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Why Europe has not been affected by a "Great Resignation" of workers like the United States - Start Up Gazzete
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Why Europe has not been affected by a “Great Resignation” of workers like the United States

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The experts anticipated a global “Great Renunciation”, but the reality that the figures show is different.

The phenomenon began to register in the United States in the middle of the pandemic: a massive and voluntary abandonment of jobs rarely seen in its labor market, and that makes it difficult for employers to fill vacancies.

It began with professionals from the health sector and teachers forced to return to face-to-face classes despite the fact that COVID-19 cases continued to increase, and it spread to other parts of the economy: service industries, retail trade, hospitality, food …

Having to change remote work for the office, exhaustion after suffering caused by the pandemic or job burnout from low wages in unskilled sectors are some of the reasons behind these resignations, according to Anthony Klotz, associate professor at the School. Mays Business Administration from Texas A&M University who coined the term.

Two workers in Europe

This panorama that the US is facing, however, is not affecting other large economies in the same way, several economists emphasize to BBC Mundo.

In Europe the effect has been very contained. There is discontent , experts clarify, but not massive resignations.

We tell you why.

Activity rate

A technical but easy to understand data is the best clue: the activity rate.

This index that measures the level of employment in a country fell in the eurozone from 73.4% to 71.6% in one year, that of confinements.

Less than two percentage points of decline from 2020 to 2021. Meanwhile, in the United States it fell by three percentage points in just three months, going from 63.3% in February 2020 to 60.2% in April of that same year.

“In Europe, there has been no decrease in the activity rate observed in the US Nor have we seen a considerable increase in voluntary redundancies or a significant increase in unfilled vacancies” , explains Juan Francisco Jimeno, professor of Economics at the University of Alcalá, Spain.

The question now is what has the eurozone done differently compared to the United States so that its workers have returned to their jobs after the pandemic.

Waitress
When restrictions were lifted by the pandemic, many American companies found they could not fill their vacancies.

Structural factors

To begin with, a structural factor must be taken into account.

Flexibility and low unemployment rates in the US encourage a worker to leave their job hoping for better job opportunities and conditions, because the US economy is typically characterized by a rapid recovery in employment in normal times.

Workers enter and exit the market with ease , say the experts consulted.

However, the European labor market is generally more rigid and has a lower turnover.

In the aftermath of the pandemic, figures show that Europeans have decided to return to their jobs rather than take risks .

“The US labor market is more fluid and that makes it easier to leave a job. Finding another job in the United States is not as difficult as in Europe,” explains Juan José Dolado, professor of Economics at the Carlos III University of Madrid and specialist in labor economics.

So while Europe uses flexibility measures within the company when it goes wrong , as reduce the hours of their workers or cut bonuses ( bonus ) or benefits beyond the wage – , Anglo – Saxon countries base their flexibility in hiring and firing.

A union meeting in Germany
Trade unions have more power in Europe than in the United States.

The role of the syndicates

“In addition, the greater union membership (that exists) in Europe and a more widespread negotiation between employers and workers imply alternative ways of showing dissatisfaction to doing so through resignations,” adds Dolado.

For Luca Nunziata, an economist and professor at the University of Padua, in Italy, trade unions also play an important role in the Old Continent.

“European labor markets function differently from the US labor market. If we exclude the UK, they are characterized by an institutional environment that traditionally favors job protection over flexibility,” he explains.

“In addition, collective bargaining and unions can play a prominent role, especially in some countries,” he says, referring to the homogeneity of wages in the eurozone in the face of high wage inequality in the United States .

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Mothers walking in a park
Paid maternity leave in Europe is generous.

But the fact that there has not been a wave of resignations in Europe also has to do with employment benefits such as paid vacations, maternity leave or childcare assistance , the economists consulted by BBC Mundo agree.

And they point to broad public assistance in job placement for those who lose their jobs through training and other resources in the eurozone countries.

“In general, the comparatively long duration of tenure in a position is an indicator of a good overall quality of work . The determination and influence of works councils and unions contribute to this in the central sectors of the economy”, says Joachim Moeller, an economist and professor at the University of Regensburg in Germany.

“In Europe there is less wage inequality than in the United States and that means that lower-skilled workers, more affected by the Covid-19 crisis, have greater incentives to return to work,” says Professor Jimeno.

“Working conditions in Europe are certainly much better than in many other countries in the world, and I am thinking of many developing countries where labor standards and conditions are much poorer while productivity and real wages are lower.” , agrees Nunziata.

The University of Padua professor explains that the reasons for social benefits in Europe are historical.

Food queue
The origin of the Welfare State was defined after the two world wars.

After World War I and II, the Old Continent imposed stricter rules and a more generous welfare system due to bloodshed and suffering in this period of history.

This laid the foundations of the Welfare State.

“The other side is a weaker labor market and less relocation of workers in declining sectors or in rising sectors. This can affect potential growth once the pandemic ends,” says the economist.

Different approaches

But for economist Christine Erhel, from the Center for Employment and Labor Studies in Paris, the focus on how the pandemic was tackled on both sides of the Atlantic also has a lot to do with the rapid recovery of the job market in Europe.

While the United States tackled lockdowns by increasing unemployment insurance, Europe paid companies not to fire anyone, even though the workforce was home from work.

Social protection maintained the link between workers and their companies.

Also the greater public assistance in labor insertion.

Image of a woman working from the living room of a house.
Many workers do not want to give up the flexibility and autonomy that remote work offers.

“In general, in most European countries, the recovery has been quite strong since the summer of 2021 and job growth is dynamic,” says the academic.

And he adds: “We don’t have evaluations yet, but all these policies and institutions have certainly played an important role .”

Youth employment

“Other measures (such as unemployment insurance) have provided a good level of income protection and a sustained level of demand. Some active labor market policy programs have also targeted specific groups (especially young people), to avoid the dependence of the trajectory and the lasting consequences of the crisis in their trajectories “, he points out.

And it is that young people have been one of the most affected segments of the working population.

“Employment has recovered well and the overall labor market barometer is in positive territory. This does not mean that there are not serious problems as well ,” says Moeller.

As in the rest of Europe, in Germany, the main problem is that too many studies have been canceled during the pandemic.

“Due to the coronavirus, very few new professional training contracts have been signed compared to previous years.”

“This is a disadvantage both for young people and for the economy in the long term,” he adds.

Author avatar
Joshua Smith
https://startupgazzete.com

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