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Managing the impact of economic volatility on the workforce



Workforce Redesign

Outlooks for Business Leaders




What's shaping the future of work?

Visit our series hub




In every market and sector, organizations are feeling — and responding to — the
impact of economic volatility. While the pandemic distilled lessons learned
around the importance of building business resilience to manage turbulent times,
there are also follow-on impacts directly shaping this current environment of
uncertainty, including the war for talent and the implementation of a more
flexible workforce. Four Baker McKenzie experts share their views on how
businesses can manage the current economic climate while confidently planning
for what’s next — and without losing the momentum to build their flexible
futures.



Kim Sartin Employment and Compensation Partner, London

Kwun-Yee Cheung Restructuring and Insolvency Partner, Hong Kong

Paul Keenan Restructuring and Insolvency Partner, Miami

Imke Gerdes Tax Partner, New York

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Amid inflation, rising labor costs and historically low employment rates, there
is an apparent contradiction between heightened layoff activity and the war for
talent. In the context of current recessionary and inflationary concerns, a 2023
survey by Mercer found half of executives surveyed anticipate a struggle to meet
demand with their current talent model.

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What is the interplay between these factors and how are you seeing this playing
out?

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"It is an interesting time and different to previous economic downturns. On the
one hand, we are seeing some organizations reducing headcount for the more
traditional reasons such as reductions in demand or to reduce their cost base.
But, alongside the financial imperative..."

READ MORE

Kim Sartin Employment and Compensation Partner, London

"In the Asia Pacific region, we've been helping companies who are struggling to
strike a balance between liquidity and business needs and spend. This is
essential to building business resilience and long-term survival given the host
of factors businesses have had to deal with..."

READ MORE

Kwun-Yee Cheung Restructuring and Insolvency Partner, Hong Kong

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with the release of Letraset sheets containing Lorem Ipsum passages, and more
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versions of Lorem Ipsum.

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem
Ipsum has been the industry's standard dummy text ever since the 1500s, when an
unknown printer took a galley of type and scrambled it to make a type specimen
book. It has survived not only five centuries, but also the leap into electronic
typesetting, remaining essentially unchanged. It was popularised in the 1960s
with the release of Letraset sheets containing Lorem Ipsum passages, and more
recently with desktop publishing software like Aldus PageMaker including
versions of Lorem Ipsum.

Poorly thought out or executed workforce reductions can impact an organization's
ability to attract top talent and backtrack hard-won inclusion and diversity
progress.

What are other consequences for companies who take a short-term view to
navigating current times?

"Key stakeholders are looking at organizations beyond shareholder value, taking
into account ESG considerations. This includes not only inclusion and diversity
considerations but a view to whether they are doing the right thing and how they
treat their employees...."

READ MORE

Kim Sartin Employment and Compensation Partner, London










LEARN MORE




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It seems we are going to narrowly avoid a "true" global recession, but
nevertheless, companies are still feeling the impact. What strategies should
they have in place to build resilience and optimize outcomes?

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"The sentiment on whether we are not heading into a recession seems to change
every week, at least here in the United States. The themes of recessions and
mass layoffs vary by industry and market. Here, the industry facing the most
headwinds is the tech sector, where we've seen significant layoffs over the last
year. Several large domestic and international crypto companies have filed
bankruptcy cases in the United States, and other well-known tech companies have
engaged in mass layoffs..."

READ MORE

Paul Keenan Restructuring and Insolvency Partner, Miami

"We're seeing clients restructuring, conducting layoffs across multiple
jurisdictions or considering closing companies, whether liquidating them or
merging them out of existence. This often spurs on a number of related
questions...

READ MORE

Imke Gerdes Tax Partner, New York

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For more information on how to navigate Pillar Two requirements, register for
our webinar series.

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For up-to-date knowledge on real estate law in various jurisdictions, visit our
Global Corporate Real Estate guide.

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One lesson learned from the pandemic was the need to embrace new and
transformative ways of working. While there are certainly crisis-driven
responses borne from the current economic climate, are organizations still
exploring a more proactive redesign of the workforce?

"Some companies are preemptively planning; they see the writing on the wall and
are thinking where they can downsize and improve results overall. However, we
are also seeing companies expanding into other markets and wanting to know..."

READ MORE

Imke Gerdes Tax Partner, New York

"We are seeing more businesses take a proactive approach on their operations and
workforce, likely due to how events have played out over the last few years.
Clients are becoming quite savvy and attuned to issues on the horizon. As a
result, they are carefully assessing issues including business priorities and
counter-party risk. They are alert to the fact that they need to plan ahead,
which is good to see."

Kwun-Yee Cheung Restructuring and Insolvency Partner, Hong Kong

The pandemic spurred on the implementation of a more flexible workforce
structure as remote work became a norm and preferred set-up for many. For
example, a 2022 survey assessing the state of remote work conducted by Gallup,
found that 60% of "remote-capable" employees in the United States cited a
preference for a long-term hybrid work arrangement.

How is the rise of remote work being impacted by the current environment, and is
it here to stay?



"The expectation of employees and workers is that that flexibility will
continue, and some businesses are struggling with that to a degree. In some
circumstances, they don't want to provide as much flexibility anymore. These
tensions have been widely reported in the press. On the other side of the
coin..."

READ MORE

Kim Sartin Employment and Compensation Partner, London

"In the tech sector, we are seeing some companies dialing back the remote
workforce or flexible working policies implemented during COVID and not
necessarily because it's not working. The pandemic has proven that remote work
is not a damper on productivity, but it has become more of a question of trying
to build a community around the company..."

READ MORE

Imke Gerdes Tax Partner, New York

Conclusion



Organizations are no doubt navigating the current economic moment with a view to
managing immediate concerns. These challenges are further compounded by new
employee expectations around flexible working arrangements and talent strain
arising from the pandemic. However, as the environment necessitates layoffs and
restructurings for some, taking a longer-term view to the lasting impacts on
overall inclusion and diversity progress and talent retention efforts is
essential — as is understanding various interdependencies across employment,
tax, real estate and more. Proactive and holistic approaches to commercial
issues can also help to ease the impacts of economic volatility so that you can
focus on shaping your workforce of the future.

Building your flexible future

Explore our Workforce Redesign Publication






Build your flexible future

WORKFORCE REDESIGN



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