What is happening with resignations in Spain? Since 2022, when the debate about the “Great Resignation” and the impact of employment “tensions” on wages and inflation even reached the discussions of the Federal Reserve or the European Central Bank, our country has skyrocketed the number of resignations to exceed 1.6 million so far in 2024. A record that refuses to go back and that, however, seems to have had a much lower economic impact than the rest of the economies affected by an apparently similar phenomenon. But the role played by voluntary resignations in our labour market has been much smaller than in other countries, which is explained by the type of workers who make this decision. and the reasons for doing so.
The phenomenon in our country has focused on workers with permanent contracts, which inevitably indicates a labor reform. Resignations increased by 67% compared to 2021, but those of people with permanent employment increased by 242%. Meanwhile, those with temporary contracts have decreased by 42%.. A figure which, in any case, continues to appear very high, especially for a country with a double-digit unemployment rate.
This marks a clear distance between what happened in Spain and the so-called global flight of workers that began in 2021 in the United States. It is difficult to know what exactly would have happened in our country without the legal change, but surely, if it had happened, the “boom” of resignations would have been much less intense and above all, it would have already been “deflated”.
Labor reform coincided with rebound in activity after pandemic which has stimulated activity and job creation. But it is the combination of these two factors that explains the persistence of the resignation boom. For many, this development predicted that as companies and workers adjusted to the new legislation and job growth slowed, resignations would fall.
In 2024, the reform will be three years old and the labor market is showing clear signs of “cooling” (and not of decline) and the effects of the labor reform on hiring seem more than consolidated. But resignations are not decreasing, but stabilizing with an increase of 2% (3.8% for permanent employees). This suggests that their behavior reflects a profound change in the labor market. But what exactly does this change consist of?What impact has it had on companies and their labor costs to avoid “talent drain”??
This is one of the keys that have accompanied the analysis of the Great Renunciation in the United States and other countries. The Spanish data suggest that it is one of the factors that contribute to the difficulties in finding work in many sectors, but its impact on costs has not been, in global terms, as intense as that of inflation itself or the increase in the SMI. and contributions. This is influenced by the filter imposed by the negotiation of wage increases at the level of the agreements, which has not been particularly put under pressure by this factor.
Employees with permanent employment increased from 62% to 77% of the total number of members of the General Scheme, but their share of resignations increased from 37% to 76%. Temporary workers, for their part, represented 29% of employees (the rest corresponds to civil servants, advisors and other public agents “without contracts”) and 69% of resignations. ANDIn 2024, they will contribute to 14% of employee affiliates and 34% of resignations.
Job polarization
In summary: the distribution of resignations by type of contract has reacted much more intensely to the reform than the composition of employment itself. In theory, a greater number of permanent workers who resign should lead to higher wages. Why has it not been like that? The explanation may lie in a fact that the analyses of the Fedea study have detected: resignations continue to be concentrated among workers who have worked the least.
This is something logical in the case of temporary workers (they feel less tied to jobs with an expiration date), but when applied to permanent jobs it is more difficult to explain in a country with high unemployment where, until recently, signing a stable contract was considered a professional step.
Another surprising fact is that, according to the same research led by Florentino Felgueroso, not all resignations result in an immediate change of job, only 42% do. And for a third of them, it does not result in a salary improvement. This implies that Resignations are for reasons beyond salary.
More data points in the same direction. According to the Ministry of Labor’s Yearbook, 55% of disaffiliations in 2023 occurred before the age of one month, a percentage only 5 points lower than the average of the years before the pandemic. While resignations used to represent 9% of all resignations, they now represent 13%. However, the average length of employment periods, i.e. jobs, has increased by 37 days, to 243 days. The reason is simple: there are more permanent employees than ever, which reduces turnover enough to compensate for the increase in departures in the first few months.
But this indicates that the polarization of the labor market between short-term and very long-term jobs is persisting because many new permanent workers have “inherited” conditions similar to those previously experienced by temporary workers. Which translates, again, in his greatest predisposition to resign.
The fact that explains everything?
However, the key data that describe the weight of resignations in the economy is the percentage of resignations out of the total workforceThe higher the percentage of departures for this reason, the more pressure companies are under to improve their conditions and salaries.
Analyzing this indicator, it is noted that, surprisingly, it maintains a very moderate evolution. In July, 262,758 withdrawals of membership due to resignation were registered, a figure that is equivalent to 1.6% of the total number of salaried workers, a figure slightly higher than the 1.3% recorded before the approval of the rule. The percentage is reduced to 1.5% for permanent employees, more than double what it was before the reformBut for temporary workers, it reaches 2.6%.
This is despite the fact that in the case of temporary workers the ratio has fallen sharply, from 7.7% in the months preceding the legal change, a fact that is partly explained due to the intense reactivation of the labor market after the health crisis but also because of the expectations generated by the future law of the time.
But little will change if the decline in temporary workers offsets the record high for permanent workers. The impact of these measures would be even more muted because, as we have seen, It is concentrated among workers with lower seniority (and lower wages).
But it must be kept in mind that the increase in employment, combined with the high level of unemployment, also contributes to “decaffeinating” the economic impact of voluntary departures. Thus, we are faced with a balance sheet of resignations that does not affect macroeconomic aggregates, at least compared to other countries. Although these countries They started from a base rate of resignations much higher than the Spanish one.
This lower macroeconomic weight of resignations than in other countries does not mean that many Spanish companies, adapted to the rotation of a labor market dominated by temporary work, should not take measures now to avoid losing workers, who would have more difficulty “recovering” in a context of more permanent hiring. But it is rather a problem of production model than the overheating of the labor market.
This explains the apparent lack of interest in resignations on the part of the government and social agents. Even if the high number of resignations requires, according to many experts, a review of the legal and social protection conditionsthis doesn’t seem to be a priority.
