Job loyalty stunting millennials’ pay, report suggests
Job loyalty appears to be a major reason Britain’s millennials – people who came of age around the millennium – are the first workers since those born in the 1950s to earn less at the start of their careers than the previous generation.
So suggests the Resolution Foundation whose new report finds a significant drop in job-hopping among young people in Britain today.
The finding that millennials had lower job mobility in their mid-20s than the generation before them conflicts with the popular view that they are always on the move. Image: pixabay-1985863
The change began before the financial crisis says the report, which finds people born in the 1980s moved jobs in their mid-20s only half as often as those born a decade earlier.
As the typical pay rise for a young person moving jobs is about 15 percent, such a big reduction in job mobility has a dramatic effect on pay progression.
Financial crisis not the only reason
For over half a century, the pattern in Britain was that successive generations of workers earned considerably more than the generation before them. But that has now come to a halt, and the new report explores the underlying factors.
While the financial crisis played a role, it has also obscured wider trends, says the Foundation.
It suggests that a shift toward low-paying jobs, and the fact employers no longer reward long service with automatic annual pay rises, as two other reasons for millennials’ stunted pay and career growth.
Millennials’ higher tendency to stay put
Falling job mobility has resulted in a rise in job loyalty – increasing proportions of young workers who stay with their employers for longer.
The report notes this tendency to stay put conflicts with the widespread view that millennials are always on the move.
For workers at around age 30, the proportion who have remained with the same employer for 5 years or more is 47 percent for those born in the early 1980s, up from 43 percent for those born only 10 years earlier.
Laura Gardiner, Senior Policy Analyst at the Resolution Foundation, says it is understandable that young people are prioritizing job security in a job market “characterized by rising temporary work and zero-hours contracts.”
“But with the typical pay rise for a job mover in their mid-20s at around 15 per cent, and evidence that employers have essentially stopped rewarding their long-serving staff with real annual pay increases, such job loyalty can be very costly,” she notes.
‘Most highly qualified generation’
Gardiner concludes that millennials may lag the previous generation in terms of pay, but they “are still the most highly qualified generation Britain has ever seen.”
“Making the most of these skills will hold the key to getting Britain’s longstanding social contract that each generation outperforms the last back on track,” she urges.