More layoffs due to structural change - Ü50 under pressure

The outplacement consultancy von Rundstedt was founded in 1985 and is now a leading outplacement provider in Germany, Austria and Switzerland. von Rundstedt works with companies in all sectors in the event of staff reductions and redundancies and supports employees affected by redundancies in their professional reorientation. The company regularly publishes a labor market barometer based on findings from current outplacement consultations. The statistics recently published in January 2019 present an interesting picture of the mood in the labor market across Switzerland in 2018, with the key findings summarized as follows:

"Less economic pressure, but more layoffs due to structural change"

Various data indicate that overall, terminations in 2018 were characterized more by structural pressure than by cyclical necessity. For example, the financial sector in particular, which is undergoing major structural change, saw a sharp increase in terminations, from 22% in 2017 to 32% in 2018. In the pharmaceutical sector, which has historically been subject to major structural pressure due to its project nature, the rate of terminations also remained high, according to von Rundstedt (at 24% in 2017; 27% in 2018). Traditional industry, on the other hand, experienced a significant decline, which can be explained by the economic recovery and better macroeconomic conditions. After accounting for 29% in 2017, layoffs in industry account for only 22% in 2018. The justification for the layoffs also go in this direction. For example, downsizing measures have fallen sharply from 26% to 20%, while restructuring terminations have increased at the same time (from 40% to 46%). This trend can also be traced in the functions affected. In 2018, for example, there was more turnover among managers (increase from 33% to 36%) and cadre employees (increase from 21% to 28%), while relatively fewer terminations were made among specialists. After 25% in 2017, there were only 17% here in 2018. This also indicates greater structural change, rather than cyclical pressure.

Ü50: Situation remains tense

While in the last two years the over-50s were affected by layoffs to roughly the same extent as other age groups, there was a slight increase in 2018. Thus, 34% of the dismissals under review now concerned older workers aged 50 and over. This figure is slightly higher than the reference value of 30%, which corresponds to the proportion of 50 and over in the total workforce.

Older workers aged 50 and over continue to find it more difficult to find a job than their younger colleagues. The average search duration of 6.8 months for the over-50s deviates significantly from the overall average of 5.3 months. The decisive factor here, however, is that the statistical variance within the Ü50 group is much higher than in other groups. This means that many over-50s find a new job very quickly, but many also have to search for a very long time. It can be concluded from this that there is no general age discrimination in the market, but that the conditions vary greatly from one individual to another and are strongly influenced by other aspects.

Vacancies are being advertised more and more frequently

More and more clients of outplacement consulting find their new job based on advertisements and online job postings on the open job market. In 2018, 24% of von Rundstedt's clients obtained an officially advertised job (in 2017, only 20%). At the same time, search successes via the hidden labor market decreased from 52% to 41%. The hidden labor market thus still remains by far the most successful search channel, but the trend is nevertheless clear and significant. This is primarily due to the fact that more and more employers are using the digital possibilities of online job advertising (webpage, social media, application platforms) and that these can be optimally managed in terms of cost and effort. The newly introduced job notification requirement (MEI implementation) will further strengthen this trend in the future, believes von Rundstedt.

Trend towards self-employment

The figures express that self-employment is becoming an increasingly common option for people in a professional reorientation. In 2018, for example, 12% of von Rundstedt's clients newly decided to become self-employed and set up a business field themselves. This increase is enormous, according to outplacement consultants. After all, this self-employment rate was only 5% in 2017. There may be two reasons for this development: First, they say, there is a general trend toward the downsizing of corporate structures and the increasing fragmentation of supplier markets - in other words, once again, a structural change. The sharing economy, gig economy and freelancer trend are seen as the driving forces behind this development. Secondly, there is also a pragmatic reason: Self-employment is often the only way to stay in the labor market, especially for older workers with a difficult profile and lower employability.

Zero Gap: Employers can still afford to recruit without compromise

Zero Gap means that employers show little tolerance for deviation from the perfect desired profile in recruitment and stick to the perfect requirements profile. Thus, it is still not easy for clients to move to a new industry or function. In 2018, only 25% of the clients advised by von Rundstedt succeeded in changing industries, and the figure for changing functions is also 25%. Zero Gap thus continues to be an obstacle for people who need to reorient and reposition themselves due to structural changes. This presents great difficulties for many of those affected, especially against the backdrop of digitization.

Signs of the arc career are visible for the first time

The arc career has long been written about in theory. It is said to be an effective concept for protecting older employers over 50. Nevertheless, it seems to have had great difficulty in working in practice. However, salary trends of outplacement clients by age group now show an interesting development for the first time. For example, von Rundstedt 2018 found a significant negative salary trend (-12%) for Ü50 in the case of job changes due to termination, with a simultaneous positive salary trend for younger workers (+9%). On the one hand, this illustrates the increasing pressure on the Ü50 group, but on the other hand, it also shows that the wage cost hurdle for Ü50 can apparently be overcome with flexibility on both sides (employer and employee) and that the market also seems to function via wage flexibility. This is a good testimony to a functioning labor market. Thus, the arc career concept seems to be slowly working in practice.

Source: von Rundstedt