The Geography of The Great Resignation: The World of Work Might be Changing for the Better
What is the Great Resignation?
The great resignation is the ongoing economic phenomenon where mass swathes of the global workforce quit their jobs and sometimes the employment system altogether. This economic and social trend rose to prominence in 2021 and has still not exhausted its momentum. Some observers, such as Professor Robert Reich of the University of California, Berkeley, even compared it to a general strike.
While most of the conversation around the great resignation tends to focus on how events are unfolding in the US and the unique aspects of its labor landscape and laws, the truth is that people are leaving their jobs in many different regions. This seems to be a global phenomenon, and in this post, we will describe how the geography of the great resignation is playing out worldwide.
Who came up with the Great Resignation?
While it can be referred to by many different names, such as the “Big Quit“ and “Great Reshuffle,“ most people will refer to this phenomenon as Great Resignation. The term was first used by Professor Anthony Klotz of the University College London’s School of Management in several interviews (like this one by the Washington Post) and opinion pieces starting in early 2021.
Why are so many people quitting their jobs?
A definitive list of causes has not yet been identified. Still, a confluence of factors has exacerbated the trend of people leaving the workforce.
Below are a few commonly accepted factors contributing to the ongoing mass resignation. This list is not exhaustive, though; many other factors may influence the employment market, both globally and locally.
The COVID-19 pandemic
The pandemic that kicked off in 2020 is one of the biggest causes of the Big Quit. It may very well be the catalyst that made events kick off.
While waiting for vaccinations to be developed, lockdowns and social distancing caused many workers to rethink their roles and careers, especially with remote work technologies having proved themselves able to support a mass transition to remote and asynchronous work while often improving productivity.
Additionally, with high numbers of people suffering from long COVID, having flexible work schedules and working from the comfort of one’s home can be a necessity more than a perk for those suffering from this often debilitating condition.
The pandemic didn’t only affect workers whose roles enable them to work remotely, though. The retail and hospitality industries have been among the hardest hit by the pandemic and most affected by the Great Resignation. In many cases, COVID relief payments and social welfare schemes deployed during the pandemic to support those who could not work enabled many people to think, often critically, about their work conditions, wellbeing, and overall workplace satisfaction.
One of the biggest reasons people choose to abandon their job or the workforce is that salaries are often not enough to cover basic living expenses. This issue is especially true in high-cost-of-living urban areas, where real estate can be inaccessible to middle-class workers. Even a full-time job can leave workers in dire financial conditions without options to save or plan for the future.
Wage stagnation and dramatic increases in wealth inequality have left many workers poorer than they would have been a few decades ago. And this is not just an American phenomenon: European wages have not grown to match the cost of living increases in a long time either. The push for better compensation for labor is driving people away from work.
However, perhaps more interestingly, it might also be at the root of impending changes and developments that seem to be taking form on the workplace horizon. Unionization efforts are growing in the US. Many companies in the hospitality industry have raised their wages and increased their benefits to attract and retain a workforce that is not willing to take up underpaid jobs anymore. There is widespread talk about raising minimum wages both in the US and Europe, and in some cases, the tide seems to be turning.
The desire for a better work-life balance
By the time things started moving “back to normal,“ large portions of the workforce had already concluded that the old normal wasn’t good enough and were unwilling to give up the freedom and flexibility they had grown accustomed to throughout 2020. The popularity of remote and hybrid work is such that these approaches to work are now among the top reasons employees change jobs.
And the pandemic might have just accelerated a trend that was already happening, albeit at a slower pace, with younger generations, such as Millennials and Gen Z, more open to changing careers and exploring different paths when unsatisfied. These demographic cohorts bring their need for change, values, and flexibility into a job market that often still needs to adapt to new conceptions of work. When change is not quick enough, they are willing to leave.
An aging workforce
While an aging population reaching retirement age in large numbers might also be contributing to the global phenomenon of people leaving their jobs, the impact of this potential contributing facto to the Great Resignation is less clear, and sources offer different points of view.
The Harvard Business Review, for example, puts retirement among the five main causes for the Great Resignation, however, older workers may have been driven out of the market involuntarily, as part of layoffs or increased health concerns, so the impact of retirement on the resignation phenomenon is debated.
Social networks might have a part in the build-up of the great resignation too. The ability to share information, activism efforts, personal experiences, and thoughts, whether from a senior economist on a LinkedIn post or a first-time fast-food worker in a Tik Tok video, has contributed to the normalization of quitting and looking for better opportunities.
What is the relationship between the Great Resignation and a possible new Great Recession?
Generally speaking, the rate of resignations tends to decrease when going gets tough. The workforce is not as willing to abandon the relative security of a job they already have in a situation perceived as unstable or downright harmful. The opposite is usually true in times of plenty. When there is increased demand for workers and the economy is stable and has a positive outlook, workers feel safer venturing into new jobs, roles, and career changes.
While this trend was matched in the initial months following the pandemic (at least in the US), with record amounts of layoffs and a consequent reduction in resignations, as more months went by, more and more people quit even though labor shortages and high unemployment persisted.
The Great resignation seems to still be going strong. However, things have changed drastically throughout 2022. With the conflict in Ukraine heavily impacting energy prices and whole economies, many countries are bracing for, or have already entered, a recession. Coupled with record levels of inflation, rough seas might be ahead, and how they will affect the labor market and modern approaches to work is still to be determined.
Who are the people most affected by the Great Resignation?
Dissatisfied and disillusioned Millennials and Gen Z are the driving force behind the trend, with over 60% of Gen Z reportedly looking to switch jobs within the next year. On the other hand, the highest increase in resignation rates is recorded in Millennials and the younger Gen X segment, who tend to be mid-career employees.
How is the great resignation affecting different geographical areas?
The great resignation in the US
The great resignation has been sweeping across the country from California to Iowa, New York to Georgia. In April 2021, with COVID-19 vaccination rates increasing and a general expectation of things returning to normal, resignation rates started growing too, with a record 4 million workers leaving their jobs. The highest quit rates were observed in public-facing jobs, such as food service workers (6.8% of whom left their job) and healthcare workers, of which a staggering 20% quit from the start of the pandemic to November 2021.
The Great Resignation in the US has been compared to labor strike phenomena such as Striketober, a 2021 strike wave that saw over 100,000 workers participate, or a general strike. Wage growth has jumped considerably, reaching record growth rates unseen since 2001, with many companies increasing wages and benefits to retain employees or even attract new ones to fill long-running vacancies. An extra element confirming dissatisfaction with wages and benefits as a driving element in the Big Quit is that resignation rates are higher in the private sector than in the public sector, where benefits are generally better.
While some observers say the wave might be (slowly) subsiding, 2022 still saw record levels of employees leaving their jobs, and numbers are still very high as we enter 2023. For more information, look at the JOLTS (Job Openings and Labor Turnover) report from the US Bureau of Labor Statistics.
The great resignation in Australia
In Australia, a record number of workers have been leaving their jobs. Job turnover reached 9.5%, the highest level in a decade, with most people changing jobs seeing a salary bump of 8-10%. The increase in job mobility is highest for women and is often a sign of workers being able to move to better opportunities, roles, and positions.
Connected to this increased mobility of the workforce, wages have also been growing, reaching record growth rates since 2018, at 2.4%, according to the Australian Bureau of Statistics. Some industries, like IT, have seen increases of up to 10%. Nevertheless, the average wage growth rate is still insufficient to cover the increasing cost of living. Unlike other countries or areas (such as North America and the UK), the unemployment rate in Australia is at its lowest in 48 years.
The great resignation in Asia
China is also experiencing a social protest phenomenon deeply connected to the labor market. The Tangping (躺平), or laying flat movement, started around the same time the great resignation kicked off, in the first months of 2021, and involved a general withdrawal from the workforce, the “Chinese dream,” and the high pressure and overwork involved in the 996 working hour system.
Mirroring trends happening in other areas, the Tangping movement is embraced mostly by disillusioned younger generations. In many cases, Chinese workers who decide to lay flat are almost completely withdrawing from the labor market, choosing to work just the minimum amount they need to get by.
In this Micheal Page report, India has also seen a wave of resignations affecting many different markets, with a record-high 86% of the surveyed workers considering a job change in the next six months. The IT sector has been especially affected, with over 1 million resignations (around 25% of the IT workforce) just in 2021.
The great resignation in Europe
While resignation rates are not as dramatic in Europe as in the US (that might be due to different policies adopted when facing the pandemic emergency), rates and details of how the labor market is reacting to the pandemic and the great resignation are different from country to country. Still, the trend seems to match what we have described so far for other regions.
A 2021 Personio study (in Dutch) found that 46% of Dutch workers plan to leave their job in the next 6-12 months. A general employee shortage and rising inflation might be behind plans to increase the minimum wage.
Over 20% of the UK workforce is planning to quit in the next 12 months, according to recent data. While wages in the UK have increased, on average, in the past few months, raises were often not enough to compensate for soaring inflation levels.
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Remote work, and the technological ability to implement it easily and effectively, have been considerable drivers in triggering the Great Resignation, at least in the more tech-driven markets. While remote work is not the answer to all the woes of the labor market, the ability to implement it easily and globally can boost employee retention rates, job satisfaction, and overall productivity.
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