The Great Depression is the first of its kind in May 2021, and has been a source of fear for employers ever since. In the US, this term implies an unprecedented increase in the number of workers leaving the post-epidemic.
Since then, much research has been done to find out why this is happening. Are workers going to stop working because the epidemic is making us rethink our priorities? Or did they just not pay attention when you tell them something to do?
We have used the National Bureau of Statistics’ data from the National Statistics Office to look at how true this great resignation story is in the UK. “Great” actually has two meanings and we have seen both the magnitude of the resignation changes and these changes are a positive force for the development of the workforce. We have also seen that the increase in resignations is exacerbating the shortage of manpower in organizations.
Increase in layoffs
Evidence suggests that it was indeed a major resignation in the UK. The chart below shows that the number of resignations has risen sharply since the end of 2020 and is well above the pre-epidemic level in the last quarter of 2021.
This is not because the workers have decided to quit their jobs and leave. Instead, we see an increase in the number of employees who are leaving their jobs to start new jobs. The only people who are leaving the workforce are those who are over the age of 50 and who are retired more than normal.
UK Retirement 2019-21
So why are people leaving their jobs to work for other employers who are above average? Some commentators have suggested that the increase was triggered by individuals seeking to make major career changes as staff re-evaluated their lives after the outbreak. In fact, this is not supported by data.
The next chart identifies UK employees leaving the UK in 2021 for higher skills, lower skilled jobs or similar jobs. As you can see, the increase in the number of resignations was largely driven by the number of workers leaving the same job side by side.
Job changes, 2019-21
Although their employees did not significantly change their job opportunities in these activities, it was good news for them. Employees in the same job earned higher wages than those in the same historical employer, and by 2021, enough, new employees would earn more than those who did not move.
For workers who change jobs, this provides some relief from the high cost of living. However, most workers are still employed and therefore suffer more because of lower wages.
Could the increase in resignations contribute to an increase in labor shortages? A.D. By the end of 2021, it was looking at reports of many companies struggling to fill vacancies, which increased the likelihood that higher unemployment could lead to these recruitment problems. We have found that among the five “scarcity” sectors, vacancies are high in construction, manufacturing, accommodation, health and food, administration and support, where people find it very difficult to recruit.
However, most of the workers left their jobs to find new jobs in the same industry, so they could not be the main cause of the shortage of jobs in each sector. Instead, difficult reasons for hiring vary by sector. For example, the manufacturing sector is described as pre-retirement, while the housing and food sectors are suffering from a shortage of young workers.
Instead of being the cause, the rising unemployment rate in these five sectors is likely to be a sign of labor shortages. It is clear that the loss of their employees will only aggravate the problem for employers who are already struggling to find employment.
Overall, contrary to some expectations, the so-called Great Depression of 2021 has not significantly improved the workforce. Employees who are willing and able to change employers are rewarded with improved wages, but not enough to reduce the slow and high cost of living for long-term wage growth.
Finally, it should be noted that the rate of vacancies and wage growth slowed in the fourth quarter of 2021, indicating a renewed labor demand. So if you are not part of the Great Depression, it may be too late.