Skip to content

How the job market has changed

Throughout 2021, while Covid-19 was still having a tremendous impact on the world of work, a new term was circulating: the “Great Resignation”. So the theory goes, workers across all industries were leaving their jobs en masse. It seemed the pandemic had given them a wake-up call, which caused them to re-evaluate what they wanted from their jobs.

Since then, we have also heard about the “Great Retirement”, which suggests older workers have been leaving their jobs at a younger age and at a faster rate. Others have theorised that there has been a “Great Reshuffle”, whereby people are moving around the job market in search of better positions and different careers, or just deciding to become self-employed instead.

Regardless of the names for these changes, some definite patterns are emerging as to the causes: time spent away from the workplace has made workers feel less connected to their employers; for some, the difficulty of separating work from home lives has led to burnout; for others, the pandemic has brought into focus the importance of health, family, and other priorities beyond work; and wage stagnation – in the midst of the cost of living crisis – has led many to seek better paying work. Concurrently, there has been a surge in economic activity following the exit from lockdown, which has created a visible increase in job vacancies. In May 2022, the ONS published statistics which show that there are more job vacancies than unemployed people in the UK for the first time since records began.

What can employers do to retain staff in these circumstances?

Given the potential cost for employers of replacing employees and trying to cope with an understaffed workforce, what can employers do to minimise staff turnover?

1. Embrace flexible and hybrid working

Flexible and hybrid working are providing an opportunity for workers to reconfigure their work patterns and environments around their family and lifestyle choices. This might be reinforced by statutory changes – the right to request flexible working from day one of employment is something the government consulted on last year (see our previous blog). This right is currently only available to workers after 26 weeks. Although the results of the government consultation are still awaited, even in the absence of further legislation it seems clear that the direction of travel is towards employers facilitating more flexible working patterns. Some are going even further, with 70 UK companies – ranging from a Sheffield software firm to a Norfolk fish and chip shop – trialling a four-day working week for their full-time staff, who will continue to earn 100 per cent pay during the pilot scheme. Employers, supported by appropriate technology, should embrace agility in their workforce in order to mitigate the risk of staff attrition.

2. Offer competitive pay and benefits

Many workers have simply been unwilling to return to jobs where they feel “overworked and underpaid”. As such, employers should ensure that pay, benefits, and reward packages remain competitive. This is crucial to keep up with those companies offering higher pay and better rewards as a means of attracting new staff.

3. Consider (re)training and longer-term skills development

Workers’ disconnectedness from their employers has increased as a result of the pandemic. One potential antidote is for employers to offer training and tuition reimbursement so staff can enhance their skills. This, in turn, can improve staff loyalty, as it shows a commitment to workers’ long-term career prospects (something which studies have shown is particularly important to younger generations – see more in our blog on intergenerational differences). Some organisations may even benefit from offering retraining to staff for positions in alternative areas of the business. Having already shown their cultural fit for their workplace, such staff can then develop the skills required for these new opportunities, while employers benefit from the retention of those workers within the organisation.

4. Foster a good workplace culture

Staff are more likely to stay with an organisation if they feel that its values align with their own. It can give them a sense of belonging. Equality, diversity, and inclusion are all examples of such values that feed into a workplace culture where all staff can feel their needs are accommodated. It is currently Pride Month for example and so a good time for employers to explore their approach to supporting LGBTQ employees in the workplace. We have a lot of resources on workplace diversity and inclusion to assist with this, including blogs on LGBTQ rights in the workplace and Increasing Diversity in the workplace. We have commented in a previous blog on how a good culture can reduce staff turnover. Conversely, a poor workplace culture (for example, one which turns a blind eye to sexual harassment) can prompt people to look for a new role elsewhere. And when a worker who is liked amongst their colleagues leaves, others are more likely to reconsider their own jobs and their own loyalty to the organisation – especially if that person’s work ends up on their plate.

5. Listen to staff feedback – and act on it

For any business wanting to retain its staff, it is critical to check in with them to ensure you understand their needs, aspirations, and gripes. Consulting and listening to staff could take many forms – for example, open forum meetings, working groups, and online questionnaires. You might even ask them what would tempt them to leave; by asking such questions, it shows that you care enough to prevent that from happening. Listening to staff feedback also demonstrates that you are open to change and that you are invested in them. Acting on feedback is equally as important, even if this involves explaining why particular suggestions cannot be implemented. The key is to ensure that the communication of priorities is a two-way discussion and is tailormade to each organisation’s own circumstances.

What happens to those employers who don’t adapt?

The current churn in the labour market is, to a large extent, part of a wider ripple-effect of economic and cultural changes brought about by the pandemic. For workers, this has moved the goalposts for what work can look like: they are better able to envisage and seek out businesses that offer arrangements and benefits that match their preferences. Moreover, workers aren’t short of options, and many are not afraid to vote with their feet.

Employers should see this as an opportunity to take a transformative view and ensure their workplaces reflect the needs and aspirations of the future workforce. Those employers who are listening to their staff already know this is what workers are coming to expect. Given that this is the current direction of travel across all industries, employers would do well to adapt to these changing times – before their workers leave to join organisations that already have.

If you require further information about anything covered in this blog, please contact Alice Kendle, Iman Kouchouk or your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, June 2022

This site uses cookies to help us manage and improve the website and to analyse how visitors use our site. By continuing to use the website, you are agreeing to our use of cookies. For further information about cookies, including about how to change your browser settings to no longer accept cookies, please view our Cookie Policy. Click for more info

Close
Back to top