How Australia became a quitter's paradise

For the first time, most unemployed Aussies are happy to have no job.

·5-min read
Composite image of a woman holding a box of her belongings after quitting, and a family walking onto a beach.
The number of Aussies quitting is now more than those getting the sack. (Source: Getty)

A most extraordinary thing has happened in the labour market. A real turning point. For the first time ever, the majority of the unemployed are there because they want to be. The quitters outnumber the sacked and retrenched.

As the next chart shows, this is very rare. Usually, unemployed people are unemployed because they lost their job, not because they told their boss to get lost or they took a sabbatical. That all changed as the economy went into overdrive in the second half of the pandemic.

Australia is now a quitter’s paradise.

A graph showing the number of people who quit their jobs and those who were sacked.
(Source: supplied)

We know the unemployment rate is very low - just 3.4 per cent. That’s one sign the job market is in a state of rare buoyancy. But this is even more exciting.

The moving parts are surprising. The number of quitters has actually fallen in the past few months. But what has really fallen at an astonishing rate - to a record-low level - is the number of people who lost their jobs. The words, “Sorry, we’re going to have to let you go” have been spoken very rarely in Australia in the past six months. Firms know the labour market is so tight they are desperate to hang onto everyone they have.

Power to the worker

This phenomenon, first brought to my attention by Seek chief economist Matt Cowgill, means it is a wonderful time to have a job. The strong labour market means workers are in an extremely powerful position – you’ve never been less likely to be let go. If you have been considering asking for a payrise but worried about doing so, thinking the boss might say, “Actually, you know what, I might let this person go and find someone else”. This data says don’t worry about that.

Workers seem to have the upper hand. If you’ve always dreamed of wearing shorts to the office, growing a beard, or asking for an extra afternoon of working from home, this is probably a good time to do so. Chances are your boss will say, “Fine. Great. Whatever you want. Just please don’t quit!”

Also by Jason Murphy:

In the US, they talk about “quiet quitting”, a phenomenon where workers show up, but aren’t really putting in the effort. That’s another facet of the same transfer of power from boss to worker.

But I heard the unemployment statistics are a scam?

It’s worthwhile, at this point, to cover off a couple of important things about the unemployment statistics:

  1. The stats don’t just count people collecting Jobseeker payments from Centrelink. The unemployment rate is data collected from the ABS quite independently, using a big survey. Indeed, many people on Jobseeker payments aren’t unemployed (you can do a few hours of work a week and still collect partial payments), while many unemployed people aren’t on Jobseeker

  2. The ABS survey counts anyone as employed if they work an hour or more in the survey week. This is the international standard created by a UN agency, the International Labour Organisation. However very, very few people work only an hour a week. If you set the cut-off at two or three hours instead, the unemployment rate wouldn’t change. What’s more, most people who report working an hour a week want to work only one hour a week – they don’t want more hours. Some of them are probably wealthy business owners who pop into the office or factory for a look around; or investors who open their trading account for a bit each week, and call that a week’s work.

Happy days

A tight labour market is a wonderful thing for people’s well-being. Unemployment is extremely corrosive to people’s mental health. But so is being stuck in a job you can’t stand, or aren’t really suited to.

The current environment must be causing an absolute flourishing among employed Australians, and also among those looking for a job. People are able to go looking for a job that actually suits them.

It will be good for productivity too. I know some small retail and takeaway places near me have shut down for days on end because they can’t find enough staff. That’s what happens to places that can’t afford to pay staff properly, and/or can’t muster up the management power to hire effectively. In a tight market they won’t be able to operate. These firms count as unproductive and, as they close, their labour is freed up to go and work for more productive firms.

We all know that in a recession the least-productive firms close - the same can happen in times when inputs are tight. In a tight labour market, some places will crank up their productivity by investing in automation (this also often means getting customers to do some of the labour). The robot McDonald's is one such example, but that’s not mainstream yet.

My favourite real-world example is ordering food using a QR code on the table. We’re no longer at the mercy of waiters who are in short supply (and who may be quiet quitting). Hospitality firms can instead focus their hiring and their remuneration on the people who can’t be replaced – the cooks.

And if the boss tries to work those cooks too hard, they can walk away, knowing that almost everyone else looking for a job right now did exactly the same thing.

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