7 Workplace Trends Impacting Your Company Culture in 2023

As the UK teeters on the edge of recession, it’s undeniable that as a nation and organisation we’re facing many challenges when it comes to workplace trends. I’m going to dive into 7 of the key workplace challenges we see impacting the HR community in 2023 and ask what it means for those trying to build a thriving culture. From demographic and population trends, to economic and technological developments, 2023 looks like a pivotal year where organisations should focus on creating a great employee experience despite a tough economic backdrop. As we enter our third consecutive year of economic uncertainty, labour shortages continue. This marks the third recession that I’ve worked through but the first where we haven’t seen increases in unemployment. There remains around one vacancy for every person unemployed. Let’s investigate why…

1. Huge Rise In Long-Term Sickness 

A big part of the answer could be data showing that since the pandemic half a million (574,000) workers have simply vanished from the workplace in the UK! This group of people classified as “economically inactive” covers a huge range. As well as students and those with caring responsibilities, there have been large spikes in older workers leaving the workplace (accounting for around half) and 325,000 people absent due to chronic long-term sickness. 

The UK is in its 4th year of sharply increasing chronic illness with a record 2.5 mill of people now absent from the workplace due to long-term sickness. This is devastating! We delved into the reasons behind this rise in long-term sickness and what employers can do about it in our recent webinar. Reducing this number with an overstretched NHS and 7 million people on waiting lists will be a huge challenge. Organisations’ focus on wellbeing must move on from seeing it as just an “employee benefit”. It needs to become a strategy for supporting a thriving culture and boosting business growth. This is a complex people issue that can’t simply be solved with a suite of benefits or a subscription to the latest wellbeing app.

2. An Ageing Workforce 

The 20th century saw huge improvements in life expectancy. This was from improved public health measures such as immunisation, the introduction of the NHS, and the decline in smoking - coupled with medical advances in treating chronic diseases such as heart disease and cancer. By 2019, life expectancy at birth in England was 79.9 years for males and 83.6 years for females. This may have dipped a little since the pandemic but most of us still expect to outlive our great-grandparents. 

So what’s happening for those workers who are aged over 50? As mentioned above, during the pandemic we saw a huge wave of early retirement. Reports are circulating that the government is considering plans to coax retired middle-aged workers back into jobs to boost the economy by offering them a "midlife MOT". As I rapidly approach the age of 49 I look forward to seeing what they dream up here! 

Separate data recently published by the Office for National Statistics (ONS) shows that 50-65 year-olds who are currently economically inactive but are considering a return to work, tend to be at the younger end of the age bracket. Unsurprisingly, money is an important driver as the cost of living crisis continues to bite. In 2022, one in five savers reduced or stopped their pension contributions, while a further 20% are considering doing so over the coming months. 

For many, any thoughts of retirement remain a pipedream. ONS figures show that 1.7 million people think they will have to work indefinitely. But many concerns remain over the difficulties over 50s face in finding employment. This may be borne out by data showing that the number of zero-hours contracts among the over-50s has reached its highest level since records began! In the last decade, the number of those aged 50+  employed under zero-hours contracts has nearly doubled to c 300,000 people.

Caroline Abrahams, Charity Director at Age UK, said that zero-hour contracts are on the rise among older people because, “sadly, it’s often very hard to find a new job in your 50s and beyond, because ageism is rife in the labour market. Yet in reality, there is a wealth of knowledge, talent and experience among older workers, who frequently make fantastic contributions through the jobs they do.”

With 5 generations of people working together in organisations for the first time, this represents both a challenge and an opportunity for employers to embrace an often overlooked aspect of diversity, equity and inclusion - age. Now is the time to embrace reverse mentoring and look at how we can attract and retain older workers.  

3. Declining Birth Rate & High Childcare Costs

As our population ages, our birth rate declines. In 2021 the fertility rate in England and Wales was 1.61 children per woman, down from 1.94 a decade ago. This trend is also seen globally. Some predictions indicate that the population will hit a peak of 71 million in the 2040s before dropping back down to 57 million by 2100 – a level last seen in 1989! 

Traditionally, the ONS has put this decline down to social changes such as people choosing to have children later in life and having fewer of them, or women choosing to focus on their careers. Whilst these still appear to be significant factors, the cost of living crisis, a decade of low pay inflation and rising housing costs are now influencing this trend. With full-time childcare costs an estimated 44% of the average salary, it’s not surprising that many couples feel they just cannot afford to have children. 

For those families choosing to take the plunge, new research from our friends at Careers After Babies highlights the real impact that having children has on women’s careers. It found that:

• Just 24% of women go back full-time after having children, with 57% of them leaving within two years, many due to redundancy or ill mental health.

• When companies put women back into different roles after maternity leave, 79% of women leave within two years. 

• The number of women in management roles drops by 32% after having children, and the number of women in admin roles increases by 44%.

4. Flexibility Is Increasing Even If Some Bosses Don’t Want It

One of the key things holding back older workers and maternity returners is the availability of good flexible working practices. New legislation gives hope that this could be about to change. The Flexible Working Bill is set to be introduced. According to the UK government it will allow workers to have a greater say over when, where, and how they work, and - plans to make flexible working the default.

Organisations are increasingly catching on that people crave more flexibility and this is a solution to improving productivity, attracting talent and reducing levels of burnout. Notably, even big high street retailers like Marks and Spencer are planning to trial a four-day work week.

But what of those organisations still mandating that employees come to the office? Research from the LSE showed that this isn’t always what actually happens on the ground. They found that C-suite level executives in many large financial services firms are demanding that their people come into the office a specific number of days per week. In practice they are being ignored, with managers often favouring a remote-first approach that satisfies their local operational needs.

Dr Grace Lordan, Director of The Inclusion Initiative at LSE and author of the report, concludes: “Firms that are adopting a ‘remote first’ approach, expecting their workers to be in the office only to collaborate or fulfil operational needs are those that can attract and retain the most diverse talent, particularly women. Firms that demand their employees are in the office for no reason will lose out on diverse talent pools. These demands are also ego-driven rather than having the best interests of the business in mind.” 

Whatever business leaders think, employees love having the flexibility to work where and when they want and feel that they are more productive. The explosion of hybrid work has been a gamechanger for the ease with which talent can now move. More than 45% of people who changed jobs last year also changed industries, indicating an unprecedented level of mobility in the workplace. All this adds up to mean that organisations must really listen to their people and co-create a culture and working practices that work for everyone or face the consequences. Hybrid working requires a much more conscious focus on culture and trust. Leaders must adjust to the new reality and learn how to inspire, connect, listen to and support their people in this new environment. 

5. Immigration Changes

Since the UK’s departure from the EU, the change in migration systems is also a major factor influencing workplace trends. Research by UK in a Changing Europe estimates a net loss of 330,000 EU workers since Brexit, with the departure of 460,000 European employees only partially offset by an increase in non-EU staff. This has led to huge labour shortages in the health and social care, transport and hospitality sectors in particular. Immigration remains a hot potato in political circles and it will take time for the new immigration system to bed in.

6. Increasing Employee Activism 

Globally employees are becoming more vocal in using their voice. Whether it’s about their culture, pay and conditions, leaders, discrimination or sustainability, employees are increasingly (and rightfully) holding their organisations to account.

In the UK, we saw the worst month for strikes in October 2022 in over a decade, as the ONS reported 417,000 lost working days. That trend looks set to continue in 2023 with 500,000 workers walking out on 1 February across many sectors. Even in non-unionised working environments employees are making their voice heard. Increasingly workers are empowered and mobilised by social media and platforms like Glassdoor. Employers who don’t listen to the thoughts and emotions of their people should beware. Management of employer brand is now a major component in any people strategy.

7. Automation & AI

“The robots are taking over!” If you believe the hype about the latest AI, ChatGPT, you may be thinking that the world as we know it is ending! Many worry about its impact on job displacement, education and information distortion. This worry is nothing new. With every stage of technology development in human history creating concern. Neuroscience teaches that this is natural with major change triggering our fight or flight instincts.

The truth is that AI and automation have been influencing both our personal and working lives for some time now. Predictions show that c7% of existing UK jobs could face a high (over 70%) probability of automation over the next 5 years. This increases to c18% after 10 years and just under 30% after 20 years. Those at most risk are likely to be in lower-skilled jobs.

The good news is that AI will also create jobs. Inevitably some of these will be in areas linked directly to AI and HR tech (e.g. data scientists, robotic engineers). But, predictions are that most of the additional employment will not be in high tech areas. Rather, these new jobs created will mostly be in providing relatively hard-to-automate services where human skills are required (e.g. health and personal care). Whilst it’s hard to predict, if history teaches us anything it suggests that we will see a broadly neutral long-term effect.

But what of AI in the HR community? Well AI is already in use in many HR platforms (including our own)! Particularly in the people analytics space where it can enable rapid analysis of millions of lines of data. Research by Bersin, Deloitte suggests that nearly 40% of companies use some form of AI in HR alone. Our belief is that when deployed correctly it can have a positive impact for leadership and HR teams - freeing them up to focus on the human elements needed to curate thriving cultures. 

So, What Next?

In 2023 it seems clear that these 7 workplace trends will mean that the fall in labour supply will add to inflationary pressures, as employers compete for scarce talent by increasing pay. Sounds bleak, right? So as an HR community, what can you be doing to put your organisation on the front foot?

• Get better at managing change and helping your people focus on upskilling and personal growth. Creating a culture of adaptability and lifelong learning will be crucial for dealing with our ageing population and ensuring that we gain from the promised benefits of AI and automation.

• Understand that employees are increasingly in charge, and are more vocal and mobile. To attract, retain and motivate them, we must focus on employee experience and identifying the key drivers that make our people happy and engaged.

• Help your leaders understand these workplace trends and that no company can “hire their way” to growth anymore. With fewer workers to recruit from and high-demand skills remaining in short supply - rather than hiring more people, we must switch to focusing on making each individual more happy and productive.