Retail hiring is expected to be flat this holiday season, reports Ylan Q. Mui

Competition for holiday retail jobs could be fierce this year, according to several recent surveys, as stores cautiously hire in the face of flatlining sales and budget-conscious customers.

Stores typically begin bringing on temporary workers in October to handle the crush of Christmas shoppers. But several recent surveys in the US predict hiring will be slow this year — when it occurs at all. According to consulting firm Hay Group, about 40 per cent of retailers plan to reduce the number of people hired by a quarter. Meanwhile, the growing unemployment rate has prompted more people to fill out applications.

“Retailers are planning for a challenging Christmas season,” said Craig Rowley, vice-president of Hay’s retail practice. “That said, retailers have their fingers crossed that they are wrong.”

According to government data, retail jobs account for about 11 per cent of the US workforce. Over the past year, the industry has shed nearly 6,00,000 positions as retailers grappled with declining sales. That has helped push the national unemployment rate to 9.8 per cent.

The job losses have created a vicious cycle in which retailers curtail hiring because of poor sales, and shoppers cut back spending because they fear for their jobs.

“We are in a period of flux, no question,” said John Challenger, chief executive of Challenger, Gray & Christmas, an outplacement consulting firm.

The vortex landed last year when the economy crumbled just before the start of the holiday shopping season. The stock markets plunged, and consumers clamped their wallets shut, sending retail sales into a tailspin. Stores were stuck with shelves of merchandise ordered long before the financial crisis, but they were able to cut costs by slashing their workforce.

Retailers chopped the number of new hires last year by 47 per cent to 3,84,300, the smallest number in two decades, according to Challenger, Gray & Christmas. The average number of staffers added during the holidays is 6,80,590.

The industry took a bigger hit after the holiday season as retailers shut down stores that did not perform well, shed seasonal hires and laid off workers. Macy’s and Home Depot both cut about 7,000 jobs. Circuit City was forced out of business, leaving 30,000 workers without jobs.

“Labour is the most adaptive of the resources in their production equation,” said Robert Yerex, chief economist at Kronos, a workforce consulting firm. “When it comes to people, they can be much more flexible.”

But as retail sales have stabilised following last year’s dramatic declines, so has staffing. According to Kronos, the number of hires rose slightly each month through August, and more people are holding on to those jobs.

A recent survey by consulting firm BDO Seidman of chief financial officers at major retailers showed that 38 per cent considered layoffs the most effective cost-cutting tool this year. But for future cuts, more companies said they are planning to reduce inventory and slow expansion rather than rely on layoffs. About 83 per cent of executives surveyed predicted an economic turnaround by the second quarter of next year.

Challenger said he expects retail hiring this holiday to pick up slightly compared to last year, but with the unemployment rate at a 26-year high, competition for available jobs is likely to be fierce. He estimated that 9.2 million people who are working part-time are looking for full-time work, roughly double the number at the start of the recession.

Source: The Washington Post