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The Great Resignation

What is the Great Resignation? Zach Spelman from our Business & Commercial team explores the economic trend which has been seeing employees voluntarily resigning from their jobs en masse.

The Great Resignation started in the United States in Spring 2021 as the nation climbed out of the pandemic, and (unlike their revolutionary republican ideas) the ideas behind the movement have spread across the Atlantic Ocean to the United Kingdom.

A survey conducted by Randstad UK found that of the 6,000 workers interviewed, 69% of them were confident about moving to a new role in the following months, and a further 24% of these workers were planning a change within three to six months. This is a staggering rise from the usual 11% that Randstad UK would expect to change job every year.

Randstad UK has warned that the Great Resignation will have a significant financial impact on employers, in some areas as much as £25,000 per employee.

So, what is the cause behind the Great Resignation? As usual, there are several factors at play which contribute to the idea and which may encourage workers to switch up their careers.

The first, and overriding principle, is post-pandemic burnout. There is little doubt that many workers struggled through the pandemic. Frequently, where colleagues were furloughed, those who stayed in their role were left to absorb their colleagues’ responsibilities. These workers have been running at maximum capacity for too long, in less than ideal working conditions.

Burnout is really a double-edged sword. Not only are workers feeling burnt out and looking to switch up their career as a consequence, but frequently it appears burnt out employees are taking a break from work altogether. Many households managed to save money during lockdown, and those who are more financially stable have found themselves in a position where they do not necessarily need to work. Pair this with rising childcare costs and you have yet another catalyst which is removing highly skilled middle-aged workers out of the job market, driving businesses to offer more money for those skilled employees hunting for a new place of work.

This feeds into the second factor contributing to the Great Resignation – pay rises. While many remaining employees have seen their pay frozen and bonuses scrapped, despite expending more working effort on a daily basis, other companies following the loss of employees are offering higher wages and more competitive roles than ever before.

The Office for National Statistics reported in September that the number of job vacancies in June to August 2021 was 1,034,000 – the first-time vacancies have risen over one million since records began. Further, growth in average total pay (including bonuses) was a staggering 8.3% in the three months of May to July 2021. These statistics will undoubtably be very appetising to a burnt-out employee and may negate any reservations they may have about changing their place of employment.

Of course, we could not talk about the labour market without discussing the impact of Brexit. Although we cannot refute evidence that shortages in some industries such as distribution and logistics or in the abattoirs around the UK is a direct result of losing EU workers, the lack of freedom of movement is simply not the motivating factor behind the Great Resignation.

As we move towards more uncertain economic times, with pressures currently mounting regarding the cost of living, we await to see how this might affect this trend and the labour market generally. However, what this period has provided is an opportunity for people to take stock of their personal circumstances and revaluate what’s important to them – and this surely looks to continue, therefore requiring employers to think carefully about the retention and recruitment of their staff.

So how can businesses avoid falling victim to the Great Resignation? Adrian Smith of Randstad UK offers three remedies: re-evaluate wages; use remote working to both widen your candidate pool and attract those workers suffering from burnout; and, if you find the perfect candidate, move fast – much faster than you may have considered moving pre-pandemic.

Zach Spelman is a member of our Business & Commercial department – working closely with his colleagues across our Fosters In House and Employment teams.

We provide expert legal advice across a range of commercial and corporate areas, and also support a diverse range of businesses through our bespoke fixed-price Fosters In House service. For more information, please follow the links, or contact the team directly on 01603 620508.

This article was produced on the 15th June 2022 by our Business & Commercial team for information purposes only and should not be construed or relied upon as specific legal advice.