During the covid period, getting a job and sustaining it was a big task. All employees hoped that they could manage their work-home balance while working remotely. As offices started to reopen almost after one and a half years, some people prefer staying home and working as they used to in the last several months. Above it, many are choosing not to join back.
What Do Data Say?
In recent months, a phenomenon in the US has been observed that millions of workers are quitting their jobs – 4 million employees left just in July 2021, according to the US Bureau of Labor Statistics. Resignations skyrocketed in April and for the last several months, with a record-breaking 10.9 million jobs are there to be filled. Straight to the month of August, 4.3 million Americans resigned from their jobs. While some people have left their workforce completely, job security and better pay options are concerns for others.
The quit rate vs total employment, increased to a series high of 2.9% in August, as per the Labor Department’s Job Openings and Labor Turnover Survey, 4.3 million Americans quit their work in August alone, the highest since December 2000.
By September, a comparative sigh of relief could be seen, 4.8 percent of people were unemployed in September, the lowest in the pandemic. But, the numbers withdrawing from the employment loop are still worrisome. 309,000 women above the age of 20 dropped out of the workforce in September. 182,000 men participated in the workforce in September. 108,700 workers quit their jobs like child care workers in September versus February 2020.
930,500 people quit working in restaurants and bars in September versus February 2020. A 12.7 percent increase was seen in hourly pay at bars and restaurants in August versus February 2020. The numbers are concerning and it is necessary to address and find out why people are opting out from their jobs. As per the survey done by The Wall Street Journal 22 — economists out of 52 predicted that labour participation will never come down to pre-pandemic levels.
A pertinent question arises, how will employers retain people if the resignation will keep on mounting?
The mass exodus of employees from the workforce has come to be known as “Great Resignation” in the common parlance, and it is not coming out evenly across all labour markets. As per recent research, mid-career workers, and tech and healthcare workers, in particular, are quitting at large. The reason is not just paying but because they don’t feel valued at work.
“The pandemic has reset people’s purpose in life,” Jerome Ternynck, CEO of SmartRecruiters, a talent acquisition platform said. “The idea that you should wait for your time until the company grows to offer you opportunities is not working.”
As workers leave their jobs at higher rates, it becomes important for the companies to know why their employees are withdrawing from their organizations. Are they opting for the same role or looking for an upscaling? This should be done so that they can understand where the loopholes that persist in their company are and how they can manage to rectify it. So that when they start to look for staffing the next time, they can retain the right candidate by offering the right working conditions.
A shift from an online to an offline working environment lacks providing time flexibility and at the same time, online working just resulted in burnout.
A Common Factor: Career Advancement
People are not only looking to switch employers, but also they are trying to cash the market boom to upscale their own careers by getting better positions with better payscale and advancement opportunities.
In one Real-Time population survey, one in four Americans reported working under a different employer than they used to work before the pandemic hit the society, and 26% of those employees are earning more under their current employer.
Some companies lack funds for salary advancement and higher opportunities internally to offer, this has propelled many to look for other employers to offer them handsome salaries with good positions. In addition, people at senior levels, who underwent major salary cuts during the pandemic are also looking to switch to compensate for the loss.
Kathleen Duffy, president and CEO of the recruiting firm Duffy Group, in an interview with Insider, said that companies are proposing bonuses up to $5,000 to secure entry-level employees.
“For mid-career hotshots,” Duffy said, “firms are being thrust into bidding wars with four or five rivals, and having to sweeten their usual offers by tens of thousands of dollars.”
Mid-Career Employees Are Seeing Higher Quitting Rates
A team led by Ian Cook, VP of people analytics at Visier, analysed more than nine million employee data from more than 4,000 firms and discovered that mid-career employees – those between 30 and 45 years old – have the highest departure rates.
The article says more than an average increase of 20%between 2020-21, employees aged 30 and 45 years have resigned from their work at higher rates.” While turnover is typically highest among younger employees”, the study published in Harvard Business Review by Ian Cook found that over the last year, resignations came less from the 20 to 25 age range, perhaps due to greater financial uncertainty and lower demand for entry-level workers. Interestingly, the 60 to 70 age group also saw a fall in numbers of resignations during the pandemic period, while employees in the 25 to 30 and 45+ age groups had seen resignation rates than in 2020 but significantly less as that of the 30-45 group.
Factors Affecting Mid-Level Employees To Exit From Workforce
As per the study, a possibility comes to the surface that a shift to remote work has made employers believe that hiring people with little experience would be a little risky as they would need in-person training and skilling. Thus, a greater demand for mid-career employees could a carved out, which gives them an opportunity to switch their jobs to newer positions at new organizations.
Second, many of this mid-level personnel may have put off moving out of their jobs owing to the pandemic’s uncertainty, meaning that the surge these days we are witnessing in recent months might be the product of more than a year’s worth of resignations.
Of course, after months of high workloads, hiring freezes, and other pressures, many of these individuals may have hit a saturation point, forcing them to reconsider their work and life goals.
Resignations Are The Highest In Tech & Healthcare
Cook’s analysis shows that healthcare saw a rise of over 3.6% of employees quitting their jobs and an increase of 4.5% resignations than a prior-year period.
According to Cook’s study, industries that saw bigger increases in demand as a result of the pandemic had higher resignation rates, due to increased effort and fatigue.
India Tech Sector: Attrition Rate Rising By 22-23%
Just like the USA’s tech sector, the Indian tech sector is seeing a rise in resignations. According to the estimates by the hiring firm TeamLease, the IT industry will have a double-digit attrition rate (22-23 per cent) in 2021. Over more than 1 million resignations are likely to be there.
As per Siva Prasad Nanduri, vice president and business head, IT and staffing, Team Lease Digital, a 22 or 23 percent attrition rate would be there 2021, 1 million resignations are projected on the base of 4.6 million employees.
He said, “The attrition rate of leading IT firms in India is now at an all-time high and companies are facing issues in executing large projects. With the onset of the pandemic, IT companies are now adapting to build newer business models and transformation projects.”
The IT employment market is gaining momentum again after last year’s low attrition rates due to the pandemic-induced slowdown. Employees were already receiving 50 to 70% raises in April of this year, and demand has continued to rise since then.
Cognizant’s attrition rate for the January to March quarter of 2021 was 21%, compared to 19% in the same period the previous year. In the fourth quarter, Infosys had a 15.2 percent attrition rate, while Wipro had a 12.1 percent attrition rate. Meanwhile, in 2020, India’s attrition rate for analytics experts was 16.0 percent, down from 30.7 percent in 2019.
Though, drawing a parallel between the scenario of India and the USA is difficult as the rate of unemployability, skilled labour and the rate of people’s willingness to work is different.
But, the reasons that are laid for the US population opting out of work can be related to the Indian skillset and workforce. A need for a hike in salaries, work security, psychological needs as per Maslow Need Hierarchy Model are what modern-day employees are looking for!
One thought on “Why Is the US Seeing Mass Resignation? India Tech Sector Too On The Verge Of Rising Attrition Rate!”
Good observations of the current trend. With the new pandemic wave, we may see some dampening of the attrition.