Inflation is all over the news these days, sparking fears that a recession is coming that will combine the worst of the 2008 downturn with the stagflation of the 1970s. Global growth is expected to decrease from 5.7% in 2021 to 2.9% in 2022 as a result of war, lockdowns, and supply chain disruption. (1)
Even as the U.S. inflation rate hit a 40-year high, opinions on how a resulting recession may impact employment are mixed. The U.S. unemployment rate was 3.6% for the third month in a row in May 2022, on par with pre-pandemic rates. (2) U.S. Treasury Secretary Janet Yellen recently explained the current juxtaposition of high employment and high inflation by saying, “There are deep recessions. There are shallow recessions. There are recessions that have rapid recovery. There are recessions that might raise the unemployment rate slightly, but not a whole lot.” (3)
However, businesses are concerned about the impact of inflation. Over 40% of CFOs cited inflation as the number one external risk to their business in a recent survey by CNBC, and most of them expect a recession to occur during the first half of 2023. (4) Even as business leaders are beginning to prepare for a recession, 77% stated hiring and retaining talent are both important to the growth and the top area of investment for 2022. (5)
It’s quite a conundrum. A recession, which is often accompanied by layoffs and hiring freezes, is expected, but at the moment, many organizations are still struggling to fill roles. In IT, 54% of decision-makers surveyed had at least one role they’ve been unable to fill, and 38% had three or more. The most challenging job areas to find qualified talent were cybersecurity, cloud computing, and analytics/big data. (6) These roles are crucial to support top technology trends like data fabric, cybersecurity mesh, privacy, decision intelligence, and hyper-automation.
To, unfortunately, make things worse, managing employee workload is an ongoing concern as employees burn out due to stress or move on to new positions. If layoffs do happen, you won’t just be dealing with fewer people to manage the work, but also reduced output from those who remain (a 20% decline in performance, according to HBR (7)). So how will you make the best out of what might be a very bad situation?
It starts with creating a plan to recession-proof your IT and security roadmap. There are a number of steps you can take to reduce expenses, minimize complexity, and streamline operations, such as moving to the cloud. Building that plan may seem daunting, but an experienced partner like Taos can help you get ahead of the problem before it impacts your business.
Learn more about the steps you can take to prepare for potentially tough times ahead at the upcoming webinar, Recession-Proof Your IT Roadmap: Streamline Your DevOps & Security to Weather Difficult Times. Hear from experts as they share real-world use cases and best practices on July 12, 2022 at 9am PDT.
(1) The World Bank, Stagflation Risk Rises Amid Sharp Slowdown in Growth, June 2022
(2) Bureau of Labor Statistics, U.S. Department of Labor, The Employment Situation – May 2022
(3) Reuters, Yellen: Not all recessions alike, inflation can come down amid full employment, June 2022
(4) CNBC, The recession will hit in the first half of 2023 and the Dow is headed lower: CNBC CFO survey, June 2022
(5) PwC, PwC Pulse Survey: Executive views on business in 2022, January 2022
(6) Skillsoft, 2021 IT Skills and Salary Report, November 2021
(7) Harvard Business Review, Layoffs That Don’t Break Your Company, May 2018