Promotion blockage threatens earning potential of young people
Becky Frith, July 28, 2015
A drop in the rate at which people move between jobs has created a promotion blockage that could affect the earnings of young workers, according to a report published by think-tank the Resolution Foundation.
The report – A steady job? – found that job stability, which is the average amount of time spent in the same job, has risen steadily over the last two decades, driven partly by 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 researchers also found that job mobility, which is the rate at which people move between jobs, is well below levels noted before the financial crisis. The Foundation warns that this drop in moves may be a cause for concern as it is likely to reduce people's 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 report added 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 earning potential.
Laura Gardiner, senior research and policy analyst at the Resolution Foundation, said that 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 job security.
“In fact the overall share of insecure work has remained remarkably stable, even since the crash,” she said. “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 economic and social policy at the University of Bath and an associate at the Resolution Foundation, said job tenure is on the rise. “The amount of time people spend in the same job has risen steadily, particularly among women and older workers,” he said.
“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.”