting team know that a referral has applied.

In the system the candidate selects referral and the client lets us know. This ensures we do not miss a referral and/or they selected the wrong source code when applying. 

Our team then schedules an interview with the referral and if qualified, proceeds to extend a verbal offer. 

If the referral is qualified, they will be scheduled with the store/hiring manager for an in-person interview, unless the referral was a quality candidate from the store manager and they already met them in person.

To assist our client in tracking the referrals coming in, our recruiters maintain a digital log of the number of referrals that were phone screened and referrals that were hired.

Our client values this referral program because it yields quality candidates and results in a faster time-to-hire for critical positions. 

When a referral is screened the recruiter ensure the source code is correct in the ATS so we provide stats and results of referrals.

Program highlights include:

  • When we onboard and train our client’s new managers, PeopleScout emphasizes the employee referral program and its importance to the recruiting process
  • PeopleScout’s team has specific SLAs to ensure referrals are expedited
  • PeopleScout tracks time in status and conversion rates specifically for referrals
  • More than 25 percent of hires for our client come from referrals
  • More than 50 percent of referrals submitted are ultimately hired
  • PeopleScout hires between 9,000 and 11,000 people for this client annually

Simplify the Employee Referral Process

While 95 percent of HR professionals believe their employees fully understand how to submit referrals, 63 percent say they “very often or frequently” receive feedback that employees find it too complicated to refer someone.

When evaluating your program, ask yourself these questions:

  • Do employees know about your referral program?
  • Is it clear with whom or where an employee should submit a referral?
  • Is the technology used to submit referrals user-friendly?
  • Is it easy to track if the referring employee was given credit?
  • Is it easy to track the incentives that were earned?

If the program makes your employees jump through hoops to place a referral, you can be sure that it won’t attract many participants.

To simplify your program, start with the following steps:

Explain your employee referral program

Employees need to understand exactly how your referral program works to make it successful.

How you teach employees about the program depends on your size and how the workforce is dispersed geographically.

You might gather your employees together and give a brief presentation or create an online training course.

Or, you might do something as simple as sending an informational email or flyer for employees to review.

Set your requirements up front

If you want your employees to refer quality candidates, they need to know what traits and skills you are looking for.

Share the open positions you are hiring for and provide employees with the job descriptions, so they get a feel for the types of candidates that would be a good fit.

Provide regular reminders

You should periodically remind employees about the referral program. If you don’t, they may quickly forget about it.

InMobi, an Indian-based mobile technology company, offered a motorbike—a very popular vehicle in India—to any employee who referred a successful engineering manager candidate.

To keep the referral program top of mind, InMobi parked a motorbike right in front of their corporate headquarters so employees were reminded of the referral incentive every day while entering the building.

When you have an influx of open positions, send a reminder to your employees that explains how they can refer candidates and what the reward is for hired candidates.

You can also promote the referral program when you aren’t actively hiring.

An employee might refer a candidate you do not want to miss out on. You should add those candidates to your talent pool.

Collect and Provide Feedback  

Measuring results is critical to evaluating the success of the program and to finding improvement opportunities.

While metrics can vary depending on the goals you’ve set for the program, here are some good metrics to track:

  • On-the-job performance of referral hires
  • Retention/turnover rate of referral hires
  • Program ROI or the cost/benefit ratio
  • Employee satisfaction with the overall process

Provide notifications after an employee referral is made

Referring employees may be nervous about whether their referrals were any good. The best practice is to notify employees immediately when their referral is accepted/rejected, if the candidate is invited for an interview and when the candidate is finally hired or not.

Employee Referral Program: The Gist

Employee referral programs remain one of the top sources for candidates because they are a cost-effective, engaging talent acquisition strategy.

To get the most out of your referral program, understand what motivates your employees to refer candidates, make the process as easy as possible and maintain good communication with both the referrer and referee.

PeopleScout UK Jobs Report Analysis — November 2018

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This month’s UK Labour Market Report, which covers July through September, brings to mind a gathering of friends sitting around the dinner table when a long-anticipated guest bursts through the door and breathlessly announces, “I have good news and bad news, which do you want first?” This month’s report contains elements that are unquestionably good and bad, but there are some items where interpretation varies.

UK Jobs Report Analysis — November 2018


First, the objectively good news: The number of employed people rose by 23,000, bringing the employment total to a new high of 32.41 million, which is 350,000 more than a year earlier. And the bad news? The UK unemployment rate has risen to 4.1 per cent, up from a 43-year low of 4.0 per cent. In the last quarter, 21,000 UK workers lost their jobs.


Below, we focus on factors that are up for interpretation.

Wages

The growth in UK wages accelerated to a near 10-year high. Average nominal earnings (wages excluding bonuses) rose 3.2 per cent from the same quarter a year earlier. This is the largest increase since December 2008 and higher than the expected 3.1 per cent predicted in a Bloomberg survey.


The rise in wages is continuing to outpace prices, which is a relief for those impacted by the inflation surge following the Brexit vote. While the rate of pay growth may be greeted positively by workers, it is a concern for employers who are feeling the pressure to raise wages to retain and attract talent in a tight market.

Job Vacancies

Job vacancies hit a record high of 845,000, which is welcome news for job seekers who find themselves “in the driver’s seat” given the high demand for workers. A large number of job vacancies can be perceived as a sign of a robust economy with many enterprises seeking to grow.


However, this high number of open positions can take a toll on both employers who have to ensure profitability with a smaller number of workers and the workers who may be required to take on extra responsibilities. Given the number of opportunities available, workers may feel the lure of quitting for a more lucrative position when they carry a burdensome workload.

EU Nationals as Part of the UK Workforce

There were 132,000 fewer EU nationals working in the UK than a year earlier, bringing the total to 2.25 million. This was the largest annual drop in the number of workers from Europe since the Office for National Statistics began keeping track in 1997.


The fall in EU workers was due to a decline of 154,000 workers from the eight eastern and central European accession countries that joined the EU in 2004. This was offset by an increase of about 23,000 workers from other EU countries. The Financial Times reports:


“Stephen Clarke, senior economic analyst at the Resolution Foundation think-tank, said that the fall in EU migrant workers ‘shows that Britain’s labour market is already changing ahead of its exit from the EU.’


‘Firms who employ a large share of migrant workers need to think now about adjusting to a lower migration environment, in terms of the workers they employ, what they produce and how they operate,’ he said.”


This may be music to the ears of those who hoped that Brexit would bring more job opportunities to UK nationals. For others, the decline in EU workers exacerbates an already difficult skills shortage and increases the pressure to raise wages to attract home-grown talent.


If we check back in with the gathering of friends sitting down to dinner, some may have heard mostly good news and some mostly bad, but they can all agree that there is much to digest as the year draws to a close and Brexit looms ever closer.

PeopleScout Canada Jobs Report Analysis — October 2018

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Canada’s unemployment rate has moved back down to a four-decade low of 5.8 per cent, but even in a tight job market where employers are having a hard time finding workers, wage growth is slowing. The nation added 11,200 net new jobs in October, including a gain of 33,900 full-time positions, Statistics Canada reported in its latest labour force survey. The agency said the jobless rate moved down from the 5.9 per cent level in September, mainly because fewer people searched for work.

The Numbers

11,200: The economy gained 11,200 jobs in October.
5.8%: The unemployment rate fell to 5.8 per cent.
1.8%: Weekly wages decreased to  1.8 per cent over the last year.

The Good

Employment among people in the core-aged group (25 to 54) rose by 31,000 in October. On a year-over-year basis, employment for core-aged workers increased by 169,000 (+1.4 per cent) with gains equally distributed between men and women. Job gains were not limited to the core age group. The number of workers aged 55 and over rose by 19,000 in October, which is the result of more employed women in this age category. The unemployment rate for all workers aged 55 and over fell by 0.3 percentage points to 4.9 per cent. Compared with October 2017, the number of workers aged 55 and over increased by 72,000 (+1.8 per cent).
More Canadians were employed in business, building and other support services; wholesale and retail trade; and healthcare and social assistance. Full-time employment rose by nearly 34,000. Over the last year, the number of employed people in Canada grew by206,000 or 1.1 per cent, with the most of the gain coming from full-time work (+173,000).

The Bad

Year-over-year, average weekly wage growth fell to just 1.8 per cent and hourly wage growth slowed last month to 2.19 per cent for the lowest reading level September 2017. Experts have predicted wage growth to rise along with a tightened labour market, but average hourly wage growth has dropped every month since May when it was 3.94 per cent.
The loss of over 22,000 part-time jobs contributed to the lackluster job gains in October. The unemployment rate fell only because fewer people were in the labour force which decreased by 18,200. With the exception of Saskatchewan which gained 2,500 jobs in October, employment was essentially flat in every other province.
There were 17,000 fewer Canadians working in “other services” in October, the first notable decline in six months. “Other services” includes services such as those related to civic and professional organizations; repair and maintenance; and private households. Employment in finance, insurance, real estate, rental and leasing declined by 15,000 in October, offsetting an increase the month before. On a year-over-year basis, employment in the industry was essentially unchanged.

The Unknown

The tax reforms in the U.S. may seriously impact the Canadian economy in the near future according to a recent PwC study as reported in BNN Bloomberg:
“Our analysis suggests that the U.S. tax reform has eliminated one of Canada’s main competitive advantages. We are of the view that this loss will have a significant negative impact on capital-intensive sectors in Canada,” according to the report, which was produced for the Business Council of Canada. “All else being equal, these sectors as a whole would likely face a significant shift in investments from Canada to the U.S. over the next 10 years.”
The wide-ranging tax reform bill cut the U.S. corporate tax rate to 21 per cent from 35 per cent and allows for companies to deduct the full cost of capital spending from their tax bills.
PwC said $85-billion in GDP – about 4.9 per cent of total output – and 635,000 jobs are at risk due to the U.S. leapfrogging Canada on the competitive front. It forecasts the chemical, machinery manufacturing and plastics industries would be most at risk. On a provincial basis, PwC said Ontario has the most on the line, accounting for nearly one out of every three dollars identified at risk.”

PeopleScout U.S. Jobs Report Analysis — October 2018

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U.S. Jobs Report Analysis — October 2018

The Labor Department released its October jobs report which shows 250,000 jobs added to the U.S. economy. The pace of hiring was strong, and the unemployment rate remained at 3.7 percent, the lowest point since 1969. The unemployment rate held steady because the number of people working or looking for a job increased by 711,000, nudging the labor force participation rate up to 62.9 percent, from 62.7 percent a month earlier. U.S. employers have added to payrolls for 97 straight months, extending the longest continuous jobs expansion on record.


The Numbers

250,000: The economy added 250,000 jobs in October.
3.7%: The unemployment remained to 3.7 percent.
3.1%: Wages increased 3.1 percent over the last year.

The Good

Wage growth climbed 3.1 percent from one year ago, on an hourly basis, exceeding 3 percent for the first time since the recession. On a weekly basis, wages grew at an even stronger rate at 3.4 percent. The economy has added 2.1 million jobs so far in 2018, which puts it on track to be the third best year for job growth since the recession. This year is 89,000 jobs behind the pace of 2015 and 322,000 jobs behind the pace of 2014. The overall increase in those participating in the labor pool is an indicator of the continuing strength of the job market.
For those ages 25 to 54, 82.3 percent are participating in the labor force and 79.7 percent have jobs. Both figures are now at their highest levels since the recession and its immediate aftermath. The biggest sectors for job growth continued to be professional services and health care, and the construction and manufacturing industries have also had solid gains over the last year.

The Bad

Not everyone is reaping the same benefits from the strong job market. The unemployment rate for workers with high school education or less climbed in October. Workers without a high school degree face triple the unemployment rate of those who finished college. Education level is not the only determining factor, as Bloomberg reports:
“Ten years after the Great Recession, 25- to 34-year-old men are lagging in the workforce more than any other age and gender demographics. About 500,000 more would be punching the clock today had their employment rate returned to pre-downturn levels. Many… say they’re in training. Others report disability. All are missing out on a hot labor market and crucial years on the job, ones traditionally filled with the promotions and raises that build the foundation for a career.”

The Unknown

With unemployment at record lows, a critical question is how many of those still on the sitting on the sidelines outside of the labor force can be coaxed back in to fill the current and future open positions. Commenting on the strong job statistics for 25- to 54-year-olds noted above, Neil Irwin in the New York Times writes:
“The proportion of prime-working-age adults — those between 25 and 54 — who were working in October soared to 79.7 percent, up from 79.3 percent in September and easily the highest of this expansion.
Strikingly, though, there is still room to run on this measure compared with the last two economic peaks. That figure was 80.3 percent in January 2007 and 81.9 percent in April 2000.
Does the economy still have the potential to reach those levels, or reach still higher ones? If so, there’s no reason this kind of job growth can’t continue for at least a few more years.
If, on the other hand, some of those who have left the labor force won’t be pulled in no matter what, the economy will be hitting a simple constraint of not having enough workers — all the more so given more stringent policies limiting immigration.
So celebrate the latest jobs numbers, while hoping that this proves to be the middle of a nice boom rather than the beginning of the end.”

2018 Q3 Global Economic Snapshot

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The strong job growth which characterized the first half of 2018 continued in the third quarter for many of the world’s leading economies. Tangible evidence of rising wages spurred by the tight job markets began to appear in the U.S. and the UK. Employers continued to be challenged by the decreasing pool of available talent which has added to the urgency to successfully recruit and retain talent.

Solid Job Growth and Low Unemployment in Many of the World’s Largest Economies


In Q3 in the United States there were more job openings than unemployed workers to fill them, and in September, the unemployment rate plunged to its lowest level since 1969. In the UK, unemployment rates were at their lowest in more than 40 years. The U.S., UK, China, Germany and Japan all posted unemployment rates under 4 percent during the quarter. Unemployment in Australia dropped to 5.3 percent in July and held steady in August. The euro area (EA19) seasonally-adjusted unemployment rate was 8.1 percent in August. This is the lowest rate recorded in the euro area since November 2008. Individual European economies however, such as France and Italy, continued to post unemployment rates above 9 percent.


For other major economies, the results were more mixed. Canada, which had experienced healthy job growth during much of the last year, had a rise in unemployment in August which was followed by job gains in September driven by part-time employment. Brazil, Latin America’s largest economy, had an unemployment rate above 12 percent during the third quarter. While Brazil’s unemployment rate is among the highest in the Americas, it is still an improvement over the 13.1 percent rate average during the first quarter of 2018.

U.S. and the UK: Possible Signals of Wage Growth are Not Shared Worldwide


In June, the New York Times noted “The rise in consumer prices over the last year has effectively wiped out any wage increases for nonsupervisory workers…That is odd for an economy with a tight labor market, with unemployment running at a 3.8 percent…the benefits of a hot economy have not yet translated into a significant wage increase for workers.” While this article was specifically referring to the United States, slow wage growth has been the norm for the world’s wealthiest countries despite sustained low unemployment.


Wage data released during the third quarter in the U.S. and the UK suggests that real wage growth may have finally arrived. In the U.S., average hourly earnings rose by 0.4 percent in August, pushing the annual rate of increase to 2.9 percent – the fastest pace since June 2009. And in the UK, wage growth accelerated over the summer with the lowest jobless rate in more than four decades. The Office for National Statistics reported that earnings excluding bonuses rose an annual 2.9 percent in the quarter including May, June and July. In July alone, basic wages rose 3.1 percent, the most since 2015. The wage increases in both the U.S. and the UK outpaced the rate of inflation, which may have a positive impact on their overall economies.


By contrast, Canada actually saw a decrease in year-over-year wage increases during the third quarter. In August the growth rate slid to 2.9 percent after expanding to 3.2 percent in July and 3.5 percent in June. In Australia, wage data for the third quarter has yet to be reported. However, the Australian Bureau of Statistics announced that consumer prices and wage price indexes both rose by an identical 2.1 percent from the start of the year to June.

Brexit, Tariffs and the End of NAFTA


While the third quarter ended without any new clarity regarding the details of the UK’s exit from the European Union, a number of businesses, including those in the financial sector, have continued planning to move operations and employees out of the UK. The composition of the UK workforce has also started to change in response to Brexit. In August, The Office of National Statistics reported the number of European Union nationals working in the UK fell by 86,000, a record amount. This decrease was the largest annual amount since records began in 1997 and continues a trend seen since the 2016 Brexit vote. This contrasts with a rise in the number of non-EU nationals working in the UK. That number is now 1.27 million, which is 74,000 more than a year earlier. Without determining the status of EU nationals working in Britain after a final Brexit settlement, the composition of the UK workforce in both the near and long-term remains unclear.


The U.S. imposed tariffs on China before and during the third quarter. In the United States, the tariffs have led to some job losses, but when balanced against impressive domestic job gains, the extent of the impact of these tariffs on both countries remains to be seen.


Uncertainty over the future of the North American Free Trade Agreement, or NAFTA, has been a challenge for many employers in Canada, the U.S. and Mexico. Changes to NAFTA could have potentially altered the price and availability of many goods and services. After extensive negotiations among the three countries, a new trade agreement known as the U.S.-Mexico-Canada agreement, or USMCA, was announced just after the end of the quarter. The agreement must still be ratified by each country’s legislatures, but the announced new terms and rules will allow employers to resume planning and hiring forecasts which may have stalled during uncertainty over NAFTA in the 1.2 trillion dollar North American market comprised of Canada, Mexico and the U.S.

Addressing the Skills Gap: Upskilling Employees


Upskilling, or teaching new skills to current employees, is one way to address the skills shortage and current economic conditions faced by many employers. Upskilling not only provides additional skills to valued workers, it can also support their retention. As a recent article in Forbes notes:


“With the job market booming, employers should make every effort to prevent employees from job hopping their way up the corporate ladder, forcing companies to backfill positions and costing thousands in recruiting expenses and lost productivity. By investing in their employees’ education and skills training, employers not only increase employees’ value to the company but also send them the message that they are worth the investment and have a place in the company’s future.”


No matter how high a company’s retention rate may be, retirement and corporate growth require an effective recruitment strategy to attract new talent. Employers that promote the development of their employees’ skills provides a competitive advantage in attracting motivated candidates, and ultimately productive and successful employees.

PeopleScout UK Jobs Report Analysis — October 2018

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The Office for National Statistics released its October Labour Market Bulletin which reports on the three months of June, July and August 2018. The bulletin reports 83,000 jobs were added in those three months with the unemployment rate holding steady at 4.0 per cent. The report shows that average weekly earnings for employees in the UK in nominal terms increased by 3.1 per cent over the last year.

UK Jobs Report Analysis — October 2018

The Numbers


83,000: The economy added 83,000 jobs over the June-August 2018 period.
4.0%: The unemployment rate remained unchanged from the previous bulletin at 4.0 per cent.
3.1%: Wages increased 3.1 per cent over the last year.

The Good


Increased competition for workers pushed wage growth to the highest level in the UK since the recession ten years ago. The UK hasn’t seen 3.1 per cent wage growth since the final three months of 2008, the period when the government had to bail out UK banks following the collapse of Lehman Brothers.


There were 1.36 million unemployed people which is 47,000 fewer than for March to May 2018 and 79,000 fewer than for a year earlier. The unemployment rate at 4.0 per cent has not been lower since February 1975. Of people 16- to 64-years-old, 75.5 per cent were working in the UK, up from 75.1 per cent a year earlier.


For June to August 2018, the unemployment rate for those aged from 16 to 24 years was 10.8 per cent, the lowest youth unemployment rate since comparable records for unemployment by age group began in March to May 1992.

The Bad


There were some signs of weakness in the report, with employment falling slightly from the previous report and for the first time since the autumn of last year. And while wage growth has started to pick up, the Financial Times reports, “The past decade has been the worst for UK real incomes since the mid-19th century and, on current trends, real wages will not double until 2099, the Resolution Foundation noted in a report published on Tuesday. In the period from 1945 to 2002, real wages doubled on average every 29 years.”


Due primarily to concerns over Brexit, Great Britain fell to two places to number 8 on the World Economic Forum’s Global Competitive Index. As The Guardian reports, “Britain has dropped two places to eighth in an influential global competitiveness index, with the risk of Brexit further damaging its international standing…While Britain remains the fourth most competitive economy in Europe behind Germany, Switzerland and the Netherlands, the WEF suggested that it could slip further behind because Brexit stood to damage its attractiveness to international buyers and sellers of goods and services.”


“Brexit … will by definition weaken the United Kingdom’s markets component as integration with the EU is rolled back,” the report said.


“The WEF said Britain had slipped in the 2018 ranking due to a deterioration in domestic labour mobility, which measures the extent to which people move between the different regions of a country to find work.”

The Unknown


Uncertainty over Brexit terms continues with some economists warning of the possibility of no formal deal being agreed to before the exit deadline of March next year. As The Economist notes, “the timetable is slipping, and there is a growing risk of no deal at all. The main reason is that Theresa May, Britain’s prime minister, has rejected a key part of the EU’s draft withdrawal agreement, a planned backstop to ensure that, no matter what happens to a future trade deal between Britain and the EU, there is no hard border with physical customs controls between Northern Ireland and the Irish Republic.


The issue of the Irish border has bedevilled talks from the start. The EU’s guidelines for negotiations, published in March 2017, made it one of three points that needed to be settled in the withdrawal agreement before talks could begin on future trade relations (the other two were settling how much Britain owed for outstanding EU obligations and enshrining the rights of EU citizens in Britain to stay). Last December Mrs. May agreed with the EU that, while the intention was to avoid frontier controls through a comprehensive free-trade deal, a backstop solution was needed to ensure no hard border in any circumstances. The problem is that the two sides have different views on how such a backstop should be legally designed.”

PeopleScout U.S. Jobs Report Analysis — September 2018

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U.S. Jobs Report Analysis — September 2018

The Labor Department released its September Jobs report which shows 134,000 jobs added to the U.S. economy. U.S. employers have added to payrolls for 96 straight months, extending the longest continuous jobs expansion on record. The unemployment rate remained steady at 3.7 percent, the lowest rate recorded since 1969.


The Numbers

134,000: The economy added 134,000 jobs in September.
3.7%: The unemployment decreased to 3.7 percent.
2.8%: Wages increased 2.8 percent over the last year.

The Good

The unemployment rate in September was the lowest in nearly half a century. Notable job increases were posted in transportation and warehousing, construction, manufacturing and healthcare. These sectors have shown significant growth over the last year: transportation and warehousing has added 174,000 jobs; construction has increased by 315,000 jobs; manufacturing has gained 278,000 jobs; and health care jobs have increased by 302,000.

The Bad

The 134,000 jobs added fell short of Wall Street analysts’ expectations. These job gains are less than half of the 270,000 jobs which were added in August based on revised figures. The comparatively modest job increases may mark the start of a slowdown of job increases.
The year-over-year wage gains fell 0.1 percentage points to 2.8 percent. This slight decrease has temporarily put on hold the start of a continuing trend of increased wages brought about by the tight job market. Slow wage growth is perceived to be the source of the current high rate of voluntary turnover. CNBC reports that compensation appears to be a major reason why workers are quitting their jobs at the highest rate since 2001 and notes that workers voluntarily leaving their jobs are making a smart move when it comes to increasing their income:
Andrew Chamberlain, chief economist at job site Glassdoor [stated] “We’re seeing high worker confidence in their ability to strike out and find a better job opportunity elsewhere,” says Chamberlain. “For many, it’s a smart move, as there’s a clear advantage to increasing your earning potential by switching jobs.”
According to Brian Kropp, vice president at research firm Gartner, the average increase in compensation for a worker who quits their old job for a new one is about 15 percent. “You’re never going to get that 15 percent [increase] by staying at your current job,” he tells CNBC Make It. “That’s just not going to happen.”

The Unknown

Hurricane Florence may have been a factor in the less than stellar job numbers in September as Bloomberg reported:
“The reason for the fuzzy September numbers? Big storms wreak havoc on a region’s workforce. Some people flee the area and businesses close down days before the wind starts to howl. Others, like utility and construction companies and their employees, work overtime preparing for damage, cleaning up and rebuilding. So the latest wages and hours-worked figures were probably skewed by the weather.”
The median forecast in a Bloomberg survey of economist calls for a 2.8 percent gain in average hourly earnings from a year earlier, slightly weaker than the August advance of 2.9 percent – which was the biggest jump since mid-2009. The hurricane effect, however, may render any actual number on worker pay a short-term blip.
“Hurricane Florence is poised to impact not only the pace of job creation in September” but also to “temporarily distort average hourly earnings and the average length of the workweek, as well,” according to Bloomberg economists Carl Riccadonna, Yelena Shulyatyeva and Tim Mahedy.”

PeopleScout Canada Jobs Report Analysis — September 2018

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Canada Jobs Report Analysis — September 2018

Statistics Canada released its September 2018 Labour Force Survey which shows a gain of 63,300 jobs for the Canadian economy which drove the unemployment rate down to 5.9 per cent, down from 6.0 per cent in August. Contributing to the drop in unemployment was a gain of 80,200 part-time positions.


The Numbers

63,300: The economy gained 63,300 jobs in September.
5.9%: The unemployment rate fell to 5.9 per cent.
2.2%: Weekly wages increased 2.2 per cent over the last year.

The Good

September’s job gains, fueled by the increase in part-time employment reversed the job losses from the previous month. The report shows that in Ontario, employment increased by 36,000, the third increase in four months. Employment in British Columbia increased by 33,000, driven by gains in full-time work (+26,000). In the third quarter, employment increased by 54,000, following a decline over the first half of 2018.
In September, more Canadians worked in construction; finance, insurance, real estate, rental and leasing; public administration and agriculture. Compared with September 2017, employment was up 222,000 or 1.2 per cent, entirely the result of gains in full-time work (+224,000). Over the same period, total hours worked increased 0.7 per cent.

The Bad

The Canadian economy lost 16,900 full-time jobs in September. At the same time, employment fell in information, culture and recreation and business, building and other support services.  Employment increased in Ontario and British Columbia while it was little changed in the remaining provinces. Statistics Canada reported that the number of self-employed Canadians declined by 35,000 after recording an almost equal total increase over the past twelve months.
The monthly labour force survey also found that all of the job gains in September were made by workers in the core 25-to-54 age range with virtually no change in youth employment. September’s youth unemployment rate stood at 11.0 per cent, up by 0.1 percentage points from the previous month and more than 5 percentage points higher than the working population as a whole.

The Unknown

Canada agreed to a new trade deal with the United States and Mexico to replace the North American Free Trade Agreement (NAFTA). The CBC notes that as “details of the newly renegotiated deal (the United States-Mexico-Canada Agreement or USMCA) emerge, some questions remain about what Canada’s signature guarantees in terms of protections, and what concessions were made…”
While the Canadian dairy industry will have new barriers imposed in the new agreement, the Canadian auto industry appears to be a winner in the USMCA, but these wins may not be lasting.  The CBC report continues, “Canada seems to have escaped..Section 232 national security tariffs — which would slap 20 to 25 per cent duties on cars and auto parts imported into the U.S… no hard limit will be placed on Canadian auto exports to the U.S., though if the U.S. moves forward with the imposition of worldwide 232 tariffs on autos, those would also apply to Canada.”

PeopleScout Australia Jobs Report Analysis – August 2018

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The Australia Bureau of Statistics released its August Labour Force Key Statistics. The 44,000 net new jobs added beat analyst expectations. Of those, 33,700 were full-time positions. The jobless rate held steady at 5.3 per cent because more people joined the labour force. The release also included quarterly data on underemployment and underutilisation. In seasonally adjusted terms, the underemployment rate fell by 0.3 percentage points to 8.1 per cent. Underemployment refers to people who are working but would like to be working more hours. The underutilisation rate, which is a sum of underemployment plus the unemployment rate, decreased 0.4 percentage to 13.4 per cent.

Australia Jobs Report Analysis – August 2018

The Numbers



44,000: The Australian economy added 44,000 jobs in August.
5.3%: The Australian unemployment rate remained at 5.3 per cent.
65.7%: Labour force participation increased to 65.7 per cent.
+4: According to the NAB, the business confidence index fell to +4 index points.

Upside


The increase in labour force participation demonstrates that the strong job market is motivating more Australians to look for work. Unlike months when job gains were mostly bolstered by part-time jobs, the August increase was driven by full-time employment. This good economic news is underscored by the drop in the underutilisation rate, which declined to a five year low.


New South Wales led the nation with an employment increase of 43,200 and a 0.2 percentage drop in the unemployment rate to 4.7 per cent. Victoria’s jobless rate also fell 0.2 percentage points to 4.8 per cent while Tasmania’s rate dropped an impressive 0.5 percentage points to 5.8 per cent.

Downside


The Australian Business Confidence Index fell to a two-year low. At 4.0, this rate is also below the index’s long-term average. One likely contributor to the plunge in confidence was Australia’s political leadership changes. The survey was conducted shortly after the Australian Liberal Party voted in Scott Morrison as its new leader and Australian prime minister. The decrease in the business confidence index was in striking contrast to the Business Conditions Index which saw a healthy increase in August.


Queensland saw a 0.2 per cent increase in its unemployment rate which rose to 6.4 per cent. Western Australia had 0.4 percentage point rise to 6.4 per cent.

Unknown


Prospects for significant wage growth in the near future are unclear. Based on the premise that an increased demand for workers in a diminishing talent pool drives pay growth, a key variable is the level of labour supply excess. As the Financial Review reports:


“Using up this excess supply of labour is a prerequisite for a meaningful rise in wage growth,” Capital Economics chief Australia economist Paul Dales said. “Progress is clearly being made, but there is a long way to go yet.”


Stubbornly elevated readings on underemployment over recent years have defied a steady decline in the headline jobless rate and contributed to uncertainty around the degree of slack in the labour market.


“The ongoing decline in underemployment, particularly in Victoria, is something we are watching closely as it could be signalling a turning point for wage inflation,” Westpac senior economist Justin Smirk said.

PeopleScout UK Jobs Report Analysis — September 2018

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The Office for National Statistics released its September Labour Market Bulletin which reports on May, June and July 2018. In those three months, 3,000 jobs were added to the UK economy with the unemployment rate holding steady at 4.0 per cent. The report shows that average weekly earnings for UK employees in nominal terms (that is, not adjusted for price inflation, minus bonuses) increased by 2.9 per cent over the last year.

UK Jobs Report Analysis — September 2018

The Numbers


3,000: The economy added 3,000 jobs over the May-July 2018 period.
4.0%: The unemployment rate remained unchanged from the previous quarter.
2.9%: Wages (excluding bonuses) increased 2.9 percent over the last year.

The Good


Wages rose faster than prices in the last three months, which beat analyst expectations. Wages, excluding bonuses, were up 2.9 per cent, against an inflation rate of 2.5 per cent, according to labour market statistics. The number of people working rose by 3,000 in the past three months to 32.4 million. Over the same time period, the number of job vacancies rose to 833,000. This is the highest number since these records began.


The number of unemployed people in Britain fell by 55,000 to 1.36 million, keeping the jobless rate at 4 per cent which is the lowest in more than 40 years.  Compared to the same time last year, 261,000 more people in the UK are working. Youth unemployment has declined to the lowest rate on record.

The Bad


Despite the recent wage growth, average weekly wages are still lower than the 2008 levels achieved before the financial crisis, remaining £31 below the pre-crisis average. The annual rate of growth in pay is still lower than the averages before the financial crisis when wages often rose by about 5 per cent.


Productivity also remains lower than pre-recession levels.  As Bloomberg reports:


“Without a significant improvement, firms may find their profit margins coming under pressure and increase prices to compensate. Flash figures for the second quarter show output per hour rose 0.4 per cent, leaving productivity up just 1.5 per cent on the year — below the rates enjoyed before the financial crisis.”

The Unknown


The relatively low number of jobs added may be an indication that the recent surge in jobs may have leveled off. Uncertainty over Brexit may be having an impact on workers who might otherwise move to new positions to increase their income.


Samuel Tombs, chief UK economist at Pantheon Macroeconomics, noted in the Guardian that while the strongest pay growth was among people moving jobs, workers may be increasingly opting to stay put while the risk lingered of no deal with the EU.“It would be a mistake to extrapolate the recent pickup in wage growth [into a trend],” he said.