So precisely why are people quitting in droves? Many point the finger of blame at the Covid-19 pandemic. A clear explanation but, at the same time, an absolute over-simplification. It’s true that it’s not the same workforce that went to the office before the pandemic struck. Covid-19 accelerated digital transformation for many companies and, as a result, people now enjoy more freedom in how and where they work. At the same time, the pandemic has taken a toll on mental health, increasing the levels of burnout and causing many people to re-evaluate their career paths and shift their priorities.
However, it’s essential to recognize that the pandemic merely served as a catalyst for the pre-existing trend of high quit rates. Many workers might have quit in 2020 anyway, even if there had been no pandemic.
In reality, the pressure on the job market has been building in developed countries for decades amid stagnating remuneration, job uncertainty, and soaring inflation levels. A desire for higher pay is the top factor motivating 71 percent of people to seek new roles, according to PwC’s Global Workforce Hopes and Fears survey of 52,195 workers in 44 countries. The survey found that one in five workers globally are likely to seek new jobs in 2023, citing historic inflation increases. However, the question remains why this challenge becomes more pressing right now.
Is It a Generational Problem?
Some wonder whether this is all just a generational effect. Microsoft found that 54 percent of Gen-Z employees are considering quitting their jobs. After all, the younger generation of employees is well-known for seeking greater purpose from their jobs and demanding that their employers exhibit certain values. Can they be accused simply of being spoiled?
This isn’t the case. Data show that resignation rates are rising across all age ranges. To understand this phenomenon further, Egon Zehnder and Kearney surveyed over 8,000 people to find out where divisions exist among generations. The result was that, overall, two-thirds of employees would leave their jobs for more meaningful positions. Whereas Millennials (70 percent) are the most likely group to leave a job in search of more fulfilling roles, rates remain high among other age cohorts: Gen X (59 percent), Gen Z (58 percent), and Boomers (54 percent). Subsequently, actual resignation rates are also high across the age range and show no sign of decreasing: Visier found that even in 2022 every age group between 25 and 70 had substantially higher quit rates than in 2021. Furthermore, this trend is not restricted to just one or two industries. The consumer, finance, technology, and healthcare industries are among those suffering from high resignation rates.
The Great Reshuffle
If you look at the situation more closely, the terms the “great resignation” or the “great attrition” may be misnomers – the “great reshuffle” might be more apt. Many employees are jumping industries rather than leaving employment altogether. Nearly half of the employees (48 percent) are leaving their current jobs to go to different employers in different industries, according to a McKinsey survey.
These changes are being reinforced by fundamental societal shifts, including a shrinking labour force as more workers retire in a rapidly aging population. In Japan, for example, which has the world’s fastest declining population, politicians are calling for the retirement age to be raised to 68 and to have older people re-enter the employment market on a part-time basis. China is expected to follow suit and increase its retirement age to encourage older people to work and pay for pensions supporting the country’s growing number of elderly. Similar conversations are happening in France.
One way companies have tried to adapt to this is by hiring people for their potential and competencies, rather than purely their industry experience. A new playing field is being created as employers compete across industries in terms of hiring and not just within their original industry. At the same time, a record number of new businesses, such as start-ups, are setting up in both old and new fields.
All these factors lead to the working world’s transformation from a buyers’ to a sellers’ market. The current supply for the workforce cannot keep up with the demand anymore. While this trend only impacted highly specialized sectors in the past, such as IT, it is now happening everywhere. What’s more, it is here to stay.