HomeTalent ManagementRewards & BenefitsReward and RecognitionWhy less job-hopping is hurting younger employees

Why less job-hopping is hurting younger employees

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The new workplace norm for employees is to pursue a succession of different roles with some even multi-jobbing. But with job switching becoming tougher, how can employers support valued staff?

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Younger workers must switch jobs regularly or face becoming stuck in lower paid roles. Ruth Thomas examines how employers can better reward their skills.


The new workplace norm for employees is to pursue a succession of different roles with some even multi-jobbing.

Recent surveys have indicated that the UK employee will hold six different jobs in six different companies across a career spanning the ages 18 to 65. The impact on today’s millennial employees, who have only experienced working in this job swapping environment, is that most don’t believe career progression will even be linear.

Instead they seek to pursue a series of different careers, rather than just jobs throughout their working lives.  They also seek to learn and develop new skills all the time, rather than working their way up the ladder in just one particular field.

Slow Recovery

However, job-hopping has been impacted by the slow rate of economic recovery in the UK. The Office of National Statistics (ONS) monitors the rate of job-to-job moves capturing the proportion of employees who change employer between one quarter and the next.

Figures fell from around 2.5% of employees to a low of around 1.7% during 2008 and 2009 as the economic outlook became more uncertain and workers became less confident about moving from one post to another. More recently, although the rate rose in the three months to September 2015 (2.5% of employees), in the following three months to December 2015 this figure had fallen slightly again to around 2.2% of employees.

Analysts have highlighted the impact this has had on pay progression. The Resolution Foundation’s study of the final quarter of 2015 highlighted that the earning potential of young people had been hit most because of a slowdown in the number of times they changed jobs and suggested that young workers’ pay would be 3% higher if job mobility had not slowed.

In the report, Resolution Foundation senior policy analyst Laura Gardiner said: “Frequent job moves are the main route to the rapid pay increases young people should experience as they begin their working lives. So it is a real concern that job switching slowed down for all groups, and particularly for young people, even before the recession hit.”

Job Stayers and Switchers

Moving jobs undoubtedly drives greater pay progression.  So-called job stayers in the demographic saw just a 4.4% median annual pay growth between 2007 and 2014, while job switchers saw 11.8% growth.

Other studies have shown that moving jobs can lead to up to three times greater pay growth than staying put. In the light of the UK’s April employment figures, where wage growth including bonuses fell from 2.1% in January to 1.8%, moving jobs to increase your salary remains an attractive option.

This phenomenon brings many challenges for employers set against the aforementioned economic landscape of near stagnating wage growth: how do you retain key employees seeking pay progression externally when internally pay budgets are limited?

Similarly, how can you manage paying market premiums to job movers looking for a raise in order to attract key skills and not end up with pay differentiation issues between newly hired and longer serving employees?

Hot Skills Premiums

In the past companies opted to pay special hot skills premiums to employees whose expertise was crucial and in short supply. These premiums ceased the minute the skills become more readily available on the market or the employer decided that the skills were no longer as important to its business.

More recently some employers have been seeking to tackle the conundrum by turning to a high performance model for pay. This approach seeks to optimise compensation by focusing limited pay budgets on high performers, or key talent, who statistically outperform expectations and whose skills are integral to the company’s strategic direction and future projects.

In this model pay becomes more individualised and market driven rather than spread thinly across all employees. The issue here is that individualised deals always raise fairness concerns, of course.

In response some of the notable organisations moving to this approach, such as Netflix, have adopted a full pay transparency model so employees can calculate why they are paid less or more than their peers.

One thing is for sure. As the long, slow economic recovery perpetuates and the career for life becomes a fading memory, employers will need to adopt ever more creative ways of attracting, retaining and rewarding their talent.


Ruth Thomas is senior consultant at Curo Compensation

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