Building a job market tailored to the future

Vision paper by Francesco Grillo and Claudia De Sessa expanding Francesco's column published on the Italian newspapers Il Messaggero and Il Gazzettino del Nord Est

Scan of the paper edition

“Great attrition or great attraction? The choice is yours”

it is with the vocabulary of betrayed love that McKinsey titles its latest report, where it analyzes a phenomenon that is changing the world of employment and the nature of business itself. In April 2021st, from when the economy slowly started to recover, 19 million Americans have voluntarily quit their job without a plan b.The phenomenon that is now spreading to Europe is especially peculiar if we think about how, during this last year, young people have fought with nails and teeth to preserve the last scraps of employment they had. Among two of the most prestigious private universities in Italy, LUISS and Bocconi, the number of graduates who favors startups over structured jobs has been growing. Indeed, many aim at creating meaningful projects with a positive impact on society and for the common good. Can this be read as a structural change in people’s needs? And what does this entail for entrepreneurs and politicians that try to govern an increasingly fluid world?

The numbers mentioned by McKinsey are showing how a little pebble is becoming a landslide. According to a study that also includes Australia, Singapore and the UK, an additional 40% of workers declares that they will probably quit their job and 27% says they may do it even without an alternative form of employment lined up. In the countries that invented the very notion of enterprise, half of the people do not feel connected to their company. This could change the nature of enterprises as we know it. The turnover is rising and it's a trend even stronger in the big companies like Alibaba and Facebook that are changing the world and can now no longer rely on a stable supply of talents.

European society is not equipped with the same level of flexibility as the US (the unemployment rate in the Unite States reached 15% in April 2020 and then went down to 4,5%, while in the EU the rate has been oscillating between 5% and 10% since 2007. In the US, it is interesting to observe the two trends regarding voluntary quits and layoffs (firings).The rates, calculated as number of quits and layoffs during the entire month as a percent of total employment, highlight how the number of people leaving volunarily is almost three times as high as those being fired. 

The phenomenon is, actually, not new. Two factors have been causing it and they have been exacerbated by the pandemic.

First of all, the discovery of smart working has made people realize that work and family life can be reconciled.

This has left employers in a conundrum: calling everyone to the office once the pandemic is finished and risk losing employees; or letting them work from home and risk letting them settle in a virtual workspace that does not require any moving.

Secondly, as the pandemic has highlighted our vulnerability, the idea that we all should “save the world” has gained popularity, especially in a world plagued by more and more uncontrolled crises.

Indeed, Gen Z – people born between 1990 and 2010 – considers having a social impact a top priority and this pushes them towards trying to do so by creating new innovative enterprises (startups). The implications are important for each of the three parties that are gambling their future on this challenge: companies, governments and workers.

Companies should reconcile themselves with the idea that they have now become more of a social animal than they were when they ruled the world of factories.

Learning how to gauge their impact beyond numbers is now paramount in order to build and develop trust not only with investors, but with clients and employees. In this context, ESG indicators (i.e. indicators that assess a company’s sustainability) can be useful.However, they need to be interpreted as an instrument to rethink the company strategy. Recognition and mutual admiration between employer and employee are certainly worth more, as McKinsey notes, than a bonus or a company car.

Governments should on the other hand give up on the idea of defending the “status quo”, fault to which they risk being cut off from history.

A welfare conceived only for those in a stable and protected situation runs the risk of becoming a privilege for increasingly less numerous and less productive social classes. On the contrary, we are in dire need of universal measures (more effective than, for example, the Italian basic income) just in order to afford the “creative destruction” that technological advancement induces. In this context, we have also realized that we need public administration in order to enact the Recovery Plan and face possible future crises; however, it will keep being devoid of talent if the social objectives brought forward will keep being overwhelmed by red tape and quibbles that make those objective unrecognizable.

A more personal challenge is, however, for those who are entering the workforce or that are finding new balances within it.

Linear careers are disappearing, bringing with them the security that used to be a defining characteristic of industrial civilizations. The winners will be those capable of giving back to work the meaning it once had: not only an imperfect way to redistribute capital, but rather an instrument to overcome the alienation that was pushing everyone towards a solely individual dimension. An instrument to reacquire that sense of belonging that, in the end, makes us human.

If the Great Attrition and the pandemic taught us anything, is that being proactive about change is what determines success for both companies and administrations. Thus, it is paramount not only to give way to the needs highlighted by job quitters as important (i.e. life-work balance, growth opportunities, meritocracy) but also to assess how new forms of employment may shape our welfare state and our society. Three elements should be assessed and then, possibly, harnessed:

First, there should be a focus on workers mobility and international recruitment. Hybrid work models indeed allow for talents to be recruited all over the world, without geographical obstacles. This could be a good opportunity to bring new perspectives in the workplace, but it also raises questions about new forms of delocalization, job market competition or on the democratization of employment. This could also have far reaching consequences on wider phenomena such as urbanization and thus, without looking too far, could also be an element to consider when talking about environmental sustainability. The synergies between new forms of employment and sustainability are indeed worth exploring.

Secondly, new forms of hybrid works could push us to rethink the state of demographics and natality. New, more employee centered work solutions could indeed provide a push to overcome the low natality rates that menace the pillars of our welfare system. Encouraging newly found family-work balance and implementing auxiliary services and measures like kindergartens could indeed be a way to encourage births. On this note, it's worth highlighting that the unemployment trends in the EU area are remarkably similar for both men and women. 

Thirdly, and encompassing the previous two points, regulations and policy making needs to start adapting to this whole changing context that bears obstacles but also opportunities. As work starts to enter the private space, “rights to disconnect” and other measures to safeguard mental health will need to be discussed. New forms of more gender equal paid leaves should be introduced, as to avoid new imbalances. Careful economic regulation will need to be monitored and implemented regarding increasingly delocalized and scattered nature of companies and finally, policy makers should start taking into account employment culture as an integral, transversal tool that could empower other important transitions such as the green and digital transition.