“The Great Resignation in Australia” was a common catch cry in 2021. Across boardrooms, Zoom meetings, and countless media articles, the fear that workers were imminently about to march, seemed ubiquitous.
“It’s coming in 2022!!” …
“Get ready to get hiring!!”…
“The pandemic has changed our workers!!”…
As it turns out, perhaps this outcry was a little premature. Far-fetched even.
As we’re well and truly into the swing of working life in 2022, we’ve taken stock on Australia’s forthcoming workplace exodus. And we’re dubious (to say the least) that the great resignation in Australia has happened, or will actually come to pass equal to the alarmist rhetoric we’ve heard.
Here’s a look at what we’ve learned…
First, Some Background: It Started in the US
‘The Great Resignation’ was a term coined in the US by Texas A&M University’s Anthony Klotz back in 2020. It stemmed from two key developments taking place at the time:
- Growing resignation rates across the US
- Workers feeling overwhelmed and stressed, on the back of the first year of COVID
His prediction for the US was spot-on. Resignation rates in 2019 were at around 2.4%. By August 2020, they had reached 2.9% – the highest jump on record.
Pundits speculated ad nauseam on the reasons for this jump. One, the Nobel Prize Winning Economist, Paul Krugman, wrote in the New York Times that this represented a worker ‘revolt’ in response to years of sub-standard conditions. (Source: The Conversation).
Others suggested workers were retiring early. Or simply looking for a less stressful life. COVID was a big factor in these decisions.
And of course, the US suffered greatly after the Global Financial Crisis of 2008. The recessionary environment tanked the economy. So recent numbers of resignations are considered somewhat of a catch-up.
But ‘The Great Resignation in Australia’? Not So Much…
At a macro level, here in Australia, we’re actually not quitting as much as we should be.
The Australian Bureau of Statistics gathers data each year on the rates of resignation across Australia. Typically, we see around 1million people leave their job in any given year.
And this is a good thing. Why?
- People leaving jobs is a sign of a high-functioning economy and labour market
- Wage growth remains low if quit rates are also low
- Productivity falters when quit rates are low
Take a look at the data on Australians changing jobs from 1975 to 2020:
Source: Australian Bureau of Statistics
“The vast majority of people were hunkering down in their roles through the pandemic period,”
Matt Tindale, LinkedIn Australia Country Manager
Where the Quit Rates Are Happening
Having said all that, there are a number of industries experiencing significant quit rates – especially in cities that have experienced gruelling lockdowns.
There are four industries experiencing talent movement in Australia. These industries are:
As it stands today, workers still outnumber jobs in Australia. But unemployment is decreasing:
Source: ABS
Yet workers with hard-to-find skills have more bargaining power now, than they have had in decades. Job vacancies peaked at 369,900 in May last year before the Sydney and Melbourne lockdowns, a record since the ABS started collecting the figures in 1979. The previous record before the lockdown was 232,600 in February 2019.
Those job families experiencing a hike in pay rates include IT, legal, HR, accounting & finance, life sciences, information technology and mining.
It appears the great resignation in Australia is targeted. The employment platform, Hero, found in September 2021 that 48 per cent of Australian workers planned to resign in the next 12 months. 15 per cent were already looking. Almost half of respondents said a pay rise would entice them to stay.
The Great Resignation in Australia: It’s Not That Simple…
When you look at the overall workforce, we’re not experiencing the great resignation in Australia, based on annual observations (from ABS data). The number of people who were leaving their jobs in the year prior to the first quarter of 2021, fell from the pre-COVID level of nine per cent of total employment in Q1 2019, to less than seven per cent in Q1 of 2021.
According to Treasurer Josh Frydenberg, what we’re experiencing in Australia, is the ‘great reshuffle’ rather than the ‘great resignation’ – in saying this, Mr Frydenberg noted the difference to the shifts in the Aussie labour market, compared to that of the United States.
“Treasury analysis shows that over one million workers started new jobs in the three months to November 2021. The rate at which people are taking up new jobs is now almost 10% higher than the pre-COVID average.
“In the last three months, a record number of around 300,000 workers say they left a job because they were looking for better job opportunities,” Frydenberg says in his speech, released ahead of delivery. The pick up in switching has been across all industries.
“Switching jobs allows workers to move up the job ladder for better pay,” with Treasury’s analysis based on single touch payroll data showing workers who moved jobs typically had pay increases of 8-10%.
Treasurer Josh Frydenberg (Australian Industry Group speech, February 2022)
So maybe this is a more accurate way to look at it (from an Australian standpoint).
Another point to note supporting this position is this: a number of other developed nations have fewer people working, compared to before the start of the pandemic. In the UK, Canada, Italy, Japan and the US, workforce participation rates are lower than pre-pandemic. Yet Australia’s participation rate is at a record high.
It would seem the great resignation in Australia was somewhat hyped-up across our media in 2021; one that was both correct and incorrect. The nuances are telling. As COVID-based government support of the corporate sector winds up, Australia’s business landscape is going to experience more talent reshuffling, particularly as our economy gets back to normal. Well… whatever ‘normal’ is.
If you would like to discuss the movement in Australia’s workforce, please don’t hesitate to contact me. You can reach me here.
