The two reasons behind the “Great Resignation”

“Great Resignation,” is what Professor Antony C. Klotz (University of Texas A&M) called the forecast he made in May 2021 for a mass exodus of workers from the labor market as a result of the pandemic. The latest statistics confirm his predictions: 4.3 million workers in the US resigned in August 2021.

Although it is still early to draw safe conclusions, researchers and analysts have engaged in the analysis of the phenomenon, identifying two causes, structural and behavioral / psychological. On the one hand, the opening up of economies after the pandemic and after the suppression of productive and consumer activity pushed companies to look for staff to meet the strong demand for goods and services. It is indicative that in the USA the vacancies exceeded 10 million. On the other hand, teleworking during the pandemic, the reassessment of work-life balances, and the physical and psychological fatigue of the lockdown have led many workers to rethink their priorities. The different hierarchy of needs (combined with the abundance of job opportunities) gives employees the motivation (and comfort) to leave a job that for various reasons does not meet their requirements, leading them more often to resign.

Is this a purely “American” phenomenon, or has it spread to the other side of the Atlantic, affecting European labor markets? In Britain, in August 2021 the vacancies for the first time in history exceeded 1 million, while according to another survey 1 in 4 employees plans to leave his job within the next 3-6 months. In Italy, according to an article in the newspaper Il Sole – 24 ore, 485,000 Italians resigned from their jobs between April and June 2021. In Germany, a survey by the ifo institute states that 1 in 3 German companies find it difficult to hire qualified staff. The phenomenon seems to be general: a Microsoft survey of a sample of 30,000 employees from 31 countries shows that 41% plan to quit their job in the near future, while 46% would give up in favor of a hybrid work model.

Of course, the lower the unemployment, the more vacancies there are, and vice versa. Eurostat job vacancy statistics show that in countries with high unemployment, such as Greece and Spain, the percentage of job vacancies is low, while the opposite is true in countries with low unemployment, such as the Czech Republic and Belgium.

It is not ruled out that the phenomenon may only temporarily disrupt European economies. On the one hand, in the United States, the generous support of the unemployed with stimulus checks during the pandemic has been a cut from the past, while in many European countries, comprehensive income support policies for the unemployed have long been in place. On the other hand, indefinite-term contracts – much more common in Europe than in the US – make it difficult for workers to decide to leave a (permanent) job.

Despite the uncertainty about how the phenomenon will develop, it is a fact that the pandemic has radically changed the working landscape. The hybrid work model that emerges contains opportunities and risks. The question is with which settings the former will be maximized and the latter will be minimized.

George Manalis

Post-Doctoral researcher,

Fellow of the Research Chair AG Leventis

Hellenic Foundation for European & Foreign Policy (ELIAMEP)

Manos Matsaganis

Principal Investigator

Head of the Greek & European Economy Observatory

Fellow of the Chair “Stavros Costopoulos”

Hellenic Foundation for European & Foreign Policy (ELIAMEP)