The great resignation – retirement or relocation?

The “Great Resignation” alludes to many employees around the world quitting their jobs owing to the pandemic’s underlying repercussions. In September 2021, for example, 4.4-million workers in the US quit their occupations, up 34% over the same month in 2020. Over the same time period, LinkedIn examined the number of members globally who recently moved jobs on their LinkedIn accounts and discovered a 54% year-over-year rise.

It should be mentioned that the rate of resignation varies significantly between countries. There are many variables involved, including demography, employment conditions and even fertility rates. For example, some statistics regarding the number of employees leaving the workforce appear inflated due to a significant portion of the baby boomer generation retiring.

This article considers if retirement statistics and ageing populations, among other factors, have contributed more to the reduced workforce size than previously considered, and how this relates to South Africa.

Globally ageing population

People are living longer. Globally, countries are experiencing a rise in the proportion of older people in the population. It is estimated that by 2030, one out of every six people will be 60 or older. In South Africa, population estimates show that the proportion of people aged 60 and up increased from 7.6% in 2002 to 9.1% in 2020. This age group grew by 3% between 2019 and 2020.

South Africa’s median age was 27.6 years in 2020, up 1.28% from the previous year. In line with this increase, the working-age population rose by 146 000 in the third quarter of 2021 from the previous quarter, and by 578 000 (or 1.5%), from the third quarter of 2020.

In the fourth quarter of 2020, the most active age group in South Africa’s labour force was aged 35-44, reaching 77.1%. The 45-54 group followed this with 73.3%, and the 25-34 group with 71.4%. In comparison, according to Statista, the average age of the world’s working population was 39.1 years in 2021, correlating with South Africa’s data.

An ageing population indicates a greater retirement trend. However, even though there is a slight increase in the 55-64 age group in South Africa since the second quarter of 2020, there has also been an increase in the working population.

This means that South Africa still has a sizable and growing working-age population. In South Africa, external factors such as remote employment and a desire to relocate may have played a more significant role in people’s decision to leave their jobs.

Unemployment rate

In the third quarter of 2021, South Africa’s unemployment rate reached a new high, with job losses in nearly every sector. The rate increased to 34.9% from 34.4% in the previous three months. This is one of the world’s highest unemployment rates. The retail, community services, and social services sectors cut the most jobs, owing to tougher containment efforts to prevent the outbreak of the Covid-19 third wave. 

The pandemic and the current financial climate have hurt businesses and decreased hiring capacity. Thus, job seekers have become more discouraged, and this group has increased by 545 000 during the same period. Notably, the state bears a substantial financial burden to maintain a large portion of the population that are not employed, an additional 988 000 people in the quarter alone. These economic limitations have largely impacted the working population in South Africa.

Fertility rate

According to the latest Organisation for Economic Co-operation and Development (OECD) data, a stable population necessitates a fertility rate of about 2.1 children per woman. Fertility rates have been continuously reducing since the 1970s, with the OECD average falling to 1.6. South Africa’s current birth rate is also dropping. In 2022, the birth rate is estimated to be 1.9, down by 1.7% from 2021.

As a result of the pandemic, it is predicted that countries in sub-Saharan Africa and Latin America are likely to experience a short-term increase in birth rates, although long-term fertility rates are unlikely to be affected. A large part of the increase will be due to unintended pregnancies and reduced access to reproductive healthcare.

Although South Africa’s population is declining, it is doing so at a considerably slower rate than the rest of the world. The country continues to have decent population growth and fertility rates.

South African work trends and relocations

The pandemic has deeply shaped the dynamics of office work. As more employees opt to work remotely, employers have had to adjust and establish a detailed strategy to remain appealing to their staff. Studies indicate that the remote working trend prevails in South Africa. Respondents expressed a desire to retain flexibility, with more than 45% preferring a combination of fixed and flexible hours.

The recent financial climate has hindered economic recovery with rising interest rates, fuel price hikes and other budgetary pressures. The combination of high unemployment rates and increasing financial pressures will result in little choice but to hunt for work in other markets.

Relocation trends indicate that many South Africans expressed a readiness to relocate for work, with the US, Australia, and the UK being the most popular destinations. In the long term, if South African citizens choose to formally emigrate rather than just relocate, retirement fund withdrawals will likely increase.

The bottom line

South Africa has not been directly exposed to the global “Great Resignation” or “Great Retirement” trends, however, they have been impacted by significant unemployment rates and pandemic related economic pressures. South Africans have indicated a desire to relocate and work remotely.

A decrease in population growth rates imposes a bigger strain on the working class in the long run. The working class often supports family members without any savings, as well as younger family members, therefore increasing their financial burden.

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Craigh Chidrawi
Craigh Chidrawi is head of retirement at NMG Benefits

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