First they took away the long-service awards: carriage clocks and gold watches; now they’re coming for your pay rises; loyalty no longer pays in UK firms. That’s the big takeaway from new Resolution Foundation research looking at what’s happening in the jobs market.
In the late 1990s if you stuck in the same job you could expect to get an annual pay rise of around 6 per cent. Even in the years just before the financial crisis, you could expect 4 per cent. Yet today the typical pay rise for someone remaining with their employer is around 2.5 per cent, barely above inflation. The returns from being loyal have fallen over time. By contrast those switching jobs are being rewarded. Last year the typical pay rise for someone moving jobs was around 10 per cent – the highest it’s been since the early 2000s.
Given this you’d perhaps expect that job-hopping was becoming increasingly common. Yet, last year just 3 per cent of people voluntarily switched jobs, well down on levels before the crisis. Even more surprising is that this lethargy is particularly pronounced amongst younger workers. In the early-2000s around 1 in 10 employees aged under 30 moved jobs each year, in the past few years it’s fallen to 1 in 20. We’ve heard a lot about ‘portfolio careers’ and no more jobs for life. Millennials don’t appear to have got the message.
Does this matter? Perhaps not if longer job tenure simply means that more people are happy in their jobs. But even if you believe this – and let’s face it, it’s hard to believe that everyone loves their job – loyalty has a dark side, particularly for younger workers.
Moving jobs is not just a good way to earn more money. It’s a good way to progress and build up new skills. Besides, job-moves become less common as people get older, so take the opportunity to move while you can. Job moves are also good for businesses; a healthy jobs market is one that matches workers to the jobs that best suit them and one in which employers can access the talent they need. And if that’s not enough, job moves are good for the economy too: moves spur productivity rises as new skills are picked up. Given Britain’s terrible productivity record, the country definitely needs a more upwardly mobile workforce.
But the fact remains that over nine in ten workers don’t move jobs from year-to-year. It’s a concern if people are staying put for the wrong reasons. Our polling last year showed that over a third of the responses by young people showed pessimism about the job opportunities available to them. This was something backed-up by participants in our focus groups. As one man in his mid-20s put it: “To go out and be like the new kid in school… you may not be as good as you think you are. You do kind of pigeon-hole yourself: this is what I can do, I’m good at this, why take that risk? Granted, nine times out of ten it will probably pay off but it’s having the confidence to leave behind what you know.”
Millennials are often unfairly characterised as fickle. The evidence shows that this isn’t the case. Encouraging younger people to be a bit less loyal when it comes to their jobs and careers would be no bad thing.