The Economy Brief: The ‘Great Reallocation’ of European talent

More than two years after the pandemic struck and long since the last lockdown forced people to turn their work life upside down, a great number of workers worldwide still think about quitting their job or moving to other positions.

A recent survey conducted by accounting firm PwC of over 52,000 workers in 44 countries shows that one in five respondents would like to change their workplace in the next 12 months, largely to seek a better paid position.

The so-called ‘Great Resignation’ set in motion by the pandemic continues to affect the US in particular, where 4.4 million Americans quit their jobs in April.

Europe’s labour market, however, is not spared by this trend, although in a slightly different way.

“In the case of Europe, I would say it’s more the Great Reallocation,” Raymond Torres, director for macroeconomic and international analysis at the think tank Funcas, told EURACTIV.

More than people quitting, European countries are seeing “shifts from job to job, or, within particular jobs, requests for different types of working organisation,” he explained.

However, the origin of the phenomenon is the same on both sides of the Atlantic and it has to do with inertia, according to Torres.

“Normally, inertia is the most powerful force,” he said, but COVID-19 broke it, pushing people to “start to rethink their working conditions and the type of jobs they want to perform.”

It’s about the money…
The top motivator for people to move to another job is higher pay, the PwC survey found. Around 35% of respondents also said they would ask for a raise over the next 12 months.

Europeans’ demand for higher wages comes along with unemployment levels at a record low across the bloc but also a staggering 8.1% inflation rate in the eurozone.

The energy and economic crises triggered by the war in Ukraine are likely to push workers to seek financial security through better paid jobs, maintaining Europe’s ‘Reallocation’ trend strong, Torres said.

“For the majority of workers all over Europe, the earnings are increasing much less than inflation,” he explained.

The cut in purchasing power is also likely to “intensify the overall feeling of not being treated by the labour market as people should be treated,” he added.

… but it’s not all about the money
For workers on the lookout for new job opportunities, however, it’s not all about getting a better salary.

Seeking a more fulfilling job and finding a workplace where to be “one’s true self” are also among the top reasons to look for a new employer, the PwC survey found.

“You know, this is all about the purpose,” Denis Pennel, director at the World Employment Confederation, told an event at the end of May.

“People want to know what their job is meant for, people want to have autonomy at work, people also want to feel well,” he said.

Yet, workers’ expectations are still far away from reality in most workplaces.

According to Even Bolstad, managing director at HR Norge, work continues to be governed by the old principle that optimising and simplifying jobs increases productivity.

Employers seem somewhat reluctant to grant more autonomy and flexibility to their employees.

“Sometimes work is organised in a very hierarchical manner, not giving enough space to the innovation capacity of people,” Torres told EURACTIV, adding that enterprises will need to organise work differently to retain their talent amid the ‘Great Reallocation’.

Bringing up Darwin’s evolutionary theory, Bolstad concluded: “It’s not survival of the fittest, it’s survival of those most adaptable to change.”