In our recent Megatrends report, we set out some of the big economic and social trends that have helped to shape work and working life in recent decades, such as deindustrialisation and demographic change. While the future is uncertain, it seems likely that many of these trends will continue to have an impact for years or even decades to come. Equally, past trends can stop having an impact – or even go into reverse – and new trends will emerge.
This is our first publication in a series of four and considers the 'bread-and-butter' issue of staff turnover, an important metric for all organisations. Key findings include:
- In the three months from October to December 2012, according to the Labour Force Survey, 2.6% of employees left their job. This consisted of 1% leaving their job involuntarily (through redundancy or dismissal) and 1.6% leaving their job voluntarily (through resignation, retirement or for other reasons).
- On this measure, turnover peaked in 1998 at 4.5% and declined gradually over the period 1998 to 2007 before falling sharply in 2008 and 2009 and levelling off subsequently. This trend is almost entirely due to falling voluntary turnover. Employer-based measures also show a decline in turnover since the mid-2000s
- A number of studies suggest that the average amount of time people spend with an employer – average job tenure – did not shift greatly between the mid-1970s and the mid-2000s. Average job tenure appears to have increased slightly in recent years – consistent with falling job turnover.
- Average job tenure in the UK is among the lowest in the OECD.
- Economic conditions are likely to be the main reason why turnover has fallen since 2008 – more employees ‘sit tight’ in their jobs because finding a suitable new job might prove difficult. However, this does not explain why job turnover was falling pre-recession.
- The evidence suggests that changes within the workplace over the last 10 to 15 years may also explain falling job turnover. These include changes to occupational pension arrangements increasing the cost of job exit for some employees and increases in overall job satisfaction and employee engagement – as dissatisfied and disengaged employees are most likely to say they are looking for another job. Employment legislation introduced since 1998 – such as the National Minimum Wage – may have played a supporting role.
- We would expect improving labour market conditions – such as a significant increase in job vacancies – to lead to an increase in job turnover compared to current levels.
- Population ageing is likely to have a negative impact on turnover for the remainder of this decade – so it is quite possible that turnover will remain at historically low levels.
- Greater workforce stability will be seen by many organisations as a potential benefit – more experienced staff with greater knowledge increases the potential return on investment in people.
- However, less employee turnover means fewer people seeking new employment and there may be challenges for organisations in maintaining their talent pipelines.
- Organisations will also face challenges in how they ensure long(er)-serving employees remain engaged and up to date with business practice – and how they can access sufficient new thinking to drive forward innovation.
View the second provocation: Megatrends: are organisations losing the trust of their workers?
View the third provocation: Megatrends: have we seen the end of the pay rise?
View the fourth provocation: Megatrends: are we working harder than ever?
View the Megatrends overview page.