No Great Resignation, Yet?

We’ve been talking about the Great Resignation hitting Australia at EGM Partners for almost a year now.

It wasn’t some crystal ball, waxing-lyrical, bold prediction you get from a recruiter standing on a soap box.

Here’s some context and some numbers for you…and reasoning behind why it’s not going to be pretty for some.

SOME NEEDED CONTEXT

The cover image for this article is a picture of me with my dad and my sister in 2007. Dad's a smart cookie. Amy is too. The photo is from my graduation from University College London (UCL).

I know what you're thinking: "great tie and great hair".

When you look back on the past you’re able to have the gift of hindsight. You see why things happen…how things happen...or perhaps not at times.

Often there are a chain of events and bad decisions (such as my poor choices in hair styles and colour) that lead to (or could lead to) a major event. For full disclosure - I had shoulder length hair until my graduation when my parents told me (using their hindsight) that I should cut my hair to make for less embarrassing photos and better employment prospects.

I’m an ongoing student of the economy. I studied European Political and Economic History in the 20th Century from the Roaring 20s, Great Depression (marked by the Wall Street Crash in the US) to inflation and labour shortages in World Wars…sound familiar with what's going on in the world currently…best not to go there!

Back to the Great Resignation and soapboxes.

I’ve heard people say “it’s not here” or that it’s “media hype”.

Indeed an article in the Conversation titled "Australia’s ‘great resignation’ is a myth — we are changing jobs less than ever before:, resignation rates are falling" argued that:

"Data collected each year by the Australian Bureau of Statistics suggests that in the 12 months to February 2021 almost 1.1 million Australians left their jobs. That’s not unusual. In most years more than a million Australians leave their jobs. Leaving and changing jobs is a sign of a healthy, well-functioning labour market."

There's even a nice graph from the ABS showing the number of employed Australians who switch jobs (although on this: What about people leaving employment and entering the gig economy? What about those finally deciding to take their super? Those who reduced their FTE hours?).

For the record - I completely agreed with the article. It argued that the Resignation hadn't happened...yet.

But the numbers don't add up...or, at least, I don't think they do now.

The November 2021 article (a great, well-written article that I fully agreed with at the time) was published right at the point that recruitment businesses across Australia were being inundated with new roles to fill. The number of "record profit quarters" from listed recruitment business taking advantage of a talent-short market being reported in Shortlist Magazine is more than I've ever seen.

There's been a huge shift since November 2021 - and as the economist Paul Samuelson said:

"When the facts change, I change my mind. What do you do, sir?”

I’m not a fan of unsubstantiated statements or tin-foil-hat wearing. I do like critical thinking though - we promote it at EGM so I’ll share with you some facts to figure out if we’re there instead and maybe promote some discussion:

• Australia’s population in 2020 was 25.69 million
• In 2020 29.8% of our population was born overseas
• In 2020, around 19.29% of Australia's population was between 0 and 14 years old, 64.49 percent was between 15 and 64 and 16.21 percent was 65 years old and over - so under 65% of working age
• In 2021 827,000 people changed jobs on LinkedIn (that's 7% of the LI members we have in Australia) with 141,000 open jobs (just waiting to be filled!)
• In the 12 months to March 2021, Australian net overseas migration was -95,300
• Job adverts increased 41.4% in Australia (69.9% in Adelaide) 2019 vs 2022
• Almost three in five Australian workers were considering a job change in the coming months, new LinkedIn data suggests. (The data, collected before Christmas, shows high levels of workplace confidence).

National, state and territory job ad growth/decline comparing February 2022 to: i) January 2022 (m/m); ii) February 2021 (y/y) and iii) February 2019.

I believe the above were all some of the ingredients of a perfect storm leading to a Great Resignation.

So if (this year) Australia's economy was 4.2 per cent bigger than a year earlier with gross domestic product (GDP) in the December quarter of 2021 now 3.4 per cent above the pre-pandemic levels of December 2019 and we’ve created more jobs with negative net migration…and we’ve created more jobs than ever before…and you STILL don’t think we’re in a Great Resignation?

Then...

Where on earth are these skilled workers coming from?

State and territory job ad volumes – February 2019 to February 2022 (SEEK)

It’s clear we’re currently in a golden era of job creation…our unemployment rate is about to go below 4% - and our population in Australia has never been higher.

Here’s where studying the past can come in useful however…there are indicators of inflations (house prices) and we’re about to enter a period of wage inflation brought about as a result of a labour shortage and increased costs of living.

Here’s the warning:

(With a disclaimer from Lawrence J Peter “An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.”)

- This won’t last.

Whether we're talking about the lowest number of resignations, inflation in salaries or the Great Resignation itself.

What is certain is that your people will leave you - the number that leave each year will change.

The key take-away for Australian organisations is to plan. Don't be taken by surprise. The Mckinsey-coined "War for Talent" from 1997 is well and truly here.

Your people will leave.

There are steps you can take to ensure you reduce the risk of them leaving (check our blog for a range) but if you rest on your laurels and don't prepare for a number of resignations...good luck.

Sources:

• Australian Bureau of Statistics
• Seek Employment Report
• LinkedIn's Talent Insights