The “Great Resignation” is Reversed, the Workers are Returning

The unprecedented phenomenon of the “great resignation”, as the mass departure of workers from their positions during the pandemic, which caused problems for businesses, industries, and supply chains in America and Europe, is gradually being reversed. The factors that bring people back into the labor market are different and result from the rise in the cost of living and the increase in wages to the improvement of working conditions, but also the depletion of savings that Europeans and Americans accumulated during the lockdowns. Market players also mention the high vaccination rates that encouraged people to return to occupations with frequent contacts, that is, those that had experienced the highest number of resignations in the first waves of the pandemic.

The reversal of the large resignation is visible primarily in Britain, where workers are returning to the labor market at a faster rate compared to pre-pandemic levels and the reason is of course accuracy. According to data from the Statistical Service, the number of people who remain out of the labor market despite being of the right age to work fell by 144,000 from March to May. In the same period, after all, employment increased by 296,000 people, clearly more than the 170,000 predicted by economists and analysts. The data inspire optimism that the trend may be reversed and the problem of staff shortages can be gradually solved,

In this case, pressure on the Bank of England may be reduced, as labor market shortages add to inflationary pressures. The problems remain, however, as Kitty Usser, chief economist of the Institute of Directors, reports, “the British labor market still has major shortfalls, but there are signs that the problem may be starting to be resolved.” His assessment is confirmed by the figures, which show the number of those who remain inactive, neither working nor looking for work, to be 378,000 people more compared to pre-pandemic levels.

The picture is similar in the USA, the country in which the “great resignation” took on enormous proportions, perhaps the largest among the developed economies. Although 2021 — and not 2020 as one might expect — was labeled the year of the “great resignation”, it was actually the year that this unprecedented movement began to reverse. Over the past year, more than 6.5 million people were hired in a variety of jobs, recording one of the most impressive job market recoveries in US history. The recovery is indeed affecting the entire spectrum of workers, with women between the ages of 25 and 54 returning to the labor market just as much as men.

As economists and market players point out, a decisive factor that pushed people back to work was first of all that the savings of the lockdowns were dissipated. Speaking to BusinessInsider, Labor Secretary Marty Walsh stressed that “the middle class and low-wage earners can’t afford to sit idle at home for six months because they don’t have that many savings.”

They have, after all, preceded the wage increases that were widely given during the last year when employers were literally struggling to find staff, but also to keep the employees they had. With data from the first quarter of 2022, wages in the US increased by 5.7% compared to the same period last year. A common denominator between Britain and the US is also the return or stay in the labor market of people of retirement age. In Britain, including over-65s, the number of people out of work fell by 225,000. Something similar is also happening in the US, where according to data from April, 64% of people aged 55 to 64 were still working.

Uncertainty

Of course, the estimates of market analysts, who, seeing the return of Americans to work since the beginning of the year, predicted that the American labor market will have fully recovered by July, may turn out to be rather overly optimistic. In fact, in the U.S. too, the number of people working remains down compared to pre-pandemic levels because the pandemic has pushed many into early retirement. In the US, the Ministry of Labor considers it likely that employment will be affected again in sectors such as, for example, hotels, which expose the worker to contact with a large number of people.