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The Big Quit: Analysing The Great Resignation

by Mark Ellwood

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You may well have heard about the Great Resignation – people leaving their current jobs in droves, many without a new one to go to. In the US alone, 4.4 million people quit their jobs in September this year according to the US Bureau of Labor Statistics. Some reports have painted this as the latent response of burned-out workers rebelling against the extra pressures put on them during the height of the Covid pandemic.  But the real factors are more nuanced than this.  In today’s post, we dive deeper into the Great Resignation, whether it is being felt in our local markets and what employers should be doing to counter this.

 

  1. People are quitting

There has been a rise in the number of people quitting their jobs in the US. This Great Resignation is defined by Wikipedia as “…the ongoing trend of employees voluntarily leaving their jobs, from spring 2021 to the present, primarily in the United States”. The title Great Resignation was most likely coined by Anthony Klotz, a professor of management at Mays Business School in Texas, who predicted this situation in May 2021.

Resignation rates in the US fell dramatically in the initial stages of the pandemic (while forced redundancies rose significantly). However, the rates returned to pre-pandemic levels in July 2020 and have now exceed those for six straight months – higher than at any time over the last two decades.

 

  1. Employers are hiring

A great deal of the narrative around the phenomena, also dubbed the Big Quit, has focused on the burn out of workers and their demands for higher wages and better working conditions. While it’s clear that employee dissatisfaction must be a factor, the same US Bureau of Labor Statistics analysis also shows that hiring has increased significantly, with around 6.5 million job openings in September – exceeding the number of people who quit by 2 million.

 

  1. Reading between the lines

With such a high job opening rate, that can’t be explained by the people who have quit, clearly there are other factors at play. Indeed, there are several notable trends in the statistics that suggest a significant adjustment in the employment market overall:

 

  • Existential crisis, reskilling opportunity. According to Jack Kelly, writing for Forbes, the “…ordeal of coping with a deadly virus made Americans reevaluate their lives, jobs and careers…They received the message loud and clear: we have only one life to live; it's short, precious and it's imperative to make the best of it”. Even before and during the pandemic, one of the main discussions was around the impact of automation and how people need to upskill and reskill to keep their career options open. This has prompted people to see more rewarding work, switch industries and/or take that opportunity to improve their skillsets. This has been recognized by several employers, such as Amazon, who now offer to pay for these tuition fees – more on that later

  • Timing for a break. Many people across a large number of sectors found themselves thrust into a position of having to carry on with their jobs from home while looking after kids’ online learning and trying to run the household at the same time. During the height of the pandemic, none of us really knew how things were going to work out and many people were being made redundant. In these circumstances, the tendency was to soldier on and be glad to have an income at all. However, as the situation improved and the market recovered, people started to feel more confident that they would be able to take time out and still find a job afterwards

  • That commute again.  As people have started coming back to the office, some have started to realise they preferred working from home – they enjoyed the flexibility, the personal space. Combine that with ongoing concerns about infection in public spaces and many people have started demanding more mobile and flexible working. Recent research by Prudential revealed that “one in three American workers would not want to work for an employer that required them to be onsite full time”

  • Safety and hesitancy. That on-going concern about the risks is a major factors that some analysts have pointed to for the Great Resignation. Michael Gapen, Managing Director and Head of US Economics Research, points out via MarketWatch;

 

“The high quit rate is a red herring for understanding the sluggish return of workers to the U.S. labor market… Instead, the true cause is a hesitation of workers to return to the labor force, due to influences tied to the pandemic such as infection risks, infection-related illness, and a lack of affordable childcare”

 

  • The Kids.   According to several data sets, the Great Resignation is made up of significantly more women than men, with some figures suggesting their participation in the US paid labor force is now the lowest it has been in more than 30 years. About one-third of all mothers in the workforce have scaled back or left their jobs since March 2020. These staff shortages are being acutely felt in the female-dominated industries such as retail, hospitality and healthcare - industries that have grown or are now bouncing back from the pandemic. With a large number of daycare centers having closed and many schools still operating remote learning or a hybrid model, many women have opted to ensure the best conditions for their kids and, with the gender pay gap still a global issue, it is often the woman in the partnership that brings home less money. These trends have also been corroborated by the Barclays research that suggests the decline in labor force participation is being fed almost exclusively by married people living with a spouse who left the labor force in the late summer of 2020 and did not return

 

  1. Malaysia and Singapore

Singapore has also started to feel the effects of the Great Resignation. For example, earlier this month, Senior Minister of State for Health, Janil Puthucheary, revealed that 1,500 healthcare workers resigned in the first half of 2021 compared to about 2,000 annually pre-pandemic.

Writing in Channel News Asia, Ong Kah Jing notes;

“An Oracle survey found nearly seven out of 10 Singaporeans felt this year to be the most stressful at work and a Kisi's Global Work-Life Balance Index ranked Singapore as the second most overworked city in the world in 2021, just behind Hong Kong”.

It’s true that Asia has not, traditionally, valued work-life-balance in the same way as it has been promoted, so extensively, in the West.

According to a recent report, published in Staffing Industry News, in 2021, around half of professionals staying with their current employers have done so for salary purposes, an increase from 40% in 2020. Employees in Malaysia have been the most concerned with salaries at 57%, followed by Hong Kong. In the previous year it had been Singapore with 58% - an interesting trend that suggests there has been a value-shift in Singapore during the pandemic.

In fact, while work-life-balance was reported as the second most important factor for professionals to stay with an employer, the percentage of responders selecting this was five points higher over the previous year. Singaporean and Malaysian professionals are, however, feeling less positive about their current work-life balance at a time when 57% of organisations across Asia are offering remote work, compared to 31% the previous year. Clearly, the shift to remote work in Asia has been more dramatic than, for example, in Europe. There has also been a reported reduction in time spent upskilling, again corroborating the idea that people are leaving jobs to do this.

In Malaysia specifically, the Malaysian Employers Federation (MEF) does not foresee any similar Great Resignation labour problems in Malaysia. Its president, Syed Hussain Syed Husman, said the group’s data on attrition rates instead indicated a gradual drop in resignations. However, the MEF view is retrospective and based on data for the period July-August 2021. Economist Adilah Zafirah from the Iris Institute noted that there could be a parallel movement starting among the younger generation about working conditions;

“If we do not improve our labour market conditions – low pay for tough jobs, low work-life balance, flexibility and so on – it is not impossible that we too might experience a Great Resignation”.

This is a movement that, according to jobsite Employment Hero and reported in Focus Malaysia, is already underway, with 61% of employees planning to look for a new role over the next year.

Overall, it could well be that the Great Resignation effect is only now starting to take hold on Asia, which lagged behind the West in terms of unlocking due to the latent spread the Delta variant. Combined with slowly changing attitudes to work-life-balance in the region, this could have a significant impact on the market in 2022.

 

  1. Employer response

With many more jobs to fill but a reduction in the job-seeking workforce, the response from employers has to be to look at the Employee Value Proposition.

As we referenced earlier, in a bid to gain an advantage in the resultant war for talent, Amazon has offered to pay the cost of college tuition fees for 750,000 of its frontline workers to attract and retain staff amid the labour shortage. Investing $1.2 billion in the scheme by 2025, Amazon will cover the cost of college tuition fees and textbooks for US hourly staff after 90 days of employment for as long as they remain at Amazon. The firm will also begin covering the cost of other types of education, including high school diplomas and English-language courses, and extending on-the-job career training to 300,000 people.

This move follows the lead of some other large US employers, including Walmart, Target and Kroger, in offering to pay the costs of education for their hourly staff. In fact, Target is offering to pay for undergraduate degrees for over 340,000 staff of its workers the US.

This response naturally takes away the pressure to resign to upskill, one of the major factors identified as underlying the Great Resignation. But employers also need to look across the spectrum of concerns – covering mobile and remote working, flexible hours, childcare costs and even health and safety.

The focus here is a shift from basic concerns round pay and hours, to greater considerations such as quality of life and future prospects within the same company, and a shift from perks to enrichment.

 

Conclusion

Companies is Asia have an advantage in that the wave of resignations reaching these shores has perhaps been delayed, giving Asian firms more time to assess the responses of Western firms and to prepare in advance. It may well be that the trend is less pronounced in the local markets that still depend on foreign labour for the lowest paid jobs, but it is still likely that a a reduction in supply during a period of greater demand will cause headaches for employers if not addressed swiftly.