1 in 4 professionals quit their job in tight labour market

The national turnover or “quit” rate stood at a 10-year high of 9.5 per cent over the year to 28 February 2023, as workers took advantage of a strong jobs market and moved employers, with professionals the most likely to have moved jobs, a trend which is likely to continue in a very tight labour market where wages growth is still lagging inflation.

Data released late last month by the Australian Bureau of Statistics (ABS) reveals the quit rate was the highest for professional workers, 24 per cent of whom changed their jobs in the year to February 2023, up from 22 per cent over the prior year.

This trend of relatively high staff turnover is being led by younger adults, who are generally more likely to move jobs than older workers, with 14.9 per cent of people aged 15 to 24 years changing employers. This compares to 11.2 per cent of 25- to 44-year-olds who changed their employment over the year to February 2023, still higher than the national rate of 9.5 per cent.

The national turnover rate could reach over 10 per cent in the coming months as more and more employees, especially professionals, look for higher-paid and more satisfying work if they feel they are underappreciated or underpaid by their current employer.

Of the people that changed jobs, most went to healthcare and social assistance (13.3 per cent), followed by construction (10.4 per cent), and professional scientific and technical services (10.3 per cent). The ABS data show people were more likely to change their industry (58 per cent) than their occupation (44 per cent). But employers are holding on to their staff where they can. The annual retrenchment rate was just 1.4 per cent, the lowest annual rate on record (since 1972), the ABS said.

An encouraging trend is that the strength in the jobs market is ongoing and has been spread across regions nationwide and not limited to the big cities. Labourers and miners, like professionals, are in very high demand across industries, including mining and construction.

The turnover data is evidence that the jobs market is still strong, and employees are using their bargaining power to move to new jobs with higher salaries and/or more favourable work conditions. The unemployment rate sat at just 3.6 per cent in May 2023, despite some economists predicting the bottom would fall out of the jobs market this year. Clearly, that hasn’t happened, and nor is it likely to happen with such a shortage of workers and the Australian economy still growing.

Employers may need to do more to retain staff

More generally, with inflation still very high and rising much faster than wages, we can expect employees across industries to maintain or lift wage demands next year to take into account higher inflation. It is quite likely that there will be a skills shortage for quite some time in Australia, so turnover is likely to remain relatively high compared to recent years. In several sectors, there are simply not enough employees to fill the number of job vacancies being advertised.

Employers will need to do what they can to attract and retain their staff and create a culture that encourages people to stay in their workplaces to avoid the high costs of staff turnover. The process of hiring and training new employees requires significant time, effort, and resources. Frequent turnover disrupts the continuity of operations. Each time an employee leaves, there is a gap in the workforce that needs to be filled, resulting in decreased productivity until a replacement is found and fully trained.

Strategies employees can adopt to keep staff on their books may include offering learning and development opportunities. This is a key area where many employers need to improve. Employers should offer training and development opportunities to ensure their staff acquires the necessary skills to do their job and upskill. LinkedIn research shows that 94 per cent of employees said they would stay at a company longer if they were offered more learning opportunities. So investing in staff can have real payback for employers.

Some employers need to better engage with their staff. When employees feel listened to by their bosses, they are likely to be more motivated and happier in their work and want to succeed in their jobs, so they’ll be more productive. Inclusion, too, is important. If your workplace only rewards a person of a particular type and excludes others, they’ll soon walk away from that exclusion.

Flexible work arrangements are also important, especially for women. While that doesn’t necessarily mean allowing employees to WFH full-time, employers should allow their employees to WFH at least part of the time because they have become accustomed to it and realise the benefits. Workers who feel their employers offer enough flexible options are 2.6 times more likely to report being happy in their jobs and 2.1 times more likely to recommend working for the company, according to LinkedIn. So, the goodwill works both ways.

By Kris Grant, chief executive, ASPL Group