What is the Great Resignation of 2021 and why is it happening?

The Great Resignation of 2021: In March and April 2020, a record 13.0 and 9.3 million employees were laid off in the US amid the COVID-19 pandemic. Much of these were driven by women who work in the service and childcare sectors. 

As the pandemic continued, employees voluntarily left their jobs en masse in 2021 despite the high unemployment rate and labour shortages, primarily in the United States. This led to an economic trend described as the Great Resignation. 

What is the Great Resignation of 2021?

According to the US Labor Department, around 4.5 million employees left their jobs in November 2021, a trend that was observed since September 2021 with 3% of the workforce quitting their jobs each month. This amassed a record 75.5 million resignations in 2021 in America alone and the trend is expected to continue this year. Furthermore, 23% of the workforce have expressed the desire to switch to new companies in 2022. 

According to various reports and polls, it has been observed that low-wage workers have resigned than their higher-paid counterparts. Hospitality, healthcare and social assistance, transportation, warehousing, and utilities are the worst hit by the Great Resignation. 

With Great Resignation comes huge vacancies. Around 4.4% of positions are open in education, more than 6% in retail, and over 8% in the healthcare sector, amounting to almost one and a half million vacant positions. 

A similar phenomenon has been observed in China since April 2021 and is referred to as Tang Ping.  It is a lifestyle choice and social protest movement in China by the younger generation who reject societal pressures on hard work or even overwork and instead choose to lie down flat and get over the beatings through a low-desire and more indifferent attitude towards life. 

Great Resignation in India

The situation in India is not as grim as in the US, however, it is still a cause for concern. Top IT companies such as TCS, Wipro, and Infosys have witnessed high attrition rates of around 20-25% in the last quarter. Following the Great Resignation, top IT companies have hired around 1.7 lakh people in 2021. According to a survey conducted by Amazon India, around 51% of the people are seeking job opportunities in companies they have little to no experience. 

Why is the Great Resignation happening?

The Great Resignation started when the American administration refused to provide employee benefits in response to the COVID-19 pandemic and was fuelled by burnout, switch from office to work from home culture, desire to move into a more suitable profession, and long term goals. 

Amid the Great Resignation, a strike wave known as Striketober began, which many economists describe as the employees participating in a general strike against poor working conditions and low wages.

A 2021 study conducted by Zety on the Great Resignation concluded the biggest causes of quitting. Low salary, limited career opportunities, not being valued by the manager, relationship with colleagues, inadequate pandemic health measures, poor employee benefits, switch the job industry, negative interactions with customers, on-site work, and seeing other colleagues quit are some of the major reasons of the Great Resignation. 

What is the impact of Great Resignation?

In light of the Great Resignation wave, employers have started offering better benefits and higher salaries to employees. However, the race to attract top talent continues with larger companies that can offer better salaries. 

The hiring bonus has also doubled between March 2020 and October 2021, as per a report from the Conference Board. 

According to another research, people now value the flexibility to work from home as much as they would a 10% salary hike. As a result, companies are now offering flexible work weeks with many shifting permanently to work from home. 

The pandemic has negatively impacted the housing sector. For what the tenants would pay to rent a small apartment in New York or San Francisco, they can afford to buy their own house in Greenville or South Carolina. This has appealed to several big companies to move their businesses to smaller cities. 

According to a 2020 survey of 300 global companies by the World Economic Forum, 43% of the businesses expect to turn towards automation and outsourcing, thereby reducing the workforce and combating labour shortages. 

Great Resignation 2021: What is the way ahead?

According to various studies and surveys, companies can provide opportunities for lateral job moves. When offered new jobs at their companies, employees are less likely to resign. 

Second, international postings may help companies to retain top talents as they are a big incentive and come with fresh experiences.

Third, a healthy work culture may do the job. This includes hosting social events, fun Fridays, happy hours and more. These fun activities not only strengthen the connections between the team members but also create experiences worth remembering. 

Fourth, making the work schedule predictable by establishing concrete time slots may help address the issue. 

Last, remote work opportunities rather than on-site working is another way to arrest the Great Resignation wave. 

Who coined the term Great Resignation?

The term was coined by Anthony Klotz who predicted the mass exodus in May 2021. Klotz is a professor of management at Mays Business School.

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