What to expect from the job market in 2013

By Matt Ferguson, CEO of CareerBuilder

Employers are heading into the new year with cautious optimism. The economy has been growing at a gradual but steady pace and is poised to stay on this path in 2013 barring any major disruptions. More employers are expecting to hire than in recent years, but the modest recovery, along with the weakened global market, means that companies will continue to play it safe.

This guarded approach to hiring was apparent in the results of CareerBuilder’s 2013 U.S. job forecast*, which polled more than 2,600 hiring managers and human-resources professionals and more than 3,900 workers across industries and company sizes. According to the report, more than 60 percent of employers say they are in a better financial position than last year. Twenty-six percent plan to add full-time, permanent employees, up three percentage points over 2012. However, due to mixed expectations for the coming year, the number of employers planning to reduce headcount is trending up as well. Nine percent of employers say they plan to decrease headcount, up from 7 percent last year. The fiscal cliff is likely on employers’ minds; whether or not the U.S. goes over it may impact actual hiring behavior.

Temporary and contract hiring on the rise
When companies are cautious about making major hiring commitments, they often turn to staffing and recruiting companies and temporary workers to help meet increased market demands. The study found that 40 percent of employers plan to hire temporary and contract workers in 2013, up from 36 percent last year. Among these employers, 42 percent plan to transition some temporary workers into full-time, permanent employees over the next 12 months, perhaps as they see how various economic factors play out over the course of the year.

Where the jobs will be
It may not be surprising that the top two positions companies plan to hire for in 2013 are sales (29 percent) and information technology (27 percent), two fields that have continued to experience healthy growth. Other roles employers will hire for include customer service (23 percent), engineering (22 percent) and production (22 percent).

Location-wise, the West and the South will again lead other regions in hiring plans as they have in past forecasts. Twenty-eight percent of employers in the West plan to add full-time, permanent workers in 2013, up from 24 percent in 2012; 9 percent plan to reduce headcount, the same as last year. In the South, 27 percent of hiring managers anticipate adding full-time, permanent employees in 2013, up from 23 percent in 2012. Nine percent will likely reduce headcount, up from 7 percent last year. Both the Midwest and the Northeast will hire more than last year, but headcount reduction will tick up as well.

Small businesses show confidence
Small business hiring will rise, but likely so will headcount reduction, as companies remain unsure about financial stability and market demand. Hiring plans increased at least three percentage points over the year across small business segments, while plans to downsize trended up the same amount. Nineteen percent of businesses with 50 or fewer employees plan to add full-time, permanent staff in 2013, up from 16 percent in 2012, while 6 percent plan to reduce headcount, up from 3 percent last year. Of the companies with 500 or fewer workers, 24 percent plan to add full-time, permanent headcount, up from 21 percent in 2012; 7 percent plan to make cuts, up from 4 percent last year.

Companies fight to close the skills gap
The demand for skilled positions has continued to grow at a much faster pace than the supply. However, companies are finding solutions to narrow the skills gap, which they’ll continue to implement in 2013. Workers looking to fill highly skilled roles should pay close attention to the following three trends in the new year:

1. Employers scouting workers from other companies: Employers will be more aggressive about approaching workers with the right skills, whether or not it’s solicited. Nineteen percent of workers say they’ve been asked to work for another company in the last year without applying for the position. Sales workers have been courted the most, at 33 percent, followed by professional and business services workers at 31 percent and IT workers at 26 percent.

2. Employers will pay more for qualified candidates: In an effort to keep and attract the best workers for skilled positions, employers expect to provide higher compensation for both current and potential employees. Seventy-two percent of employers plan to increase compensation for existing workers — up from 62 percent last year — while 47 percent will offer higher starting salaries for new employees — up significantly from 32 percent last year. Most increases will be 3 percent or less.

3. Companies will take matters into their own hands: Oftentimes workers possess a base level of skills that, with the right training, can be built upon to meet an employer’s needs. So instead of waiting for applicants with the right résumé to come to them, employers are taking the initiative to “re-skill” workers to fill positions. Thirty-nine percent of employers plan to train people who don’t have experience in their particular industry or field and hire them for positions within their organizations, up from 38 percent last year.

*Totals may not equal 100 percent due to rounding or respondents being able to choose more than one answer.

Matt Ferguson is the CEO of CareerBuilder.