Fewer workers leaving jobs as downturn bites

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The number of people leaving their main job has almost halved over the last 13 years, suggesting that the labour market is considerably less dynamic than it has been in the past.

The latest research, published today by the Office for National Statistics (ONS), shows that 674,000 people left their main job in the second quarter of 2011, down 42% on the 1998 peak of 1.17 million.

In terms of ratio to total workforce, 2.4% of all workers in the UK left their main job in 2011, down from 4.5% in 1998.

The reasons for leaving differed across age and gender with 10.5% of women citing family or personal reasons compared with 4.2% of men. Those aged between 25 and 34 and between 35 and 49 were more likely than other age groups to leave for family or personal reasons but, overall, people in younger age groups were more likely than those in older age groups to leave their main job.

Of the 674,000 people who left their main job in 2011, 382,000 (57%) chose to leave voluntarily while 292,000 (43%) left involuntarily.

The recent recession had the most impact on the rate of people leaving due to redundancy and the rate of people resigning.

The numbers leaving due to redundancy more than doubled, from 0.4% in the second quarter of 2008, to 0.9% in the second quarter of 2009. The increase was largest in the construction, the manufacturing, and the banking and finance sectors. Redundancies also increased more for men than women, with men being more likely to be working in the sectors most affected by the recession.

This compares with the rate of people leaving their main job by resigning, which fell from 1% to 0.6% over the same period. The fall was across all industry sectors, with the largest decrease in the manufacturing, the distribution, and the hotels and restaurants sectors.

ONS statistician Jamie Jenkins told Personnel Today: “Since 1998 we have a seen a decline [in the numbers leaving work] and this could be linked to changes in the labour market, which have seen the UK change from an emphasis on manufacturing to one on service. Our figures also show an industrial breakdown, so different industries may impact on the numbers.”

Jenkins also highlighted the differences between movement in the public and private sectors.

“During the recession there was little impact on the public sector and little change in the percentage of public sector workers leaving their main job during the recession, either voluntarily or involuntarily, but in 2010/11 the numbers have gone up.”

Since the end of the recession, the percentage of public sector workers made to leave their job has doubled, from 0.5% in the second quarter of 2009 to 1% in the second quarter of 2011, while the percentage of those in the public sector choosing to leave fell from 1.1% to 1% over the same period.

Charles Levy, senior researcher at the Work Foundation, said that the figures had serious implications for the next generation of workers. He told Personnel Today: “We would expect fewer people to voluntarily leave private sector jobs during the recession, since alternative employment will be harder to find.

“But the fact that this rate has been falling since 2004 highlights again that the labour market was facing challenges long before the credit crunch. This is a worry since a healthy economy is built on churn. New and growing businesses hiring staff from existing employers is how our economy renews and develops. Switching jobs is also a key progression route for many employees. Lower churn could suggest that workers are finding fewer opportunities to develop.

“This would have significant knock-on implications for those looking to join the labour market, particularly the young. The fact that people are unwilling to leave their current jobs appears to be both a sign of a difficult labour market and an increasingly significant challenge for the new and growing businesses with the potential to drive our recovery.”

Sharon Seville, managing director of F1rst Commercial Recruitment, said: “It’s no surprise that the UK labour market is less dynamic than in the past. We are currently in an unprecedented economic climate where there is considerably less jobs mobility due to extreme consumer caution.

“What the report also reinforces is how the public sector job cuts, an integral part of the coalition Government’s deficit reduction plan, have begun in earnest.”

The labour force survey questioned workers aged 16 to 64 and asked whether or not they had left their main job in the last three months, and, if so, the reason for leaving. Respondents selected from nine reasons. Two were classified as involuntary reasons: dismissed; or made redundant/took voluntary redundancy.  The remainder were classified as involuntary: temporary job finished; resigned; gave up work for health reasons; took early retirement; retired (at or after state pension age); gave up for family or personal reasons; or some other reason.

Speaking this morning in Manchester at the Chartered Institute of Personnel and Development (CIPD)’s annual conference and exhibition, chief economic adviser Dr John Philpott said: “The ONS figures on the trend in job exits since the late 1990s parallel findings from the annual CIPD labour turnover surveys, which shows a modest decline in both quit rates, i.e. workers leaving jobs voluntarily, and firing rates (including redundancies) prior to the recession in 2008, followed by a sharp fall in the quit rate and a sharp rise in the redundancy rate.

“On the basis of a comparison between 1998 and 2011, the ONS concludes that the overall decline in the exit rate from 4.5% to 2.4% suggests that the UK labour market is less dynamic than in the past. However, this comparison is slightly misleading since the period in question begins at a time when the UK economy was expanding rapidly and heading toward full employment and ends with the economy struggling to recover from a major recession. It is therefore the economy not the labour market that is less dynamic in 2011 than 1998.

“What is intriguing is that quit rates fell at all during the long boom from the late 1990s prior to the recession, especially in the private sector. The opposite might have been expected with employers competing for staff in the tight labour market conditions of the time and eager to poach talent. The apparent paradox is explained in CIPD surveys which show increasing employer emphasis on staff retention strategies during the boom, encompassing both financial and non-financial improvements in working conditions. The ONS figures would suggest that employers became gradually more successful at retaining staff as the boom progressed.”       

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