Vacancy Rate

What the vacancy rate is

The vacancy rate (معدل الشواغر), also called the job vacancy rate, is the proportion of an organisation’s approved posts that are unfilled, measured against the total number of approved posts in the organisation at a specific moment of measurement.

A vacancy rate therefore describes the organisation at a point in time. It states how many of the positions the organisation has approved have nobody in them on the day of measurement, expressed as a share of all the positions it has approved, filled and unfilled together.

How the vacancy rate is calculated

The vacancy rate is the number of vacant posts divided by the total number of approved posts, multiplied by 100:

Vacancy rate = (vacant posts ÷ total approved posts) × 100

The numerator is the count of approved posts that have no holder on the day of measurement. The denominator is the count of every approved post on that same day, whether a person holds it or not. Dividing the first by the second gives the vacant posts as a fraction of the approved total, and multiplying by 100 turns that fraction into a percentage.

Both counts refer to the same moment of measurement, as the definition of the vacancy rate requires. The numerator is always part of the denominator, because a vacant post is an approved post that nobody holds, so the result lies between 0% and 100%.

A worked example of the vacancy rate

Take an organisation with 80 approved posts, 12 of which are vacant:

12 ÷ 80 × 100 = 15%

The remaining 68 approved posts are filled, which is 85% of the total. The two shares add up to 100% because together they cover every approved post.

A vacancy rate of 15% means that 15% of the organisation’s approved capacity, the capacity represented by those 12 posts, is not working. The work attached to those 12 posts is either spread across the people who remain or not being done at all.

Where it is spread across the people who remain, they carry the tasks of the 12 vacant posts in addition to the tasks of their own posts. Where it is not being done, the tasks attached to those posts stand still until someone is appointed to them.

How the vacancy rate separates open vacancies from frozen ones

The overall vacancy rate hides an important distinction between two kinds of vacant post:

• A vacancy in recruitment. It is a post that has been advertised and for which applicants are being screened. Its existence is normal: recruitment on it has started, and the post is moving towards being filled.
• An approved but frozen vacancy. It is a post that exists in the organisation’s structure and is counted among its approved posts, but on which recruitment has not begun. It is this second kind that inflates the figure without saying anything about the organisation’s capacity to hire.

A frozen post says nothing about that capacity because no recruitment has taken place on it. Its staying empty is not the result of a search that has been slow or has failed, since no search has started. Counting it alongside the posts in recruitment raises the vacancy rate while adding nothing to what the figure says about how the organisation hires.

For that reason the vacancy rate is taken on the vacancies that are actually open, and frozen vacancies are set out as a separate item. The posts in recruitment are then the ones that make up the rate, and the frozen posts remain visible in their own line rather than being merged into it.

How the vacancy rate differs from time to fill

The vacancy rate is a snapshot taken at one moment: it counts how many posts are empty now, at the time the count is taken. Time to fill is a duration: it measures how long a single vacancy takes to fill, taken as running from the day the vacancy is opened until the person appointed to it starts work.

The first is a count of posts at a point in time, expressed as a percentage. The second is a number of days, measured vacancy by vacancy over the period each one stays open.

The two figures need not move in the same way. Two cases show how they can behave:

• An organisation that speeds up its hiring. Its vacancy rate can fall, and its time to fill can fall with it. Each vacancy is filled in fewer days, so fewer posts are empty at any given moment.
• An organisation whose people leave faster than it attracts new ones. Its vacancy rate can rise even while its time to fill stays the same, because vacancies are being opened faster than they are being closed by appointments.

In the second case each vacancy takes as long to fill as it did before, so time to fill shows no change. What has changed is how many vacancies are opening, and the vacancy rate is the figure that registers it.

For that reason neither figure is examined without the other.

When a high vacancy rate becomes a concern

A rising vacancy rate can have one of two causes, and the remedies for them run in opposite directions. Either hiring is slow, or people are leaving the organisation faster than they are being replaced by new appointments.

The first cause lies on the way into the organisation: vacancies stay open because they are not being filled. The second lies on the way out: vacancies keep opening because people leave.

The two causes are told apart by examining the vacancy rate alongside the employee turnover rate:

• A high vacancy rate with low turnover. It indicates a recruitment problem. People are not leaving at a high rate, so the posts are empty because the organisation is not attracting and appointing people to them.
• A high vacancy rate with high turnover. It indicates a retention problem. The posts are empty because people are leaving them faster than they are replaced, and the difficulty lies in keeping people rather than in finding them.

This is an explanation of the concept, not legal advice.