Vacancy Rate

The vacancy rate measures the percentage of vacant positions in an organization over a specific period.A paid employment that has recently been created is vacant, or has been terminated is referred to as a job vacancy.It indicates the percentage of unfilled vacancies compared to the total number of vacancies in the company.

How to calculate the vacancy rate?

Calculating the vacancy rate regularly is one of the most important variables. Because if an organization has a high vacancy rate, then it leads to many disadvantages like overpaying existing employees and losing customer satisfaction which leads to a loss in the end. Companies with a low vacancy rate have a competitive advantage over those with a high vacancy rate.

Comparing the number of vacancies to the total number of jobs in the organization yields the percentage of open positions. If you wish to narrow down your search, compare the number of job openings to the total number of jobs in a given department or team.

The formula for calculating vacancy rate:

Vacancy rate =  Number of vacant job positions / the total number of jobs in the company * 100

Example of Vacancy Rate Calculation

Number of vacant positions Divided by The Total number of positions Multiplied by 100 Equals Your vacancy rate
10 ÷ 50 X    100 = 20%


What do high and low vacancy rates mean?

A high proportion in the labor market could indicate either excessive demand or scarcity of labor. It’s also possible that there are available positions that aren’t being filled.

The low vacancy rate could be a reflection of the company’s efficient HR operations and the attractiveness of the listed opportunities. In other words, it could imply that substantial market demand exists for the advertised job positions.

How much does a vacancy cost?

Because the cost of vacancies is dependent on a range of factors, there is no universal formula for calculating it. Other costs associated with vacant positions include lost income and overtime pay for current employees as a result of personnel reductions. More work means more stress and strain for your staff, which can result in burnout, lower productivity, and more attrition.

It’s worth mentioning that filling in the gaps is frequently cheaper than paying overtime. Furthermore, an excessive workload might result in a decline in performance quality, which can negatively affect customers and customer satisfaction.

Disadvantages of high vacancy rates:

  • Losing trust: Generally, if an organization is good, employees love to stay and work there. If a company has a high vacancy rate, it indicates a terrible working environment, which prospective employees will consider before joining.
  • Losing customers: Customers will put their trust in a business based on many factors. The vacancy rate is one of the elements among those. So, if an organization has a high vacancy rate then they think that this organization is not performing well and customer support will also be decreased. As a result, businesses should strive to lower their vacancy rate.
  • Hiring costs: When an organization has high vacancy rates then it should hire new employees to balance the workload. Hiring an employee entails many expenses, all of which are a loss to the organization.
  • Overpay: During periods of high vacancy rates, existing employees will be assigned more work than usual. As a result, they should be paid more than usual. This is an additional expense for a company.
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