The Great Resignation: taking back control

The Great Resignation (GR) – that process whereby an inordinately large number of the workforce voluntarily decided to quit their jobs – is still in full swing, even though the Sars-CoV-2 pandemic that appears to have catalyzed it is now in full retreat. Chris Gilmour decided to delve into this topic.

On closer inspection, the GR has an incredibly large number of moving parts and a proper analysis is not possible without delving into the root causes of it. Suffice to say that it has probably been going on for a while now and the pandemic just brought it into stark relief. If that is the case, we should be prepared for the GR to last a while longer. And, like supply chain disruptions and the war in Ukraine, its effect on the global economy will continue to be inflationary.

The first distinction to make is between people leaving their jobs in greater frequency just to go elsewhere and those people leaving the workforce permanently, not planning to come back at all. The former is more common but the latter is gaining in momentum, especially in the developed world.
I first encountered the latter type of GR back in the late 1990s in Cape Town, where I was a general manager of a large life assurance company’s investment arm. The back-office manager, another Scotsman, was a cheery chappie who not only got on with all the staff beautifully but also did his job brilliantly. He went way beyond the call of duty, often spending all night in the office making sure that accounts reconciled. He left nothing to chance. In his late thirties at the time, all he wanted to do was to retire at the age of 50 and go travelling. And to cut a long story short, that is basically what he did.

This type of example has probably been replicated millions of times over in the financial services industry worldwide. People work themselves to the bone and then decide that life’s too short to keep on working into retirement and so make sure they have enough capital to live off and retire early.

But not everyone has the luxury of being able to accumulate enough capital to do this, especially lower down the socio-economic ladder. More often than not, they are forced by economic circumstances to just suck up the abuse they receive in the workplace and continue being wage slaves well beyond normal retirement age.

This is particularly relevant in the hospitality industry, although even here, at least in the developed world, legions of people are quitting, often forcing restaurants and bars to close for good, long after coronavirus restrictions were lifted.

A new outlook?

So what happened during the pandemic to catalyze such a torrent of resignations? It seems like enforced living and working from home inculcated a new outlook on life. A new recognition and evaluation of what is and what is not important in life. To use a hackneyed old term, to get a better work/life balance.

Working from home has resulted in people taking back control of their working lives and away from the bean counters to a large extent. To be sure, Big Brother is still watching in the form of automated work-monitoring systems such as Asana for example, but at least in a home office environment, the individual can choose his or her own chair, desk, office space and much much more. This is especially relevant in the context of peace and quiet for more cerebral types of jobs: those that require a quiet background, where thoughts can be placed in a logical order.

From about the late 1950s or even earlier in the US, open-plan office configurations were all the rage. They were especially popular with head office bean counters, who saw only the cost benefits of squeezing pesky employees into ever-smaller spaces with little or no privacy. This type of approach reached its peak with the concept of the so-called “hot desk”- a system whereby employees no longer have a dedicated desk as such but just use any old desk as and when it becomes available. This was seen to be useful for travelling salespeople aka business development managers who spend most of their time on the road and only needed a desk periodically. But of course, the accountants managed to extend the usefulness of this concept way beyond the sales force.

Many large institutions have many acres of currently unused office space to fill and these leases are costing them plenty of money. They would dearly love to get their people back into the office again. But having tasted “freedom” in a working from home environment, many of them are extremely reluctant to return to the office, even if it’s just in a hybrid fashion.

Little wonder, then, that a large chunk of the work force has become disillusioned over the years. Treated like automatons, they have literally voted with their feet and left in large numbers. Many of them will be forced to return because of economic necessity but many will not. A large number of the people involved in the GR are baby boomers – that cohort of people born between 1945 and 1964, the last of whom are officially retiring this year. That generation never had it so good, compared with Generations X & Y and the Millennials. They have enjoyed decades of almost uninterrupted strong economic growth in the 1950s, 60s, 80s, 90s and now, punctuated only by the global stagnation of the 1970s. And that is reflected, in the developed world at least, in impressive pension fund accumulations in the US, UK and large parts of Europe. And in the UK, for example, there is still a large remnant of defined benefit pension funds, or “final salary” pension funds as the Brits call them. Unlike the more common defined contribution pension funds, where the risk is assumed by the pensioner, a defined benefit pension has its risk in the fund itself, so the pensioners never loses. American baby boomers have had it even better, being able to control their pension fund asset allocations with their 401ks. But when these baby boomers enter retirement, that all stops. For good.

I know of a number of people who formerly worked in high-pressure IT jobs in England and who are now in their late 50s who have relocated to rural Scotland to live. They still have a few years before they can access their considerable private and state pensions and in the meantime are prepared to live relatively carefully off savings. Once their final salary pensions kick in they will be sitting very pretty. And they were doing this before the pandemic even started. They have decided to sacrifice a few more years of lucrative work for a far better quality of life.

Many UK baby boomers and indeed even younger employees in their 50s have taken early retirement over the years and during the pandemic, finally threw in the towel, never to return. Just last week, the chair of leading UK retailer John Lewis, Dame Sharon White, made a desperate public appeal to early retirees to get back to the shrunken workforce and help to contain soaring inflation. She reckons many of those people could be coaxed back into the workplace if they were offered more flexible working conditions. Conservative Party leadership contender Liz Truss expressed similar sentiments during a televised debate last week.

Neither of these appeals is likely to be particularly successful. People have left the workforce because, quite frankly, they’re gatvol of working. It’s not just about the money, or the office politricks, or the daily commute, or the endless inane chatter of fellow employees, or the lack of privacy in the office – collectively it is precisely about these things and more.

To quote that dreadful little phrase so beloved by Brexiteers during the Leave campaign of 2016, it’s all about “taking back control.”

For granular detail on SA retail sales analysis, go to www.gilmour-research.co.za.