The great turnover: record resignations and job vacancies in Europe

The “great disappearance” of candidates is plaguing the European labour market. Employers are struggling to find candidates to hire, and not just in the hotel and restaurant sector. Meanwhile, further fuelling demand, the boom in voluntary resignations peaked at the end of 2022 in countries such as Italy, Spain and France, becoming the clearest symptom of the fact that post-pandemic Europeans no longer want to work as much as before.

This is the focus of the latest survey – lasting three months – by the European Data Journalism Network, for which Il Sole 24 Ore have collaborated with other European newspapers. The survey, led by the editorial staff of Alternatives Economiques, was published on 25 March and studies how Covid-19 has changed the way we work or think about work.

In search of workers

The job vacancy rate is at an all-time high in the eurozone. According to Eurostat data, 3.1 percent of paid jobs were unfilled in the third quarter of 2022, compared to 2.6 per cent in the third quarter of 2021 and 2.2 percent in the same period in 2019, before the health crisis. “A sign that tensions are multiplying in the labour market: the debate on labour shortages has replaced the debate on mass unemployment,” says Belgian researcher Wouter Zwysen of the European Trade Union Institute (ETUI).

In Germany, the IAB (Institute of Employment Research) labour shortage index in February this year recorded the fourth consecutive increase, showing the increasing difficulties of German employment agencies in filling positions. “Partly due to the gradual demographic downward trend observed in the country, the need for workers is increasing,” explains economist Gustav Horn, chief economic advisor to the SPD

In Spain, in 2022 vacancies increased by 150 percent in the transport sector, by 111 percent in public administration, and by 91 percent in professional and technical activities. In absolute terms, the largest shortages (totalling around 140,000) are concentrated in industry and construction.

In the Netherlands there are currently 123 vacancies for every 100 unemployed, 15 times more than in France where, in July 2022, the percentage of industrial companies reporting recruitment difficulties had reached 67 percent, a level not seen since 1991 (the long-term average for this indicator is 31 percent, according to INSEE). Italian companies, which were looking for more than half a million workers in January, are facing similar problems: 45.8 percent of employers at the beginning of the year reported difficulties in hiring, compared to 38.6 percent last January.

Resignation in comparison

In parallel, like the current labour market’s own internal paradox, voluntary resignations are also on the rise in several countries. France, for example, reached an all-time high in 2022, with more than 2.16 million employment contracts terminated at the employee’s request. As a proportion of the number of employees, the resignation rate stood at 2.7 percent in the first quarter of 2022, not so far from that of the United States where the so-called “Great Resignation” peaked at three percent in December 2021.

In Italy, almost 2.2 million resignations were recorded in 2022, 13.8 percent more than in 2021 (all contract types are included). In Spain, where the only statistic on the phenomenon is the one related to social security numbers, about 70 thousand workers with permanent contracts were reported to have given up their jobs in 2022, more than in any year since 2001, when this statistic was first recorded.

It is difficult to know how widespread this phenomenon is across the continent: the survey conducted by EDJNet’s partners tried precisely to fill the void of aggregated statistics at the European level by collecting information in individual member states. According to the Dutch Central Bureau of Statistics (CBS), in the first quarter of 2022 1.9 million people in the Netherlands said they had started a new job that year, about 400,000 more than in the first quarter of 2021. Even in Germany, where the phenomenon appears to be minimal, Gallup’s annual workplace study nevertheless shows a record number of employees looking for a new job: 4 in 10 say they would stop working altogether if they could afford to, 25 percent more than in 2016.

“The resignation rate is a cyclical indicator,” reads a note from the French Ministry of Labour on the phenomenon. “It is low during crises and increases during periods of recovery, as strong as the economic recovery is rapid.” In practice, new job opportunities appear during economic upturns, prompting people to resign more often. And labour shortages tend to exacerbate the phenomenon, in particular by fuelling labour ‘poaching’ practices between companies.

The Great Turnover

Despite the high number of resignations, resigned workers appear to be returning to work rather rapidly. In France, around eight out of ten workers who resigned from a permanent contract in the second half of 2021 returned to work within six months.

Instead of a Great Resignation, Europe is, in short, witnessing a Great Turnover. Compared to the US, the level of employment – including that of women, who suffered most during Covid – has returned to pre-pandemic levels almost everywhere. It is labour force turnover that has accelerated: this is shown by the parallel course of the new employee index, whose positive trend seems to be closing the circle.

One example is enough: in Germany during the pandemic, and immediately afterwards, many people resigned from the restaurant sector and went to work in retail, transport and logistics. Some hotels lost up to 50 percent of their staff, many of whom seem to have relocated elsewhere.

The high number of resignations thus becomes an indicator of labour market dynamism, in a context where bargaining power seems to shift more in favour of employees. In a favourable economic environment, Europeans no longer hesitate to turn their backs on employers. But it will have to be seen whether this dynamism will also translate into higher salaries or better organisation of work within companies, along with the lessons supposedly learned during the pandemic. Indeed, turnover is only possible with increasing demand, but if the mechanism eventually “jams” – a demographic crisis or skills mismatch could make the vacancy rate unsustainable – companies will have to start meeting the demands of workers, who have become more demanding and more selective.