HomeFinanceHAMISH MCRAE: Riddle of the Great Resignation

HAMISH MCRAE: Riddle of the Great Resignation

HAMISH MCRAE: The Great Resignation is sweeping across the developed world – something very big, and very puzzling, is going on

The Great Resignation is sweeping across the developed world, with huge numbers of unfilled jobs just about everywhere, and in the UK we are being swept along by it. Something very big – and very puzzling – is going on. 

In the first week of this month there were 221,000 new jobs advertised, according to the Recruitment and Employment Confederation. That brings the total jobs advertised to nearly 2.7million, the highest ever. 

We will get new figures on Tuesday from the Office for National Statistics, which will probably show a new record for unfilled vacancies – though a lower number than the REC’s as it calculates in a different way. So it looks as though the country will have managed the end of the furlough scheme without soaring unemployment. 

On the move: It seems that many people don't want to do the same jobs as they did before

On the move: It seems that many people don’t want to do the same jobs as they did before

That will be a relief. But it is also part of the puzzle. Unemployment may not have risen nearly as much as feared, but there are still 1.5million people registered unemployed. So there is clearly a mismatch. The people looking for jobs don’t have the right skills, or perhaps don’t live in the right place, to fill them. 

That would make sense. There is huge unfilled demand for HGV drivers, care workers (more now given the requirement to be double-jabbed), IT experts and so on. Many of the jobs lost have been in high street retail. But it is not easy for someone accustomed to working in a shop to train to become an IT expert, or to drive a lorry across Europe. 

This upheaval in demand for labour is the most sudden transformation since demobilisation after the Second World War. So there was bound to be a mismatch of skills. 

But the revolution is not only on the demand side. It is happening on the supply side too. That is what the Great Resignation is about. It seems that many people don’t want to do the same jobs as they did before. This is pretty much universal. 

The expression was invented in America but it is evident in Germany, where one-third of companies report staff shortages. They had trouble in Italy getting the grape harvest in. The huge hospitality industry in France is struggling to re-staff as it has opened up. And so on. 

What’s up? What seems to have happened is twofold. The period during the lockdowns when people were forced to work differently, or perhaps were laid off, has led many to rethink their careers. 

Do I really want to go on doing this for another 20 years? Some older workers have retired early. Some younger people have decided to retrain. Others have decided to work fewer hours and cut their living costs. Work/life balance is something that just about everyone has pondered. For some this has been the opportunity to make the leap. 

But it is not just that. The other driver is the cash pile that collectively we have accumulated through the lockdowns. 

Here in the UK, the so-called excess savings – the money people have on their bank accounts as a result of being unable to spend over the past 18 months – stands at around £150billion. Of course that money is unevenly spread, but for many it provides a cushion. Similarly, the house price boom will help downsizers who find they can retire earlier than they expected. 

Pull all this together and the result is a huge shift in power between employer and employee. So employers find they have to offer all sorts of incentives to get people on board. City legal firms are offering upwards of £100,000 a year for newly qualified lawyers. Amazon is offering £3,000 as a signing-on bonus at its Exeter warehouse ahead of the Christmas rush. The chief executive of Uber, Dara Khosrowshahi, rushed over to London last week to tackle the driver shortage crisis. Pay and conditions, and of course fees, are rising sharply. Other employers are being forced to offer retention bonuses to stop staff leaving. 

So where does it all end? 

Well, as the world adjusts to the pandemic the labour market will come back to some sort of normality. But there are good reasons to expect the power to stay with employees for some years yet. 

One is demography. A shortage of young people will push up their wages. Another is the push-back against offshoring jobs. Do you really want to risk another breakdown in global supply chains? 

Still another is the realisation that work is not just about pay. It is about satisfaction and fulfilment. Wise employers will learn to behave better to their staff. And that is no bad thing at all, is it?


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