London workers lose out on pay rises because of housing costs
High housing costs are limiting the overall income gains from regional wage variances
In the last three months of 2017 around 290,000 people moved jobs, compared with 110,000 a quarter during the financial crisis, according to the Resolution Foundation's Earning Outlooks report.
However, voluntary job moves remain far less frequent than they were in the early 2000s, and are down 15% from before 2008.
The research - which looked at prospects for pay growth in 2018, focusing on both the frequency of job moves and the associated rises in pay - found that employees who moved jobs were more likely to see an increase in wages than those who stayed put, earning 7.3% more versus 2.5% more respectively. Those who moved regions saw a larger increase of 8.4%, while those who relocated to London saw the highest rise in pay, at 18% in 2015/16.
However, the moving regions pay rise across most of the North has fallen over the last decade, and is now below 5% in the North East and Wales.
The research noted that while the premium for moving to the capital has grown over the last decade, the share of people migrating to London has stayed the same; at around a fifth of all moves. This is likely due to high living costs, as, once housing costs are taken into account, average incomes in London are lower than those in the South West, despite hourly pay being £5 higher on average.
Jonathan Seager, executive director of housing policy at London First, warned that the high cost of living in the capital could have an adverse effect on attracting talent. “The high cost of housing is forcing tens of thousands of Londoners out of our capital every year," he told HR magazine. "Employers are doing what they can – from paying the living wage to offering tenancy deposit loans and flexible working. But unless the government helps tackle London’s housing crisis we face an ongoing drain of talent."
The combination of low wages outside of London and high housing costs in the capital should act as a double warning to policymakers, the Resolution Foundation added.
Stephen Clarke, senior economic analyst at the Resolution Foundation, said: “There are plenty of positive reasons for people being comfortable working where they are. But it says something about the scale of London’s housing crisis that even 20% pay rises can’t persuade more people to move to jobs in the capital.
“The uniquely high pay bonus associated with moving to London is also a pretty damning indictment of the scale of regional economic imbalances throughout Britain.”