2023 trends – the end of remote working and the ‘great return’

A challenging recession could force businesses to review post-pandemic flexible arrangements such as hybrid working, while those who joined the great resignation may be swayed back to work
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Employees have enjoyed a brief and unusual period of power. A constricted labour market and steep competition for talent have given job seekers a strong hand when negotiating wages. Many businesses responded by improving their workplace perk offerings and increasing remuneration.

But the tables could be turning. With the UK’s recession expected to worsen in the year ahead, companies are likely to slow their hiring plans or even begin layoffs to survive the tougher economic climate. 

Mass layoffs have already been seen in the tech sector, with Twitter and Meta each letting go of thousands of staff. Meanwhile, retailers Made.com and Joules have had to make redundancies after going into administration.

Janine Chamberlin, UK country manager and vice-president of LinkedIn, warns that “we haven’t seen the last of the redundancies yet”, adding “it’s going to be a challenging 12 months ahead”.

James Reed, CEO and chair of recruitment firm Reed, also fears that redundancies could become a theme of the year. “If the recession is severe, we could expect mass layoffs because companies need to reduce their costs if they’re suffering big drops in income.”

But so far his company hasn’t seen signs of this. “We’re yet to see influxes of applicants who have been made redundant,” he adds. “We’re seeing more people look around for better-paying jobs, to improve their circumstances in an economy where real wages are being squeezed.”

This squeeze on wages is being felt by many and is expected to worsen over the coming months. The Office for Budget Responsibility has predicted that UK households will suffer a 7.1% decrease in living standards over the next two years – the largest such drop in 60 years – as wages struggle to keep pace with rising inflation.

“A lot of companies are under pressure to increase wages but can’t necessarily do so, especially if they have a lot of debt in their business as the cost of financing that debt will keep going up,” Reed says. He anticipates the consequences will likely be “more strikes, more industrial action and all sorts of unhappiness in the workplace”. 

Companies reject remote working

These challenging economic conditions could also shift the power balance back in favour of employers. “Just as everybody came up for some air, we’re now facing a lot of uncertainty again,” Chamberlin says. “This is putting some leaders on the back foot and making them review some of the progress that we have made in the last two years.” 

Take remote working. Recent figures from LinkedIn show that the number of remote opportunities has passed its peak, with remote listings on its jobs site falling from 16% at the start of the year to 12% in December 2022.

Chamberlin thinks the change is fuelled by the precarious position that many businesses find themselves in and is a symptom of business leaders trying to re-establish a sense of control. 

Uncertainty leads people to hold on to what they have and seek stability

Research from Microsoft shows managers are increasingly concerned about the performance of remote workers. This productivity paranoia is likely to grow in the year ahead as the economic pressures facing businesses mount. 

But this is at odds with employee wishes. There’s still a high demand for autonomy and flexibility, even though companies are less interested in offering these privileges

Rescinding on the right to flexible work could “have consequences for employee motivation and the progress that’s been made on diversity and equity,” Chamberlin warns. While this may see a company through a precarious patch, businesses should be aware of the damage it could do to their employer brand over the longer term.

The great return and recession fatigue

It’s important to consider the impacts these factors are likely to have on employees. For example, a recession could make employees slightly more conservative in their actions. 

Holding on to talent may become easier. The great resignation saw many people job-hopping in search of better-paid employment. But recession in 2023 is likely to deter potential movers as tougher economic conditions cause people to become more cautious. “Uncertainty leads people to hold on to what they have and seek stability,” Chamberlin says.

Brad Harris, human resources professor at HEC Paris, points to factors that may play out in the workplace. “On the one hand, a recession can drive people to work harder because they know the stakes are high. Yet over the longer term, this stressor starts impeding our performance and wellbeing, as it’s just not sustainable.” 

The next 12 months might also see the return of those who have left the workforce, particularly the over-50s who quit employment in large numbers during the pandemic. There are almost 400,000 more economically inactive adults aged 50 to 64 now than in the pre-Covid period, according to estimates from the Office for National Statistics.

Failure to invest in skills development is incredibly damaging to the future stability of any organisation

Reed anticipates that 2023 might see the return of some of these retirees in what he has dubbed “the great return”.  Financial pressure is likely to be a big motivator but there is also a business incentive to encourage people back. 

“The over-50s are big contributors to the workforce and they’ve got a huge amount of skill and a lot of experience to share,” Reed says. “A lot of people were disengaged by the pandemic and became isolated but if they can be brought back in, that would be a good outcome for everyone.”

The importance of continuing to invest in skills and development should also not be ignored, according to Chamberlin. “Even for somebody who stays within the same role for the next five years, the skills that are required to do that role well will change by about 50%,” she says. “So failure to invest in skills development is incredibly damaging to the future stability of any organisation.” 

While 2023 will present businesses with many challenges, the reintroduction of people to the workforce and lower competition in the labour market may make hiring easier. Holding onto talent will also be equally important and although there may be a temptation to wind back remote working, allowing staff to retain this flexibility may pay off in the long run.