the times | Wednesday December 22 2021 47

Business

Ian King

The Great Resignation, the untold story

of the pandemic, is about to get greater

well documented, acute skill shortages

persist in technology, while the

extended lockdowns that crippled

hospitality and live entertainment saw

many workers permanently leave

those sectors. Healthcare, where

nearly two years of the pandemic have

left workers exhausted, is another

sector where many employees have

resigned for good.

Another reason to expect the

situation to continue in 2022 is the

growing imbalance between employee

and employer expectations.

Millennials, in particular, are voting

with their feet when employers have

proved reluctant to offer hybrid

working arrangements, with

recruitment agencies reporting

growing numbers of 25 to 40-year-

olds seeking fresh opportunities.

Such is the willingness to move that,

according to a recent survey of 6,000

workers by Randstad UK, the staffing

firm, 69 per cent of British employees

are ready to move jobs, while almost a

quarter plan to do so within the next

three to six months.

Surveys like this suggest that the

great resignation has yet to really get

going. Robert Walters, the

recruitment firm, published its 2022

Salary Guide recently and reported,

again based on a survey of 6,000

workers, that 72 per cent of white-

collar professionals expect to receive a

pay rise in the new year. That

compares with its finding, from a poll

of 500 businesses, that only 28 per

cent of employers intend to make

changes to pay packages in the new

year. The new year appraisals season,

then, could be when the great

resignation accelerates.

That will have a bearing on

company profits in the form of higher

recruitment costs. Randstad UK

estimates that, based on a cost of

£25,000 to hire an employee and for

that new recruit to then get up to

speed with their new job, it would cost

employers £1.1 billion if one in six of

the UK’s 275,000 accountants were to

leave for pastures new.

In reality, though, the greater cost

for businesses will be in the form of

wage inflation. The threat of this, or of

rising inflation expectations feeding

There have been

many memorable

business stories in

2021: the supply

chain disruption

inflicted by Covid; the Reddit-fuelled

frenzy in GameStop shares; the

collapse of dozens of household

energy suppliers; Tesla’s seemingly

unstoppable rise; the explosion of

retail investor interest in

cryptocurrencies; the row the

European Union picked with

AstraZeneca over vaccines; and the

start of post-pandemic tightening of

monetary policy by the US Federal

Reserve and the Bank of England.

Some of these, notably the latter,

will rumble into 2022. However, in the

longer term, another story is likely to

be the one that economics historians

look back on as most significant.

For this was the year the Great

Resignation began, during which

millions of workers reappraised their

lives in the wake of the pandemic,

deciding that they would rather do

something else. Part of this reflects

the fact that many, particularly in the

United States, deferred their

retirements immediately before Covid.

It also reflects the fact that some

people who left the labour force

during the pandemic have yet to

rejoin it. According to the US Labor

Department, 4.4 million Americans

quit their jobs in September, followed

by another 4.2 million in October.

Here, during the third quarter of the

year, a record 400,000 Britons

switched jobs.

The sense, certainly in the UK, is

that an important inflection point has

been reached. It is impossible,

currently, to have a conversation in

the City without hearing of someone

who has decided to call it a day and do

something else.

The phenomenon will continue in

2022. This has been a record year for
      mergers and acquisitions activity and,
      accordingly, bankers, lawyers and
      other advisers can expect bonuses not
      seen since the financial crisis. Banks
      such as Goldman Sachs and
      JP Morgan are said to be considering
      raising their bonus pools by as much
      as 40 per cent. Bonus season is always
      followed by movement in the City jobs
      market, yet it would be no surprise
      next year to see more people
      reconsidering their careers after the
      latest payouts.
      But the great resignation goes well
      beyond financial services. As has been

BAE Systems

to team up

with flying

taxi business

Robert Lea Industrial Editor

BAE Systems is set to enter the electric

flying taxi business, with plans to

develop military and security versions.

The London-listed defence company

is to launch a joint venture with Eve, a

vertical take-off and landing aircraft

maker that was spun out of Embraer,

the Brazilian regional jet specialist.

Instead of ferrying the wealthy on

short hops around cities or between

airports, military flying taxis could be

used for moving top brass, emergency

evacuations and intelligence missions.

Such vehicles also would help to solve

the conundrum of how big military

companies such as BAE, building fuel-

intensive fighter jets and warships, can

reduce their carbon footprint.

Eve claims orders for 1,735 flying taxis

worth $5.2 billion from 17 customers. It

has stated its intention to join the New

York Stock Exchange via a reverse into

Zanite Acquisition, a so-called blank-

cheque or special purpose acquisition

corporation, in a transaction that

would value the business at $2.9 billion.

The company intends to trade as Eve, to

be listed under the ticker EVEX and to

have a $512 million cash position that

would be used to develop its flying taxi.

Eve is expected to start trading in the

second quarter of 2022, after the clos-

ing of the deal.

Jerry DeMuro, Eve’s co-chief

executive, is well known to BAE as he

used to be the head of its American

business. Both BAE and Rolls-Royce,

another of Britain’s biggest players in

the defence sector, are among Eve’s

“strategic partners”.

Rolls, historically a specialist in

vertical lift-off and landing aircraft

such as the Harrier jump jet and the

latest generation F-35 fighter, and a

growing expert in electric aviation, is a

partner and shareholder in Vertical

Aerospace, the Bristol-based flying taxi

company, which recently reversed on

to the New York stock market via a

$2.2 billion blank-cheque deal. BAE is

not part of that project.

Eve’s $30 million flying taxis will use

rotors to get airborne from electric-

charging “vertiports” before the rotors

switch to horizontal to fly along. BAE

said that its Lancashire-based experts

would join their Brazilian counterparts

at Embraer to “explore a defence

variant” of the Eve aircraft for “per-

sonnel transportation, surveillance and

reconnaissance, disaster relief and

humanitarian response.”

Shares in BAE rose 10½p, or 2 per

cent, to 539¼p last night.

into higher wage demands, is probably

why the Bank of England last week

overcame its unease over the

Omicron variant of the coronavirus

and raised its main policy rate. The

latest report last week from the Bank’s

network of regional agents, one of the

key pieces of evidence scrutinised by

the monetary policy committee,

contained numerous references to

labour shortages in a wide range of

sectors.

The agents’ report noted: “There

were reports of companies making

mid-year salary adjustments to retain

staff, and some instances of pay

settlements of 5 per cent to 7 per cent,

especially among companies where

pay had been frozen over the past

couple of years.

“Contacts reported significant

upward pressure on pay for skills in

short supply, such as construction,

hospitality, IT, accountancy and legal,

with staff being offered pay increases

ranging from 10 per cent to 40 per

cent to switch firm. One-off retention

bonuses were also reported to have

become more common.”

Such evidence suggests that

whatever companies may be saying

publicly to pollsters, in private they are

handing out inflation-busting pay rises

rather than risk losing key employees

in a tight labour market. Not for

nothing were labour shortages,

recruitment difficulties and wage

inflation cited by three quarters of

respondents as their main concern in

the latest quarterly survey of chief

financial officers by Deloitte.

Employers may also be trying to

pre-empt strike disruption, which,

reflecting increased worker power, can

be expected to rise next year.

Investors must consider the

implications of all this and not just for

company profits. It may, if inflation

takes hold, finally bring to an end the

four decade-long bull market in

bonds. That bull run has coincided

with, or has perhaps been driven by, a

decline in the share of income going

to workers and an increase in the

share of income going to the providers

of capital. Now it

feels as if the

pendulum is

swinging back from

capital to labour.

‘‘

’’

Ian King is business presenter for

Sky News. Ian King Live is

broadcast on Sky News at 10am

Monday to Friday

Pressure for pay rises is growing, from City banking to the national health sector

KATE GREEN/GETTY IMAGES