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The Great Resignation: Should You Still Be Worried?

What is the great resignation of Australia, and should your company be worried?

The fear that employees were about to walk off the job spread across boardrooms and Zoom meetings and was the talk of social media reports. But as it so happens, the outcry was perhaps premature.

In this article, we deep-dive into this mass withdrawal of workers worldwide in greater detail and what it means for employers, like you.

What is the great resignation?

Coined by Anthony Klotz, a professor of business administration at Texas A&M University, "The Great Resignation" refers to the escalated rate at which workers across the United States resigned from their jobs in the spring of 2021. All of which were amid low unemployment rates, strong labour demand and the ease of COVID-19 restrictions thanks to vaccinations.

When did the great resignation start?

Contrary to belief, the phenomenon did not start during the height of the pandemic in 2020 but a year later. However, COVID-19 was undeniably the catalyst. What we are witnessing and living through is not just short-term turbulence provoked by an unprecedented pandemic but its cascading effects that shape how employees view their careers.

Understanding the great resignation

The great resignation is an epidemic of epiphanies resulting in a significant upswing of people quitting their professions, whether they quit the workforce altogether, retire early, take sabbaticals, or desire a change.

Whether the individual’s reasons for leaving the workforce entirely and changing jobs are tied to personal circumstances, or economical, there is no question that the arrival of COVID-19 and the job losses immediately curbed the mass exodus by employees.

We outline the economic and emotional motivations which attributed to the great resignation:

Emotional

The great resignation confirmed that jobs for many employees weren't adequately meeting the psychological needs to live fulfilled lives, resulting in a crisis of consciousness for many across America and the United Kingdom.

The need to feel valued: Some workers feel micromanaged, and others feel completely invisible. Employees are now seeking a sustainable work environment where they no longer feel replaceable, and management acknowledges their contributions to their employers.

The unfulfilled promise of work/life balance: The death of beloved families and the confines of working from home caused many to reevaluate their work life, and reconsider what is most important.

The promise for a work/life balance for many was a disguise for a heavier workload and longer work hours, which led to work life and personal life becoming intertwined under one roof. Employees found it difficult to disconnect from work and were more obligated to work late in the evenings. As a result, workers realised that their careers were the defining factor that negatively impacted their personal lives.

Longing for real meaning: It can be tough to spend 40+ hours a week staring at a computer screen if work is not tied to some greater purpose. Compounded over many years, the repetitiveness of meaningless work has encouraged workers to question the purpose of their existence and if their only mission in life is to support their company's bottom line.

Economical

A new Pew Research Centre survey demonstrated that employees left their job positions due to lack of growth opportunities, low pay, and feeling disrespected in their work environment to better job flexibility.

Low or non-negotiable pay: Up to 63% of workers who resigned in 2021 claimed that low pay was their primary reason for quitting, whereas 57% also felt disrespected by their employers.

Inflexible childcare: Half of the study (48%) claimed that limited childcare led to working parents resigning from their roles. This was compounded by the inflexibility to choose where they could put in their hours (45%).

Working too many hours: Pew's study also identified four-in-ten adults (39%) that quit their job last year state they were working too many hours, even while working from home. Meanwhile, three-in-ten cited working too few hours.

Relocation: A third of workers (35%) looked to relocate to a different area.

Lack of internal advancement: Most workers who quit their position last year are now employed elsewhere. They claim that their current work situation is an improvement compared to their previous job. At least half claim they are now earning more money (56%) and have more opportunities for career advancement (53%).

Employee incentives: Workers also stated that not having good worker incentives such as paid time off or health insurance was the driving force behind their resignation (43%). Fewer workers who quit their role last year (42%) now say they have better benefits, while 36% say it's about the same.

Younger adults vs older: Compared to older adults with higher incomes, younger adults (under 30) were more likely to resign from their position in 2021 voluntarily. 37% of younger adults followed through compared to workers aged 30 to 49 (17%).

The sudden increase in quit rates may have also risen for other reasons tied to the pandemic, including:

  • Employers insist workers go back to the office after working remotely in 2020.
  • Mistreatment from customers and employers throughout the pandemic pushed workers to resign after other job opportunities became available.
  • The labour force participation rate is slowly recovering from pandemic lows- fueling the competition between employers.
  • Some workers were unable to comply with workplace COVID-19 vaccination requirements.

The great resignation in Australia - Is it happening?

Has the mass exodus of employees spread to Australian borders? Not so much.

At a macro level, Australians in the workforce aren't quitting their roles as much as expected. According to the Australian Bureau of Statistics, which gathers yearly data on the resignation rates across the country, typically, 1 million people will leave their profession. However, businesses shouldn't be too alarmed by this statistic and here is why.

  • People leaving their professions is a sign of a well-functioning economy.
  • With low wage growth comes lower quit rates.
  • Valuable productivity also falters if quit rates are low.

Here are the statistics on job changes in Australia from 1975 to 2020:

That being said, specific industries have experienced significant quit rates- especially in cosmopolitan areas that have experienced gruelling lockdowns. The four sectors that underwent talent movement in Australia include:

While workers still outnumber jobs, unemployment rates are still decreasing, according to the ABS. This means Australians with hard-to-find skills have more bargaining power than ever.

Job openings peaked to 369,900 in May last year, just before the Sydney and Melbourne lockdowns, the highest since 1979, when records began. February 2019's previous peak was 232,600 vacancies.

However, those industries and job seekers experiencing a hike in pay rates included only HR, legal, IT, accounting and finance, information technology and mining.

As a result, the great resignation of Australia is more targeted, unlike its American and British allies.

The labour force participation rate is gradually rising from pandemic lows, fuelling competition among businesses. The problem of voluntary departures is thanks to the constricted talent shortage across Australia, unlike the US. Take our current unemployment figure of 4% (nearly FULL employment across the country) and the competition skyrockets.

Compared to the great resignation of the US, Australia's case is more of a supply and demand equation.

The abundance of vacancies with the reduced number of skilled workers provides many career choices for Aussie job seekers, allowing more people to quit careers with ease without worrying about the repercussions.

What does the great resignation mean for employers?

According to the ABS, we're not seeing the "great resignation in Australia" as a whole from annual observations. Prior to the first quarter of 2021 people who quit their careers fell to less than 7%, compared to the pre-COVID level of 9% of total employment in Q1 2019.

According to Treasurer Josh Frydenberg, the country is experiencing a 'great reshuffle' rather than a 'great resignation ', with Australia mostly exhibiting shifts in the labour market.

“In the last three months, a record number of around 300,000 workers say they left a job because they were looking for better job opportunities,” Frydenberg says in his speech, released ahead of delivery. The pick up in switching has been across all industries.

“Switching jobs allows workers to move up the job ladder for better pay,” with Treasury’s analysis based on single touch payroll data showing workers who moved jobs typically had pay increases of 8-10%” - Treasurer Josh Frydenberg (Australian Industry Group speech, February 2022).

From an Australian standpoint, this is more accurate.

To support Frydenberg's theory of a 'shifting in the labour market', workforce participation rates in developed countries like the US, UK, Canada, Italy and Japan, are lower than what they were pre-pandemic. Yet Australia's employment rate is at its highest.

From this perspective, the great resignation in Australia is more of a hyped-up fad across our media in 2021, both correct and other times incorrect.

As COVID-based government assistance to the country's business sector winds down, the environment will change considerably. There will be more talent redistribution as our economy recovers, mainly because there will be many opportunities in new markets.

How can employers minimise the impact of the great resignation?

Resignations and replacements are an inevitable component of any employment environment, especially during a favourable economic period. However, when an open position is challenging to fill, the burden on the business can mount up with the cost of a vacant seat. Here are decisive actions to bolster retention whilst ramping up your recruitment methods to minimise the impact of the great resignation:

Incentivise loyalty: In addition to updating your employee's overall compensation package, consider offering employees on-time bonuses and providing work-from-home stipends to correcting pay inequities to minorities.

Provide growth opportunities internally: Pretend your employees have just handed in their resignation notices. How do you change their minds? The answer, demonstrate to employees that you value them more than new hires by providing them internal opportunities to advance their careers. Offer incentives such as workshops to learn new skills.

Elevate your business's company purpose: Your business goals are why an organisation exists and why people join (or choose) to stay. Employers must prove to their current employees that there is more to your company than the bottom line. Try using your company's mission statement to shape what you do, and how you work.

Make culture and connection a priority: Employees are viewing themselves as more than just a number. Therefore building relationships with your workers is integral. Not only will this solidify loyalty with your organisation, but social connection also has a positive impact on work productivity and output.

Invest in looking after your employees' general wellbeing: Introducing sources such as mental and physical health benefits to providing subsidised daycare for parents with small children to giving more paid time off. While some employees require more than others, employers should do whatever it takes to ensure they are cared for.

Embrace flexibility: Flexibility in the workplace is another driving factor in retaining your employees. Whether it's flexible office hours, terms of placement to career paths, embrace it. This also includes loosening job qualifications. Consider hiring candidates who do not quite fit your profile. While they may not hold a bachelor's degree, they may possess the technical skills, experience and the right attitude to be an excellent fit for your business.

Acknowledge your employees: A simple 'thank you' can move mountains. Throughout the pandemic, employees have made many sacrifices- acknowledge them. Be proactive in making your employees happier by holding company-wide meetings where management addresses staff, outlining their achievements and contributions to keeping the company running to show transparency about their future with the company.   

Is your business struggling amid a labour reshuffle? Or struggling to find the best candidate that matches your job requirements? Gough Recruitment is a specialist recruiter with more than thirty years of placing candidates of skill sets with companies like your contract and temporary roles.

 

Contact us today!

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