‘Blocked’ jobs market blighting career prospects of young people

Average amount of time spent in the same job has risen steadily since mid-90s

A sharp drop in the rate at which people move between jobs since the financial crisis has created a promotion blockage that risks permanently scarring the earnings of a generation of young workers, according to a new report published today (Tuesday) by the independent think-tank the Resolution Foundation.

A steady job?  finds that job stability – the average amount of time spent in the same job – has risen steadily over the last two decades, driven partly by welcome trends such as more women returning to the same employer after having children, and a greater number of older people being in work.

However, the report also finds that job mobility – the rate at which people move between jobs – is still well below its pre-crisis level, despite the strength of the recent employment surge. Moreover, the fall started several years before the crash.

Rather than being a cause for celebration, the Foundation says that this drop in job to job moves may be a cause for concern as it is likely to reduce the prospects for promotion, pay rises and productivity gains. Employees who change jobs over the course of a year typically have much faster earnings progression than those who stay put.

The Foundation adds that impeded job mobility is a particular problem for young people early on in their careers, when promotion is normally most rapid, and blockages can lead to a permanent scar on their earnings potential.

Its analysis has found that the typical earnings of 30 year olds born in 1983 (whose early careers were hit by the downturn, when the rate of job to job moves plummeted) were around £2,800 a year lower than those born five years earlier.

The report also finds evidence of a growing generational divide in relation to job insecurity – a broader measure that includes an assessment of contract terms, pay and hours.

While the headline measure of job insecurity among the whole workforce has changed little over the last 20 years – or indeed since the crash – the share of young workers (18-29 year-olds outside of the full-time education system) in insecure work has increased sharply.

The report also finds that the gender gap in job insecurity is narrowing, with the majority of working women now in secure employment – reversing the position recorded in the mid-1990s. However, women are still far more likely to be in insecure work than men.

The report shows that while there has been no overall rise in the share of adults considered to be subject to job insecurity over the last 20 years, insecurity appears to have deepened for a sizeable minority of workers as a result of the rise of zero hours contracts (ZHCs), more insecure self-employment and involuntary part-time and temporary work.

The Foundation emphasises  that while only a relatively small minority of people are in these forms of employment, the fact that their prevalence remains well above pre-recession levels suggests that there may have been a more permanent shift towards deeper insecurity for a significant number of workers.

The Foundation says that encouraging secure work must play a key role in the Chancellor’s pursuit of full employment, which will require bringing those furthest from the world of work – including people with ill-health or a disability – into the jobs market. Ensuring that ‘work’ means the prospect of secure and stable employment will be crucial to drawing more people into the labour market.

Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, said:

“The UK has a good record on getting more people into work over the last 20 years, though some have argued that this has come at the expense of rising job insecurity.

“In fact the overall share of insecure work has remained remarkably stable, even since the crash. However, the recent rise of precarious forms of employment such as zero hours contracts has brought deeper insecurity for a sizeable minority of workers, particularly young people.”

Paul Gregg, Professor of Economics and Social Policy at the University of Bath and an associate at the Resolution Foundation, said:

“The amount of time people spend in the same job has risen steadily, particularly among women and older workers. This shift has been supported by a combination of financial incentives, support with childcare and employment legislation.

“But we’ve also seen people moving between jobs less frequently. This can create a promotion blockage, which in turn hinders young people’s career progression and can permanently scar their earnings.

“Job security is crucial to the pursuit of full employment as it will make work more attractive to those facing the biggest barriers to work. But we should also be mindful about the falling rate of job moves, which are a vital way for young workers to build their careers.”

Notes to Editors

The report defines those in ‘insecure’ work as part-time workers in post for less than five years, full-time workers in post for less than two years or earning less than half the average full-time wage, and all temporary and ‘mini-job’ (less than 16 hours a week) workers.

Recent analysis of ONS data found that employees who change jobs over the course of a year have much faster earnings progression than those who stay put.

The Resolution Foundation is grateful to the Nuffield Foundation for supporting this research.