What is the Great Resignation?

Tens of millions of people around the world have voluntarily left their jobs in the last year. The phenomenon—which originated in the U.S. and is known as “the Great Resignation”—was first detected in 2021 in conjunction with the reopening of the economy following the lockdowns due to the COVID-19 pandemic.

Since then, experts, business owners and the media have been debating the causes and future consequences of this mass exodus from the labor market. Right now, the clearest indication we have are the numbers, which are record-breaking and devastating.

Four million Americans left their jobs in April of last year alone, a marker never seen before in the country. Between April and September, the number grew to 24 million. By the end of the year, the number of job openings reached a historical maximum of nearly 11 million in a market with only 6 million unemployed people. In other words, there were nearly two job openings for every unemployed person. What’s going on?

The Great Resignation: A large-scale phenomenon

As often happens with all economic trends that start in North America, the effects of this wave have now begun to be noticed across the Atlantic. Despite a smaller overall impact and particularities in each case, official data and studies indicate that we are facing a global trend: millions of people are rethinking how they want to live and work, and talent is in short supply across all companies and sectors.

In the United Kingdom, a recent survey suggests that 48% of men and 45% of women intend to quit their jobs in the next year, and the country recorded an all-time high of one million vacancies in July. In Germany, more than a third of all companies report a shortage of qualified workers. In the Netherlands, another study shows that 46% of employees are planning to leave their jobs in the next six months. In France, the number of resignations grew 9% in September compared to 2019. In markets like Spain, with higher unemployment rates, voluntary resignations are not growing yet, but the inactive population has increased.

In recent months, social movements such as “Lying Flat” and “Worker Lives Matter” in China are laying bare the discontent with the “996” work culture, in which employees work from 9 a.m. to 9 p.m. six days a week. In Australia, the number of workers changing companies increased by 26% in October and there have been record numbers of job vacancies. Onwards and upwards.

Globally, Microsoft has launched a broad survey of more than 30,000 people to try to paint a more uniform picture. The study reflects a disjointed and unmotivated workforce, where 46% of people are thinking about changing professions or leaving their jobs in the next year.

Experts predict that if the economy continues to grow with a revived job market, this phenomenon will spread like wildfire across developed countries. With this kind of individualized revolution, the world is reevaluating not only how jobs will need to be going forward, but also what relationship we will want to have with work.

Replacing an employee is estimated to cost a company the equivalent of 122% of the annual salary of that worker. Thus, even if it were just a financial matter, as a leader you would be best to prevent this mass exodus from affecting your office as well. How? By having a good understanding of the causes behind this trend and responding to what your employees need to feel satisfied in their jobs.

what is the great resignation

Who is leading the Great Resignation and why?

At first glance, this can seem like a dramatic situation, but people aren’t simply quitting their jobs to do nothing. Although there are also many early retirements happening, the reality is that most of these movements are professionals who are reconfiguring their career paths to take better jobs, refocus their careers or launch their own projects.

And this is happening across many sectors: hospitality, recreation, health, transport, logistics, beauty, administration, technology, customer service, retail, online sales, entertainment, construction, industry, education, etc. It seems that none are immune. In the U.S., nearly all of those sectors have seen workers leaving their jobs at double the rate they did in 2020. In other countries like Spain, the phenomenon is centered on certain profiles in high demand such as computer programmers, mathematicians and truck drivers.

Either way, the primary motivation is clear: people want higher salaries. With business activity recovering after months of lockdown, in certain sectors that are traditionally lower-paid, job offers have grown faster than demand, so workers have nothing to lose: they can quit their job with a full guarantee of finding another one right away and for better pay.

For some analysts, this phenomenon has been brewing since before the pandemic. Global data confirm this: employee turnover has been growing incrementally over the last decade and appears to be a trend that companies will have to adapt to as soon as possible.

Contrary to popular belief, employee turnover was high in the 1960s and 1970s. Things began to change starting in the 1980s: salaries stalled, job security became more precarious, and housing and education prices soared, narrowing the possibilities of building a financially stable life. Americans seem to have lost their patience, and the market is currently rewarding them: salaries of low-income workers are increasing faster than they have since the Great Recession.

The pandemic has us rethinking our lives

The other large group leading the workplace exodus are mid-level highly qualified professionals between 30 and 45 years old. Experts note that many of them would have delayed planned transitions due to the uncertainty caused by the coronavirus. Once the economy reopened, all those changes would have occurred in a very short span of time.

A second determining factor is that the emotional impact of the pandemic is causing workers, especially those with more resources, to rethink their life from top to bottom. This includes their goals, where and how they want to live, the impact their job has on society, how they can find greater balance, which values are essential to them, etc.

As part of this reflection, and following months of pressure, anxiety and stress, many have simply realized that they can take some time away from the office to think, look for, and hopefully find a job that is more in line with their interests. Experts are calling this the Great Reshuffle.”

Heaped on top of this, with the successive waves of the pandemic, is the exhaustion generated by the seemingly never-ending crisis. Many workers are reluctant to go back to the office, or have to take care of children or elderly family members, so companies that pressure their teams to work in person run a higher risk of accelerated employee turnover.

Finally, another circumstance shaping this great resignation is that the physical friction of changing jobs has recently disappeared in many industries. Technology and the boom of remote work have made previously inaccessible jobs worldwide available to millions of professionals. A person can literally leave a company on a Friday and receive the computer from their new company on Monday morning.

Given this context, how can you retain the talent on your team? Discover it in this article.