UK worker loyalty increases when regional unemployment is high

Awareness of high regional unemployment leads to increased employee loyalty, new research from the University of has found.

The study, by Professor Yannis Georgellis from the Kent Business School, and Professor Nicolas Apergis from the University of Piraeus in Greece, used data from the government’s 2004 and 2011 Work and Employment Relations Survey (WERS) to assess how loyal UK workers were towards their employer.

As the two reports were taken either side of the recession of 2007 it provides a convenient comparison into how workers’ mind-sets changed when the risk of unemployment became more of a possibility.

The WERS report from 2004 showed that 21.9% of respondents said they ‘strongly agree’ with the statement that they are ‘loyal to their organisation’. In the 2011 report this had increased to 25%.

Those in public limited companies (PLCs) saw the biggest shift in loyalty. In the 2004 study 61.6% of those surveyed said they felt loyal towards their organisation. This increased to 77.7% in 2011, underlining the impact the recession had on those in firms more likely to cut headcount to quickly offset potential income losses.

Regionally the South East saw the biggest shift in employee loyalty between the two periods, with an average of over 75% of employees saying they were loyal to their organisation in 2011. This was a sizeable increase on the figure of between 60-70% in 2004.

Overall, the study finds there is a clear link between high unemployment in a region and worker loyalty to an organisation, as staff are aware it will be harder to find employment if made redundant.

Furthermore, the researchers also noted that workers have become aware that support for those out of work has diminished as government cutbacks have reduced benefits, training opportunities and even access to start-up capital for entrepreneurs.

The findings have implications for regional policy making as preserving loyal workforces is vital for maintaining a strong local economy, ensuring organisational longevity, reducing turnover and hiring costs and enticing foreign and domestic investment.

It could also help provide insights to HR teams about how external factors influence employee loyalty as much as internal.

The paper, Regional unemployment and employee loyalty: evidence from 12 UK regions, has been published in the journal Regional Studies.