Staff turnover costs UK businesses £42bn a year

British business is losing £42bn a year through its failure to retain key staff, research out today reveals.

The study – by the accountancy firm PricewaterhouseCoopers (PwC) – found nearly a quarter of British employees are either actively looking or planning to look for a new job because of unhappiness about expected pay and conditions in the coming year.

PwC has found that in any one year around 10.4 per cent of British workers quit their posts in favour of new opportunities. In the US, that figure is 7 per cent, while in France and Germany it is just 5 per cent. But the cost of replacing those workers equates to around a year of the lost employee's salary when taking into account lost skills, productivity, and the combined costs of recruitment and training.

The average annual salary in Britain is £25,000 and based on that, PwC says that a rise of just 1 per cent in the resignation rate heaps £8bn of costs on to businesses.

PwC's research also found that the problem will get worse now a recovery is underway. It says scrimping on pay rises could turn out to be a "false economy".