This is how inflation affected the labor market

By: Trademagazin Date: 2022. 11. 17. 09:39

High inflation has a significant impact on the labor market as well as on all areas of the economy. The consequences may differ from sector to sector and market to market, but it is a general phenomenon that professionals have to make decisions by considering opposite effects: in addition to their increasing expenses, they try to keep their employees, whose living costs have become more expensive, so their salary requirements are also higher. From the employee side, increased activity is expected on the labor market, but the number of job advertisements has started to decrease – it was revealed in the newly launched Backstage podcast of Profession.hu.

How much salary increase is justified? – this is also an important question

The increasing cost of living encourages employees to be active in the labor market: in order to get a better salary, the situation can motivate many to look for a new job for a higher salary. Until now, the most motivating factor for switching has been salary, the importance of which has increased even more now. Therefore, finding and recruiting new employees effectively can still be an important success factor for companies, and in comparison, due to the decreasing intensity of recruitment, the retention of their current employees increases in value. Meanwhile, they have to make short and often even long-term decisions in an uncertain economic environment.

In most cases, due to the cost of living due to inflation, companies increased the salaries and benefits of their employees. One of the most important strategic questions in this case is the optimal amount and form of this: should employers give their employees a one-time or permanent amount. Wage increases must definitely be included in the company’s budget, which is often compensated by raising prices. In this case, the most important question becomes how much the market can withstand a price increase and whether the consumer will tolerate the resulting price increase when paying for products and services.