European startups in the tech industry are hiring about 40 percent fewer staff than last year, in turn bringing down salary increases. Staff retention is thus becoming more important, writes Tech Europe based on a report by HR tech specialist Ravio.
According to the report, hiring large amounts of new staff for European tech startups is a thing of the past. Whereas during and immediately after the pandemic, lots of new hires were the norm, and with it, higher salaries. This is no longer the case.
Today, it has become difficult for these tech startups to attract investment capital, IPOs have become more difficult, interest rates have risen and companies are more profit-driven. This forces them to make different choices when it comes to hiring new staff.
Fewer new staff
Among the most recently established startups, Ravio sees an even sharper decline (50%) in hiring additional employees. In addition, just over half of all startups plan to keep staff levels the same in the first half of next year.
Salary growth down
The new market conditions are also affecting the level of salaries European tech startups are paying their employees. Last year, despite the difficult economic conditions, tech startup employees could still get an above-average salary increase of 8 percent. This year, however, that is about to change.
According to the researchers, less hiring and more focus on financial stability means that salary increases will also be cut. This year, tech startup employees can expect a salary increase of about 4.5 percent. This is also a reduction of about 40 percent.
Focus on employee retention
The report further notes that tech startups will place more emphasis on employee retention. They hope to achieve this by giving them rewards other than salaries. These include giving shares or other benefits.
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