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2011:The Big Recovery?

In 2009 the top priority for many companies was survival and for many individuals it was just keeping their jobs. And 2010 was a year of consolidation for many companies. We hope 2011 will be the year of the big recovery.

The dynamics of the labour market have changed.(Source: SITA)

In 2009 the top priority for many companies was survival and for many individuals it was just keeping their jobs. And 2010 was a year of consolidation for many companies. We hope 2011 will be the year of the big recovery.

Unemployment currently stands at 12.46 percent, with 381,209 registered unemployed persons, much higher than the OECD average of 8.6 percent. December 2010 registered 6,558 more unemployed than in November. The number of jobless persons is only 587 less than in December 2009. Based on these figures it is premature to offer any kind of optimistic conclusion.

What could be an indication of recovery, however, is the large increase in demand for personnel. In particular, throughout Slovakia, our clients are recruiting or are planning to recruit a substantial number of additional staff. A difference is that many more companies are considering hiring new staff through personnel leasing (temporary staffing). The reasons are obvious: many companies faced substantial costs while downsizing and these costs can be avoided when temporary agencies are utilised. Furthermore, due to the crisis, the fees of temporary agencies have been adjusted. In fact, it is currently substantially cheaper to hire staff through agencies than hiring people directly.

The dynamics of the labour market have changed. However, not all changes are obvious. What is obvious is that many job seekers and employed individuals are much more moderate in their salary requests and the fringe benefits they seek. Specifically, company cars are no longer a standard request; and regular, high salary increases have come to a halt. The economic downturn has certainly changed the nature of business and will have a strong impact in the coming years.

Companies, in order to survive and stay profitable, must do the following: do more; produce in a much more expeditious manner; create higher quality products; utilise less manpower; and set lower prices. This is seen internally at many companies where processes are improved, more investments are made in smarter technology, and so forth. Interestingly, the internet is a big factor in these processes as companies are geared towards being able to do more. This implies that the employees of companies will have to be more productive which requires creativity, commitment, hard work and constant improvements as well as many changes. This makes our jobs more challenging and the demand for skilful and talented staff will increase over the coming years. This could mean a widening gap in terms of salary between the average workforce and the more talented, ambitious persons. The requirement from companies is that their staff improves and those who are able to enhance their performance will see their remuneration packages increase.

Those with a 9-to-5 mentality, doing their job well but nothing more will face difficult times in career enhancement. The times bode well for the bold, smart and ambitious people and companies among us; these times are bad news for those who are average and all of those who still have their heads in the economic downturn.

These times have indeed a new dynamic. More than ever, hard work, creativity, intelligence and entrepreneurship are decisive for success. Innovation is the key to growth in market share and for securing a company’s profitability. Both people and companies who fail to adjust will fail in their careers and in their markets. These times have been, and will continue, distinguishing the “boys from the men”.

Martin Marek and Gerard Koolen work for Lugera & Maklér

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