Labour costs and talent retention

A study by The Economist shows that in 2020 the share of GDP going to workers reached a record high in OECD member countries, roughly a 3% increase since 2019. This was largely because firms continued to pay people’s wages — helped, in large part, by government-stimulus programmes — even as nations’ GDP contracted. As the world faces growing inflation across markets, executives wonder if workers will before long demand even higher wages to compensate for increased prices in the shops, or for overtime due to labour shortages inherited from over two years of covid. How to respond to almost-certain labour cost increases in 2022 is among the top concerns for any CFO.

Equally important is holding on to talented workers and filling job openings. How to hire and retain the best people increasingly falls under the CFO’s remit. Furthermore, technology advancements such as AI-enabled systems are playing a more vital role in scanning applications far more quickly than humans, and working out whether candidates are a good fit. For a company like Johnson and Johnson for example, which every year receives 1.2m applications to fill just 25,000 positions, investing in such technology is a tantalising prospect. At the end of the day, the CFO might have to make that call.