There has been wide speculation that a Great Resignation is poised to take place in 2022. How might we know if this is taking place?

By Michael Johnson and Ellouise Roberts.

Michael and Ellouise are labour market analysts with the National Skills Commission, and work on the Recruitment Experiences and Outlook Survey.

The opinions expressed in this staff-authored blog are those of the author/s and do not necessarily represent the position or policy of the National Skills Commission or the Australian Government.

As Australian cities and towns emerge from the recent round of COVID-19 lockdowns, and labour market activity continues to pick up, there has been wide speculation that a Great Resignation is poised to take place in 2022. First identified in the United States, any similar event would be later in Australia due to the different timing coming out of restrictions. Whether it might be due to COVID-19 related burnout, the search for a job with better pay and conditions or simply people changing their priorities, the Great Resignation would see a dramatic increase in those leaving their jobs. While recent published data would suggest this is not happening yet, a boost to job vacancies across the board suggests there is scope for large numbers of people to change jobs either late this year or into next year.

So how would we know if the Great Resignation is happening here? For the purposes of this blog post, we’ve taken The Great Resignation to mean a combination of both job mobility (i.e. people changing jobs) and labour market exits (i.e. people leaving both their job and the Australian workforce completely, such as in the case of retirement).

Converse to the narrative that modern employees are regular job hoppers with little loyalty, job mobility in Australia – measured as the proportion of people moving between jobs each year – is actually pretty low. Declining from a peak of 19.5% in 1989, the rate of annual job mobility now sits at a record low of 7.5% in 2021.

While there is certainly scope to increase the rate of job mobility, and it’s likely that this will be the case in some occupations due to pent-up demand for new opportunities, job mobility in Australia is unlikely to reach the rates seen in the late 1980s – or anywhere near.

Figure 1: Job mobility - percentage of employed persons who changed jobs during the year

Source: ABS Participation, Job Search and Mobility, Australia, annual data each February, 1980 to 2021 (and NSC analysis where annual data not available).

In August 2021, around 9 in 10 (90.4%) people expected to still be with their current business or employer in 12 months' time. This data series has been consistent, ranging from 89.2% to 91.9% across the period August 2001 to August 2021. While there can be a large gap between expectations and outcome, it shows that there hasn’t been a fundamental change in what workers are expecting from the future.

Figure 2: Proportion of employees who expect to be with their current employer or business in 12 months’ time

Source: ABS, Labour Force, Australia, Detailed, October 2021.

Looking at monthly employment inflows and outflows – for which data is more contemporary and available right up to October 2021 – there again isn’t a lot of evidence of unusual levels of outflows from the workforce relative to previous years.

Behind the relatively small sounding average net increase in employment of roughly 14,000 each month that Australia has experienced over the last 5 years lies a much higher number (roughly 400,000) of those becoming employed each month and a slightly lesser number no longer being employed (whether becoming unemployed or leaving the labour force altogether).

Recent increases in outflows (excluding seasonal January spikes) at the start of the pandemic and over the last few months were likely to be driven by lockdown restrictions rather than resignations.

Figure 3: Monthly employment inflows and outflows

Source: ABS, Labour Force, Australia, October 2021.

Despite lockdown restrictions and government programs such as JobKeeper, many workers changed employers over the last 18 months. While there was initially a drop in 2020 in the proportion of employed who had changed employers in the previous 3 months, it has since returned to pre-pandemic levels. In fact, the cumulative effect means that, in August 2021, the proportion of employed who had been with their current employer for less than a year is now at its highest level (21%) since prior to the GFC.

It should be noted that for there to be a Great Resignation, this proportion would have to increase much further. The next release of ABS quarterly data (based on November 2021 data) will provide further insight as to whether the recent peak is likely to grow further, plateau or return to longer-run historic trend.

Figure 4: Proportion of employed with current employer for less than 3 months or less than 1 year

Source: ABS, Labour Force, Australia, October 2021.

Finally, the National Skills Commission’s Recruitment Experiences and Outlook Survey (REOS) provides insight into the reasons why employers are currently recruiting. Around 3 in 5 recruiting employers are wanting to fill vacancies due to turnover, largely unchanged over 2021. While recruitment activity has increased across most markets and industries, the proportion of employers looking to backfill vacant positions has largely remained unchanged.

Figure 5: Reason for recruitment (as a proportion of recruiting employers)

Source: NSC, Recruitment Insights Report, October 2021.

None of the published datasets explored above have yet hinted to a revolution sweeping the Australian workplace in the form of a Great Resignation, at least not at the whole of labour market level.

In coming to the conclusion above, it’s important to acknowledge that this blog post has taken a whole of labour market perspective, and it is possible – and indeed likely – that some sectors of the economy, together with individual businesses, are seeing higher rates of turnover than usual.

None of this is saying there won’t be a Great Resignation eventually – and there are certainly contextual factors that point to it being a conducive environment for higher than usual job mobility.

The NSC’s Internet Vacancy Index (IVI) has found very high job vacancy numbers in 2021, despite lockdown restrictions in NSW and Victoria.

Figure 6: Internet job advertisements

Source: NSC, Internet Vacancy Index, trend data, October 2021.

As the Australian labour market adjusts to a COVID-19 world, these vacancies will have to be filled from somewhere. With the intake of overseas migrant workers to be relatively small (by historical standards) in the short term, a strong majority of these will have to be found locally – either from those not currently employed or from hiring already employed workers.

Without an influx of fresh workers, and with employers facing less competition for vacancies from applicants, many workers may take opportunities to change jobs (such as jobs seen as more secure or having better conditions).

While the current expectations of employers do not suggest a wholesale resignation is yet on the cards, however, the data sources presented above should be monitored for any significant changes that suggest a rapid increase in the pace of job mobility and resignations.

Until then, perhaps just call it a Shuffle.