Decoding the 2023 Labour Market: An Employer’s Guide to the New Era | Israel

2023 is a game-changing year in global and local labour markets. While some work habits formed during the pandemic have faded, new trends have emerged. Companies are trying to redefine their core policies, moving towards primarily office-based work, with just a few flexibility perks thrown in. To stand out in a highly competitive market, employers need to keep abreast of the continually evolving range of flexible work models. The key to success lies in a distinctive strategy specifically designed to stimulate Gen Z’s active participation in the workplace.

As the cost of living continues to rise, and companies are tied down by expensive long-term lease contracts, vacant offices have become an unaffordable extravagance. Recent research among managers and employees adds vital data: remote work may enhance personal productivity but eventually results in a decrease in work engagement and collaborative teamwork. The lack of social interaction between employees affects a company’s overall performance, and has wider implications: the “productivity theatre” abruptly gave way to the “quiet quitting” trend, the most extreme way for employees to express their indifference to employer’s needs. A lackadaisical attitude at work became a form of public protest – something to be recorded and shared with the whole world on Tik-Tok.

Since early 2023, large multinationals have regained the whip hand, implementing mass layoffs across the board. The wave started with tech giants (Meta and Facebook have already gone through two layoff rounds, totalling  40,000 workers; Microsoft, Google, IBM, Spotify, Twitter and many more, have followed suit). Mass layoffs spread rapidly to leading companies in other industries (Amazon, Disney, Morgan Stanley, Rolls Royce, Paramount, and more). The numbers point to a staggering loss of over 1 million jobs in the USA alone in less than six months. The power has shifted back to employers, and no doubt the “quiet quitters” were the first to get the chop.

Over the past 50 years, union density has steadily declined, hitting a historic low as Generation X, Y, and Millennials favoured autonomous management of their salaries and benefits. However, the uncertain economic climate post-pandemic, coupled with Generation Z’s entry to the workforce, significantly reversed this trend, fostering a pro-union mentality among employees. This trend is particularly noteworthy in the USA, where the current administration actively advocates for union-friendly legislation. Major companies such as Amazon, Google, and Starbucks are experiencing ongoing unionisation processes. On closer examination, it appears that the unions best at fighting back against union busting are primarily newcomers or company-based unions. These types of unions adeptly pinpoint the common motivation uniting different employees, rallying the workforce towards common objectives. Their efforts also elicit strong public support via social media and consumer boycotts, as seen with Starbucks.

In the wake of the pandemic, leading companies adopted hybrid work models, such as fully remote to at least two days in the office a week. Based on new insights, employers tend to favour a strict Return to Office (RTO) model (promoted as a more palatable alternative to layoffs). On the other hand, a 2023 Gallup survey of 16,000 full-time American employees reveals that four days in the office a week, as implemented in the UK and Japan, is considered not flexible enough. Since March 2023, Disney, BlackRock and Chipotle Mexican Grill, along with leading American finance companies such as JPMorgan Chase and large law firms, have embraced a strict RTO model, later dubbed “RTO creep” by their employees. Meta announced a three-day RTO policy starting in September, but sweetened it with a “Work From Anywhere” perk of two to four weeks. This new arrangement raises several legal issues, including mandatory attendance at Zoom meetings despite considerable time differences, and restrictions on work from home benefits. Other corporations, such as Google, Apple and Microsoft, have likewise increased their RTO work stipulations. Some companies use a strategy of “sharing” their RTO expectations, in which remote workers are subtly excluded or given the cold shoulder as a signal to return to the office.

Attracting highly skilled young workers has become a top priority for employers. The challenge lies in catering to Gen Z's unique work preferences, which include optimal work-life balance (mainly by combining a part-time job with a side hustle), creative tasks, influencing the company’s socio-political stances, along with a reasonable salary. Some multinational corporations have adjusted to this trend, taking a clear stance on and implementing environmental standards, broad diversity and information transparency, for example. Ignoring Gen Z values come at a cost. Thousands of Google employees worldwide recently staged a walkout in protest at the company’s substantial payout to a senior officer accused of sexual harassment. In May 2023, disgruntled Amazon employees orchestrated a high-profile walkout in protest at the company’s RTO push and climate policies. There were similar walkouts at Facebook after Mark Zuckerberg refused to delete a racially insensitive post by former President Trump. Such actions lead to collateral damage, including reputational harm and a decline in employer ranking.

AI is the hot top in today’s workplace. The prediction that AI could displace up to 30% of the workforce has been a cause of fear and uncertainty among less highly skilled employees. On the other hand, the argument is far from one-sided: intelligent AI utilisation by employers has the potential to reduce bureaucratic tasks, aid unskilled employees, and even alleviate the workload contributing to employee burnout. The application of AI in the workplace should be examined carefully, fostering an insightful dialogue that encourages the advantageous use of AI that benefits everyone.

The revolution is underway. The question of whether to join or not boils down to risk management. To navigate their organisations successfully through tumultuous markets, leaders must be prepared to question long-standing beliefs, remain open to novel methods of work evaluation and rewards, and above all, maintain open lines of communication with employees to understand their real needs. History serves as a reminder: those who fail to adapt, like the Luddites, will be left behind.