Research from thinktank the Resolution Foundation has found that workers who change jobs regularly may benefit from what has been dubbed a “disloyalty bonus”.
The report found that the typical pay rise for someone switching jobs is, on average, around 2.5 times higher than for someone remaining in the same job.
Furthermore, pay growth for those who change jobs is back at pre-financial crisis levels, whereas the typical pay rise for those staying in the same job is still around a third lower than it was in 2007 and 2008. This suggests that pay rises for those who stay with the same employer are subdued.
Employees who change jobs could be better off
Although voluntary job-to-job moves continue to rise, they are still a fifth below pre-crisis average. During the decade before the crisis, those moving jobs made up around 12% of the work force, but in the decade since it has fallen to 9%.
The report suggests that a lack of job moves may be behind the subdued level of wage growth:
“The lack of job-to-job moves may be reason to believe that the productive potential of the economy has still not been reached. On the other hand a lack of dynamism may represent the new economic paradigm we find ourselves in.”
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A lack of job movement may mean that there is less pressure on companies to pay their staff more to prevent them leaving, leading to a lack of wage growth. It may also suggest that companies are struggling to attract suitable workers, leading to stalling productivity levels.
Hesitant improvement for the UK job market
As well as job movement, the report examines wage growth and employment more generally. It identifies that in the first quarter of 2018, annual growth in weekly wages averaged just 2.7%. This is almost 1.5 percentage points lower than the pre-crisis average, yet growth has been between 2% and 3% for 33 of the past 36 months, suggesting that wage growth could be picking up. However with inflation remaining above 2%, there is little growth in real wages.
Unemployment has continued to fall, with long-term unemployment remains just 0.2 percentage points above its previous lowest point and unemployment remains at a 40 year low. However, this is not the case for women or workers under 50, who are still experiencing elevated levels of underemployment.
It also sheds light on migrant employment. Between 2013 and 2017 the share of vacancies filled by migrants rose from 13% to 21% due to an increase in EU migration to the UK. However, the report identifies signs that this may be slowing, possibly due to Brexit.
The composition of the UK workforce is also changing. Since 2012, the number of people employed in the UK has risen by 2.5 million and the employment rate has climbed from 71.4% to 75.7%. Significant numbers of people that tend to be out of work (such as single parents, people with lower qualifications and those with health problems) have also moved into employment.